Hopes of US Financial Law Inspiration Spreading to Local Companies

By: Rudi Ariffianto

JAKARTA, BISNIS INDONESIA – It was believed the Wall Street Transparency and Accountability Act that is part of a financial reform package approved by the US Senate last week will encourage accountability on the part of extractive industries operating in Indonesia.

Indonesia Publish What You Pay Coalition National Coordinator Ridaya Laodengkowe said the act passed by Congress requires all companies registered under the SEC to report sums paid to the local government, to the public.

He said the requirement applied equally to US-based and registered foreign oil/gas and mineral mining companies

“Therefore, extractive industry companies registered at SEC are required to report the funds they have remitted to the local administration,” he stated to Bisnis Indonesia last weekend.

Of the 50 largest oil and gas companies based on their deposits there are 30 companies that are actively listed internationally and 27 among them are listed at SEC, or are bound to the requirement encompassed in the new Bill.

Eight out of the ten largest mining companies in the world are also listed on the SEC and are going to be required to comply with the same conditions.

Ridaya stated that this legislation is in accordance with the spirit of the Extractive Industries Transparency Initiative Presidential Decree established by President Susilo Bambang Yudhoyono last April 23. More so since among those companies listed on the SED are also operating in Indonesia. This will strengthen the EITI implementation in Indonesia. This is very relevant in view of the fact that there is some indication that BP Migas and the ESDM Ministry are reluctant to implement EITI consequently.”

ExxonMobil, Royal Dutch Shell, Beyond Petroleum, Chevron Texaco, Total and PetroChina are some of the larger oil and gas companies also operating in Indonesia. Rio Tinto, BHP Billiton and Freeport McMoRan are listed as large mining companies actively operating in Indonesia.

Fairer

Executive Director Reformer institute, Pri Agung Rakhmanto considers that those requirements are very positive to encourage transparency in the oil and gas industry in Indonesia. In turn, not just the American companies or those listed at SEC shall be required to do the same. “But also other companies operating in Indonesia so that it becomes fairer,” he explained.

Pri Agung further said that in addition the requirement to report will also facilitate the oil and gas and mining regions to calculate and trace the revenue that is their due.

The chief of BP Migas, R Priyono welcomed this regulation issued by the Uncle Sam nation. “All that is directed at transparency and accountability towards the public is good.”

Priyono added that Indonesia also has to become smarter in responding towards global changes, just as the policies implemented in Europe and China, to discover a new balance.

“Anytime there is an external change, this becomes a golden opportunity for us to move forwards and gain benefit,” he related without going into further details.

Source : Bisnis Indonesia, July 19, 2010