[nabila Fatiha]_iytl 2019 Essay.docx

Extractive Industries Transparency Initiatives (EITI) Scheme Implementation in Eradicating Coal Corruption in South Kalimantan By: Nabila Fatiha Indonesia is rich of diverse natural resources, including oil, gas and minerals. In a coal sectors, Indonesia ranked as the 10th country with the biggest amount of coal reserved and ranked as the 5th as the biggest coal producing country in the world.1 Up until now, Coal has been a massive sector that support Indonesia’s electricity and energy source. In Indonesia, South Kalimantan is the third largest coal producing regions (Ministry of Energy and Mineral Resources, 2008). According to the data of Badan Pusat Statistik per 2013, South Kalimantan has produced more than 150 million tons coal. It is undeniable, at the provincial level; this business contribution is also dominant in economic value added and output (Fatah, 2008).

The coal industry in South Kalimantan rapidly growing, especially after the decentralization which regulate in Undang-undang Nomor 22 Tahun 1999 and UndangUndang Nomor 32 Tahun 2004 to delegate mining permit authority to local governments where shown that in 2001-2008 there are 2.513 new licenses for small scale of coal mining, and 10% of it was in South Kalimantan (Ministry of Energy and Mineral 1

IEA Coal Information, 2017

Resources). Also, in this period the number of licenses rose from 750 in 2001 to more than 10,000 in 2010, 40% of which were for coal mining. In another side of the high-growth coal industry in South Kalimantan, The Ministry of Energy and Mineral Resources states that only 30 percent of small-scale coal mining in South Kalimantan has official permits. Fatah (2008) also states that all coal-producing districts/ cities in South Kalimantan have a number of illegal mines and the number has increased from 157 in 1997 to 842 in 2004. It is a matter of fact, which the rising number of both illegal and legal coal mining in South Kalimantan means that there are corruption and bribery practice to keep business running. One of the reasons why the coal sector is very fragile and submissive to bribery and corruption is because of the political transaction happened in the coal sectors which then lead to impunity. Rapid returns to investment in high profits and large subsidies have drawn Politically Exposed Person (PEP) into the dirty coal. Discretionary power at the local government level has opened opportunities for politicians to take advantage of their position as holders of power. The most significant development in pushing corruption in the mining sector is the decentralization of government functions. This decentralization has made the decision-making process more political and increased discretionary power by regional officials, and both of these increase the risk of corruption. As stated in the Coalruption report by #BersihkanIndonesia coalition, the practice of corruption and bribery in coals sector massively endangered community and environment. It is because; Firstly, the coal mining permits which are published based on bribery and corruption will increase the possibility of companies to be immune to law and regulation, including and not limited to pay taxes, guarantee money, royalties and reclamation insurance and environmental insurance. Secondly, by the practice of bribery and corruption that including political elites and people in power will lead to the rejection of people’s right and living, because of the beneficially relationship between companies and political elites, as in what happened in Meratus Hills in South Kalimantan, the one and only rainforests which are where the natives people live and earn living, recently permitted as an area for coal mining. The number of damages caused by corruption and bribery practice is uncountable and miserably affecting lives of many. The struggles to eradicate the corruption in coal sectors need a comprehensive and consistent supports from various stakeholders. The regulation and law need to be more than just theoretical, but practical. The law-holders need to be objective and act as the servant of people. As the main key of decreasing the number of corruption and bribery practice in coals sector, the writer suggest the implementation of Extractive Industries Transparency

Initiatives (EITI) Scheme in Indonesia which has been adapted since 2010. By implementing the scheme will lead to the transparency process since it’s obliged the company and government to disclose all data and information in the extractive chain of coal sectors started from the natural resources information, licenses and contract, production process, revenue collection, revenue allocation, social spending and the benefits for the community information. This open data system allows public, NonGovernmental Organizations (NGOs), civil society, company and government to involve in public debate and act as a watch-dog of the process. By the independent verification, the data and information could be used as a references for public to evaluate and control, and demand an action if found incompatibility between the information and the regulation. This could lead to the decreasing number of bribery and corruption as the number of exposure in every process increasing. However, just adapting the Extractive Industries Transparency Initiatives (EITI) scheme is not enough. Eradicating corruption and bribery means a shared accountability and responsibility from all stakeholders to really involved and take 100% responsibility and 0% reasons in implementing, controlling and evaluating how the scheme play roles in Indonesia. The exposure of the Extractive Industries Transparency Initiatives (EITI) scheme is not well-known for the public; therefore it’s important to raising awareness and educating the people on what’s their role and how they can contribute. Eradicating corruption is not a one day work, but it is a noble struggle to achieve the justice for the people and the sustainability of environment and community.