FATF list removal helps economy

FATF list removal helps economy

Leony Aurora, The Jakarta Post, Jakarta

The central bank is optimistic that the removal of Indonesia from
the list of non-cooperative countries in the fight against money
laundering will encourage foreign banks to extend loans to
businesses here and, eventually, boost the volume of financial
and trade transactions.

Several countries have already started to relax their
requirements for lending to Indonesia, Bank Indonesia governor
Burhanuddin Abdullah said on Monday during a hearing with the
House of Representatives' finance commission.

"Hong Kong has lowered its provision requirement from 60
percent to 10 percent while the Netherlands has lowered it from
80 percent to 50 percent," said Burhanuddin.

"I have heard that they are going to lower it even further."

A lending provision is money must be set aside by a bank
lender to cover the risk of default.

The higher the risk, the higher the provision.

"This is proof that our efforts to make the cost of doing
business in Indonesia lower are bearing fruit," said Burhanuddin.

After years of pleas, the global money laundering watchdog --
the Financial Action Task Force -- removed Indonesia from its Non
Cooperative Countries and Territories (NCCT) list last week.

It is expected that in the long run this will improve
international confidence in Indonesia, which has long been
considered a safe haven for money launderers, especially with
open corruption flourishing in all walks of life. Being excluded
from the blacklist would also boost the country's chances of a
ratings upgrade from the global ratings agencies.

The removal of Indonesia -- along with the Cook Islands and
the Philippines -- leaves Myanmar, Nauru and Nigeria as the only
countries still left on the list.

As part of its efforts to be removed from the list, the
government passed the Anti-Money Laundering Law in 2003 and
established the Financial Transaction and Report Analysis Center
(PPATK), which is tasked with auditing the country's financial
institutions.

To date, however, not one money launderer has been prosecuted
under the Anti-Money Laundering Law.