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.