Legislators regret RI's blacklisting

Legislators regret RI's blacklisting

JAKARTA (JP): Legislators expressed regret over the decision
by industrialized nations to add Indonesia to a money laundering
blacklist, saying it was not a wise step while the country was
struggling to defuse a prolonged economic crisis.

Kwik Kian Gie, a legislator from the Indonesian Democratic
Party of Struggle (PDI Perjuangan), said at present it was
impossible for Indonesia to crack down on money laundering, since
a majority of the laundered money deposited in banks was gained
from corruption rather than other illegal activities such as the
narcotics trade or smuggling.

"The majority of the bank deposits raised from corruption will
move to other countries such as Singapore and Switzerland if the
legal authorities are forced to investigate money laundering in
the country," he told The Jakarta Post by telephone here on
Saturday.

The Paris-based Financial Action Task Force, supported by
industrialized nations, added Indonesia to a money laundering
blacklist on Friday, threatening to recommend retaliatory actions
against the country in international financial transactions.

Kwik, who is a former coordinating minister for the economy,
said the government was unable to fight money laundering
effectively because of a 1967 government regulation that bars law
enforcers from monitoring bank deposits.

"The regulation was issued by former president Soeharto when
the economy was at a low point and the inflation rate was 600
percent," he said, adding that the regulation had yet to be
revoked.

He said the government should revoke the regulation and speed
up the deliberation of a money laundering bill submitted early
last week to allow for a gradual elimination of money laundering
in the country's banking system.

According to the noted economist, if the government cracks
down too hastily and too strenuously on money laundering it runs
the risk of overseas capital flight.

"Indonesia needs capital and foreign investment for its
economic recovery," he said.

He said that despite the absence of money laundering
legislation, Indonesia could enforce the Criminal Code and other
laws on banking, corruption and drugs to fight domestic and
international syndicates involved in illegal activities.

Aberson Marle Sihaloho, another legislator from PDI
Perjuangan, said the worldwide fight against money laundering
should be coordinated by the UN to ensure equal treatment for all
member countries.

He said industrialized countries should not only press crisis-
hit countries such as Indonesia and Russia to eliminate money
laundering, but all UN member countries, including Singapore and
Switzerland, two countries that have been accused of storing the
assets of corrupt regimes.

Aberson, a member of House of Representatives Commission IX
for finance, banking and the economy, warned the lion's share of
Rp 850 trillion in bank deposits would move to Singapore as that
country did not impose high interest rate taxes on expatriates'
assets.

"Indonesia's economy could collapse if the majority of the
bank deposits owned by third parties were converted into US
dollar and moved out," he said, adding that third parties
preferred to deposit their capital in banks because of the
political instability and legal uncertainty in the country.

He said it would be futile for the government to issue a
government regulation in lieu of law to crack down on money
laundering because such a step would effect the economy.

He said the industrialized nations' threat of retaliatory
action against Indonesia would prove ineffective because
international financial institutions, including the International
Monetary Fund and the World Bank, were still disbursing loans to
the country.

Meanwhile, Ferry Mursyidan Baldan, deputy chairman of House
Commission II for home and legal affairs, said it was impossible
for the House to endorse the bill on money laundering this year
because the House had many other bills that needed to be passed
immediately.

"We have made it our priority to process bills that need to be
passed into law to support the national system," he said, adding
that the House has given the priority to bills on the central
bank, the settlement of labor disputes and the fight against
corruption. (rms)