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)