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Civil groups call for more transparency in oil palm governance
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This picture taken on March 27, 2019 shows villagers passing through a palm oil plantation in Meulaboh, Aceh. (AFP/Chaideer Mahyuddin)
C
ivil groups are calling for more transparency in the governance of the oil palm sector, saying that Indonesia could still maximize its revenue from the sector as research has calculated substantial potential state losses from the sector due to alleged tax evasion.
Transparency International Indonesia researcher Bellicia Angelica said that as oil palm continued to thrive as one of Indonesia’s top export commodities, the lack of integrated monitoring efforts by relevant stakeholders had left the sector vulnerable to corruption.
“There is no integrated palm oil management design among different ministries, [government] institutions and local governments,” said Bellicia in a discussion on Tuesday. “This could make the oil palm [sector] a fertile ground for corruption, particularly in the process of obtaining business permits.”
She went on to add that the sector had also been marred by tax-evasion issues, citing a recent collaborative study conducted by civil group Auriga Nusantara along with news outlets Tempo, Mongabay Indonesia and Betahita, that estimated potential state losses of between Rp 2.83 trillion (US$ 197.7 million) and Rp 3.63 trillion annually due to alleged tax evasion in the industry.
The figure was calculated by comparing the estimated potential revenues from property tax (PBB) with the realized PBB collection from the oil palm sector in the country between 2016 and 2020.
The potential loss in tax revenue stood in stark contrast with the current industry landscape, where exports of crude palm oil (CPO) and its derivative products have become a significant element of Indonesia’s trade, Bellicia added.
According to data from the Indonesian Palm Oil Association (GAPKI), Indonesia exported 28.89 million tons of palm oil products, including CPO, crude biodiesel and oleochemical products, between January and October 2021. The figure represented a 6.5 percent increase compared with the same period in 2020.
