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Jakarta Post

$142 billion worth of commodities illegally exported since 1989: Study

  • News Desk

    The Jakarta Post

Jakarta   /   Fri, March 29, 2019   /   02:48 pm
$142 billion worth of commodities illegally exported since 1989: Study Container trucks pass a checkpoint at Tanjung Emas Port in Semarang, Central Java, in this file photograph. (Antara Photo/Aji Styawan)

Research organization Perkumpulan Prakasa has revealed that the Indonesian government has lost about US$11 million in state revenue as $142.07 billion worth of key commodities was exported illegally from 1989 to 2017.

Perkumpulan Prakarsa executive director Ah Maftuchan said the state losses were based on improper reporting on exports of the six commodities -- coal, copper, crude palm oil (CPO), rubber, coffee and shrimp – during the period.

He said the illicit financial flows occurred when exporters practiced under-invoicing -- paying less than due in taxes and royalties by reporting lower exports -- and over-invoicing – namely reporting larger exports with the aim to get deductions of value-added tax (VAT) and export and import taxes.

“Through over-invoicing, the [exporter] will benefit from a deduction of import and export taxes as well as the deduction of VAT,” Maftuchan added in Jakarta on Thursday when revealing a report on “illicit financial flows in Indonesia”, as quoted by kontan.co.id.

The study shows that the practice of under-invoicing of coal exports contributed most to state losses, namely $5.32 billion in the period of 1989 to 2017, followed by combined palm oil and rubber exports, which contributed $4 billion to state loss over the same period.

Center of Reform on Economics (Core) Indonesia research director Piter Abdullah said illicit financial flows could come from exports and imports, transfer pricing as well as human and drugs trafficking. He believed that human and drug trafficking involved larger amounts of money. (bbn)