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View all search resultsGraft believed rife in oil palm sector
Lack of transparency makes industry ‘fertile ground’ for corruption, tax evasion.
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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 Rp 22.8 trillion (US$1.5 billion) annually due to alleged tax evasion in the industry.
The figure was calculated by comparing the estimated potential revenues from corporate income tax, property tax (PBB) and value added tax (PPN) with the realized tax 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 6.1 percent increase compared with the same period in 2020.
