Indonesian President Prabowo Subianto has announced a plan for the government to take control of the country’s major commodities exports, in a bid to boost government revenue at a time of global economic disruption.
In what Reuters described as “a fiery, 95-minute speech” to parliament, Prabowo said that Indonesia had lost as much as $908 billion due to the undervaluing of its commodities at the time of export. He said that exports had been underreported by “fraud or deception” in order to reduce taxes, and that increasing state control would lead to more revenue flowing into the national accounts.
“The primary objective of this policy is to strengthen oversight and monitoring – and to combat under-invoicing, transfer pricing, and the diversion of export proceeds,” Prabowo said, as per the Associated Press. He added, “We don’t want low revenue only because we have no courage to manage our own resources.”
Prabowo said that the new policy will start with palm oil, thermal coal, and nickel products – three commodities in which Indonesia is the world’s leading exporter. Under new regulations, a new state-owned enterprise, Danantara Sumberdaya Indonesia, will take over control of exports of these commodities, although more commodoties may be added later as the government sees fit. According to Nikkei Asia, this company will be 99 percent owned by Danantara, the sovereign wealth fund launched by Prabowo in February of last year.
