Indonesia’s dangerous return to state-controlled trade
Indonesia's President Prabowo Subianto has announced a plan to centralize the export of strategic commodities through a state-controlled structure. This move aims to combat financial fraud but raises concerns about increased state control over trade and potential complications for exporters. Critics warn that this could lead to cronyism and damage investor confidence in the long run.
- ▪The plan involves centralizing exports of commodities like palm oil and coal through a new state entity linked to the sovereign fund Danantara.
- ▪The government claims that under-invoicing and opaque trading have cost Indonesia billions in lost revenue.
- ▪The new export mechanism may complicate trade for companies, increasing political influence over export approvals.
Opening excerpt (first ~120 words) tap to expand
Indonesia’s President Prabowo Subianto has unveiled one of the most consequentialeconomic interventions since the fall of Suharto: a plan to centralize exports of strategiccommodities — including palm oil, coal and ferroalloys — through a state-controlledstructure linked to the sovereign fund Danantara. The official justification is seductive. Indonesia, the government says, has lost hundreds of billions of dollars through under-invoicing, transfer pricing and opaque offshore trading schemes. The problem is real. Commodity exporters across the developing world have long shifted profits to Singapore, Hong Kong or Dubai while reporting artificially low prices at home. Governments lose taxes. Foreign exchange earnings disappear offshore. National wealth leaks outward.
…
Excerpt limited to ~120 words for fair-use compliance. The full article is at Asia Times.
Discussion
0 commentsMore from Asia Times
