JAKARTA (The Jakarta Post/Asia News Network): Finance Minister Sri Mulyani Indrawati has warned of fraudulent practices as businesses might seek to shirk some obligations to maximise their profits in response to surging mineral and coal prices.
Sri Mulyani, formerly a World Bank managing director, urged ministries and agencies to coordinate closely to minimise the potential for fraud, which could deprive the state of potential revenues to the tune of trillions of rupiah.
“[Amid the high] commodity prices, the threat to good governance is very big. The incentive to violate good governance, for smuggling, for under-invoicing and for tax evasion also become bigger,” the minister said on Tuesday (March 8) during the online launch of a nationwide monitoring system for mineral commodities.
The surge in mineral prices has brought fortune to Indonesia. In 2021, the government made Rp 124.4 trillion (US$8.7 billion) in state income from tax, export duties and non-tax revenue in the minerals industry, the highest in five years.
The prices of many commodities like nickel, coal, aluminum and oil are at multiyear record highs, especially as a result of the war in Ukraine and the sanctions imposed on aggressor Russia.
Speaking at the same event, Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said on Tuesday that he was glad that the nickel price had risen to around $44,000 per ounce, but cautioned that there were still many “rats” in the country, a reference to corrupt people depriving the country of state revenue.
“We must eradicate them, and we should create a better system,” Luhut said.
To that end, the government had launched the new inter-institutional system “Simbara”, its name deriving from Sistem Informasi Pengelolaan Mineral dan Batubara (minerals and coal management information system).
The system integrated the data of various institutions, from tax numbers and non-tax compliance, to mining permits, export permits and commodity sales, among other information.
The government claimed the system would help ensure compliance with the domestic market obligation (DMO) for coal, which mandates that producers supply at least 25 per cent of their coal output to the domestic market.
The Energy and Mineral Resources Ministry added that it would help to minimise illegal mining and trading. Luhut said Simbara currently accommodated coal and nickel data, but he wanted the system to include data on other minerals, such as bauxite.
“Now, we can find out whether there is fraud or whether obligations are unmet,” he said.
“No violation is allowed in the system. If there is any, firm action must be taken.”
Through the new system, the government also aims to increase industry compliance with regulations on royalty fees and on keeping foreign exchange earnings in the country.
Bank Indonesia Governor Perry Warjiyo lauded the new system, saying Simbara could help supervise foreign exchange earnings from mineral and coal exports, which would support macroeconomic and monetary policymaking.
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