JAKARTA: Indonesian President Prabowo Subianto said on Wednesday (May 20) that his government will centralise exports of key commodities as part of efforts to boost state revenues and tighten the country’s grip over its abundant natural resources.
Prabowo said in a fiery speech to parliament that Indonesia had lost as much as US$908 billion in revenue in the last 34 years because its commodities were being sold on the cheap, adding that key exports like palm oil and coal would in future be sold via a central government-run enterprise.
Indonesia, a global commodities powerhouse, is the world’s largest exporter of thermal coal and palm oil.
“Today the Indonesian government that I lead will issue a regulation on management of commodity exports,” Prabowo said.
“The issuance of this regulation is a strategic step to strengthen management of commodity exports,” he said.
“All sales of our resources, from palm oil, coal must be through a SOE selected by the government … as sole exporters,” he added.
Prabowo’s remarks confirm earlier accounts from two sources familiar with the matter, who said Indonesia was planning the move as part of a drive to strengthen government oversight over its natural resources.
Rumours about the plan have spooked the market on concerns that it could lead to changes in pricing mechanisms and squeeze trader margins, with Jakarta’s main stock index JKSE shedding 3.5 per cent on Tuesday and close to 2 per cent on Wednesday.
The move by Prabowo, who has vowed to optimise revenue from the country’s natural resources, is aimed at addressing concerns about under-invoicing and transfer pricing by exporters, the sources said. The sources declined to be named because they were not authorised to speak publicly.
Prabowo said Indonesia’s natural resources were sufficient to deliver welfare to the entire country if they were managed according to the constitution.
“In the opinion of the government – and I am sure every patriot will support this – the earth, water and all the resources within it must be enjoyed by all Indonesians,” he said.
Despite being rich in resources as well as a G20 country, Indonesia had not managed the economy well enough to boost state revenues, he added.
The regulations required to bring the plan into action had not yet been finalised, one of the sources said earlier.