The Leakage And Lies Keeping Indonesia's Rupiah Weak

By selling commodities cheaply to overseas affiliates before those affiliates resold them to final buyers at market prices, the group drastically reduced its domestic tax obligations, causing estimated state losses of 2.6 trillion rupiah.

A similar pattern emerged in the coal industry. A 2019 investigation by Global Witness detailed how PT Adaro Energy Indonesia Tbk shifted much of its profits to its Singapore-based subsidiary, Coaltrade Services International, between 2009 and 2017. Coal was sold at artificially low prices to Singapore, where Coaltrade later resold it at international market rates to third parties.

Despite functioning as a relatively low-risk distributor, Coaltrade booked average annual commissions of US$55 million, a dramatic leap from its previous $4 million average. The profits were intentionally accumulated in Singapore to benefit from tax rates of around 10%, far below Indonesia's effective upstream mining tax burden, which at the time approached 50%. From there, funds were reportedly routed onward to tax havens such as Mauritius and Labuan to escape Indonesian fiscal oversight entirely.

These practices also rely heavily on the creation of“paper-only companies”, shell entities with little or no genuine economic activity. Leaked banking documents in 2020 exposed the existence of Colestar Resources Ltd, a company allegedly serving as a coal trading arm for a domestic conglomerate.

The entity reportedly had paid-up capital of only $1, owned no fixed assets, employed no operational staff, yet controlled export transactions worth enormous sums because it was fully owned by Indonesian business interests.

The methods continue to evolve. In 2025, an Indonesian police task force uncovered an alleged smuggling attempt involving exporter PT MMS, which reportedly falsified export documents by classifying high-value CPO derivatives as lower-value palm products in order to evade export duties and understate cargo values worth 28.7 billion rupiah.

The persistence of these economic crimes cannot be separated from the corrosion of Indonesia's bureaucratic safeguards through entrenched corruption. Oversight systems built around self-assessment mechanisms, without integrated real-time transaction monitoring, have been exploited by both corporations and corrupt state officials seeking private gain.

The bribery scandal involving former tax official Angin Prayitno Aji and his associates, including Wawan Ridwan, exposed how tax compliance audits involving major commodity corporations could effectively be negotiated.

Prosecutors found the network had received bribes totaling 57.14 billion rupiah in exchange for reducing tax liabilities for several giant companies, including coal miner PT Jhonlin Baratama. Indonesia's customs institutions have faced similar decay.

Customs officials such as Andhi Pramono allegedly used their positions as covert brokers facilitating problematic export-import documents, while Eko Darmanto reportedly abused his authority in customs risk management to overlook invoice manipulation in return for lavish gratuities.

From a macroeconomic perspective, the loss of export proceeds directly weakens monetary stability. In theory, persistent current-account surpluses fueled by commodity exports should strengthen Indonesia's net foreign assets and foreign exchange reserves.

But because manipulated export earnings are parked offshore, the actual supply of dollars entering Indonesia's domestic foreign exchange market shrinks dramatically. Under basic supply-and-demand dynamics, scarce dollar liquidity amid strong demand inevitably pressures the rupiah downward. This explains why Indonesia's currency often continues to weaken despite recording trade surpluses for dozens of consecutive months.

To plug these monetary leakages, the government has tightened rules governing export proceeds from natural resources (DHE SDA). Under Government Regulation No. 36/2023, exporters were required to retain only 30% of their export earnings domestically for three months.

That framework was radically strengthened through Government Regulation No. 8/2025, which now obliges non-oil-and-gas exporters to place 100% of their export proceeds in Indonesian banks for at least 12 months.

The policy was refined further through Government Regulation No. 21/2026, mandating that the funds be deposited specifically in state-owned banks under the Himbara network. To avoid triggering panic within industry circles, the government capped mandatory rupiah conversion at 50% while also offering progressive income-tax incentives, potentially reaching a zero-percent rate, for exporters willing to keep their funds longer within the state banking system.

President Prabowo Subianto has taken the strategy even further by establishing PT Danantara Sumberdaya Indonesia (DSI) under the umbrella of the Danantara sovereign investment authority.

The single-window export agency is headed by Australian commodity banker Luke Thomas Mahony, who has been tasked with bringing global transparency standards into Indonesia's commodity trade system while helping secure as much as $150 billion in export proceeds.

DSI's oversight system is designed to unfold in three phases. From June 1 to August 31, 2026, the system will operate in a transitional phase, allowing existing contracts to remain valid while exporters register full transaction details. The second phase, scheduled for late 2026, will focus on verifying whether export prices align with global commodity benchmarks.

By January 2027, DSI is expected to function fully as Indonesia's sole commodity trading gateway, meaning all transactions with foreign buyers must pass through the DSI platform before export revenues are distributed back to domestic producers.