Indonesia’s anti-graft push tarnished by US$20 billion tax scandal
A BREWING tax scandal in Indonesia, which has revealed more than US$20 billion in suspicious transactions over 14 years, is casting a shadow on President Joko Widodo’s campaign to root out corruption in the government.
Public anger is mounting.
Earlier this week, a state financial watchdog identified questionable dealings related to criminal offences at the Ministry of Finance from 2009 to 2023. Similar cases were found in other ministries. Just last month, Jokowi, as the president is known, pledged stronger action after Indonesia slid down the ranks on a corruption index.
Focus has turned to two-time Minister of Finance and trusted Jokowi ally Sri Mulyani Indrawati, who is facing calls on social media to resign. While she was not implicated in the scandal, she has gone on a media blitz, seeking to restore public trust in the institution and to maintain tax compliance before the filing deadline at the end of this month.
In an interview, the former managing director at the World Bank shed tears while pledging to investigate the issue thoroughly: “What we need and must do is make sure that we do our best. Sometimes, even the best is not always enough to withstand a disaster.”
The case comes at a crucial juncture for Jokowi, who is trying to draw foreign companies and funds to invest in a US$34 billion new capital project. Indonesia has struggled with long-standing corruption, with government officials often asking for bribes to speed up projects and approve permits.
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Arya Fernandes, a political analyst at the Jakarta-based Centre for Strategic and International Studies, said: “If the government doesn’t clean up corruption, it will certainly affect the interest of foreign investors because they want to see transparency.”
“There needs to be a thorough revamping of the system to ensure this does not happen again in the future,” she added.
On Wednesday, Coordinating Minister for Political, Legal and Security Affairs Mahfud MD said there was also the question of why the finance ministry never responded to the watchdog after it sent the ministry multiple reports of the suspicious transactions.
He added that the deals, dating back to 2009, involved 460 people, mainly in the tax and customs agencies, and were never tracked.
Public furore erupted last week, after videos and photos of tax and customs officials’ lavish lifestyles circulated on social media, prompting questions about how they could afford such luxury on a civil servant’s wage.
A regional head of a customs office was removed on Wednesday, after Indonesians spotted social media posts of his daughter modelling a Balenciaga outfit, estimated to cost about 22 million rupiah (S$1,928). Last week, a tax official was convicted for failing to declare his assets and evading taxes, and dismissed. Photos and videos of his son flaunting a Jeep Wrangler Rubicon and Harley-Davidson motorbike had surfaced on social media.
The Indonesian government is investigating another 69 civil servants for allegedly having questionable assets. BLOOMBERG
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