 A new policy brief by the Center for Market Education (CME) warns that Indonesia's trade misinvoicing problem requires urgent action, but cautions that turning Danantara Sumber Daya Indonesia (DSI) into a sole-buyer and sole-seller commodity trading monopoly may create more risks than benefits.
The policy brief, Trade Misinvoicing, Illicit Financial Flows, and Export Governance Reform in Indonesia: A Critical Assessment of PT Danantara Sumber Daya Indonesia (DSI) and Its Alternatives was authored by Alvin Desfiandi, Chief Economist at CME and Faculty Member at Universitas Prasetiya Mulya and edited by Alfian Banjaransari, CME Project Manager Asia Pacific and Country Manager for Indonesia.
The paper examines Indonesia's long-standing problem of trade misinvoicing, especially in coal and crude palm oil (CPO), and assesses whether the newly established DSI is the right policy instrument to address it.
Indonesia is the world's largest exporter of thermal coal and crude palm oil, yet its tax-to-GDP ratio remains around 12%, well below the 15–25% range observed in comparable commodity-exporting economies. According to the numerous studies, trade misinvoicing is among the structural reasons behind this fiscal gap.
The brief notes that Global Financial Integrity estimated Indonesia's revenue losses from trade misinvoicing at US$6.5 billion in 2016 alone, equivalent to around 6% of total government revenue of that year. Other long-term studies indicate cumulative trade discrepancies in the hundreds of billions of dollars across coal, CPO, and other primary exports.
“Indonesia does not lack commodity wealth. That much we are certain. However, the problem is much of that wealth is leaking through weak export governance, fragmented data systems, and insufficient enforcement of transfer pricing and customs rules,†said Alvin Desfiandi.
The paper identifies four main channels of misinvoicing: coal royalty and domestic market obligation evasion, CPO transfer pricing through mainly Singapore-based affiliates, capital repatriation through over-invoicing, particularly along the Bangladesh corridor, and HS-code misclassification.
The authors argue that DSI's first phase, based on mandatory transaction reporting and price verification, is a proportionate and practical reform because it creates a verifiable commodity export audit trail. However, they warn that the second phase, which would transform DSI into a sole-buyer and sole-seller trading monopoly from 2027, is not supported by the causal evidence.
“DSI's real contribution is not monopoly trading. Its real contribution is data transparency,†said Alfian Banjaransari. “Indonesia needs a real-time, cross-agency transaction record. It does not necessarily need the state to replace private trading networks.â€
DSI's true value lies not in monopolizing trade, but in providing price transparency that allows market participants to make informed decisions. As such, the state's value lies not in introducing the centralized distortions of a trading monopoly, but in fostering the decentralized benefits of data transparency.
The brief draws analogous examples from Ghana's COCOBOD, Nigeria's NNPC, Russia's Gazprom, & Indonesia's own BPPC clove monopoly. It concludes that state trading monopolies can easily become sources of rent-seeking, price suppression, market distortion, and fiscal opacity.
Instead of proceeding with DSI Phase 2, CME proposes a four-layer alternative enforcement architecture.
First, Indonesia should establish an independent commodity benchmark commission, or Komisi Harga Acuan Komoditas, to publish credible grade-differentiated reference prices for coal, CPO, and other strategic commodities.
Second, the Directorate General of Taxes should launch a commodity transfer-pricing audit surge, supported by a dedicated Commodity Transfer Pricing Unit focused on related-party transactions, Singapore-based trading affiliates, and intangible royalty charges.
Third, Indonesia should strengthen bilateral customs and financial intelligence data-sharing with Singapore, India, and Bangladesh, given their central role in the country's coal and CPO misinvoicing patterns.
Fourth, ultimate beneficial ownership disclosure should be linked directly to export licensing, so that hidden related-party structures cannot be used to shift profits or disguise trade-based money movements.
According to the brief, these four reforms can be implemented under existing legal authorities and would target the actual mechanisms through which misinvoicing occurs, without necessarily displacing private-sector trading infrastructure.
“The policy objective should be minimum to zero misinvoicing, not maximum state control,†said Desfiandi. “A monopoly may centralize transactions, but it does not automatically solve transfer pricing, ghost transactions, or customs misclassification. Enforcement must be mechanism-specific.â€
CME recommends that DSI Phase 1 be refined and strengthened, but note that DSI Phase 2 to be deferred pending an independent 18-month impact assessment. The assessment should compare recovered fiscal revenue against possible losses from lower export volumes, reduced competitiveness, investor uncertainty, and administrative bottlenecks.
