Mark-up results in uneven distribution of wealth
Mark-up results in uneven distribution of wealth
JAKARTA (JP): Minister of Finance Mar'ie Muhammad said
yesterday that the mark-up of project values by irresponsible
people impedes the even distribution of welfare.
Speaking at the seventh congress of the Indonesian Accountant
Association in Bandung, West Java, last night, Mar'ie said mark-
up practices occur because people want to get personal gains
quickly and easily without considering the impact of their ill-
doing on the society.
"Many professionals, including accountants, have not yet
understood the large, negative effects (of mark-up), and
therefore they collaborate in mark-up practices," Mar'ie said.
He noted that accountants, because of their profession, are
involved in the decision-making process of either state or
private projects.
"That's why I earnestly ask you, all accountants, to uphold
your professional code of ethics and specifically contribute to
efforts of national efficiency in using monetary resources,"
Mar'ie said.
The minister noted that mark-up practices will eventually
result in the embezzlement of state funds because the money is
used irresponsibly.
The government's tax revenues will also decline since the
depreciation of the projects will burden the calculation of
profits, which automatically affects the amount of tax they have
to pay.
"Just count how much the government would lose from the mark-
up if the target of investments in the sixth Five-Year
Development Plan (Repelita VI) period is Rp 480 trillion (US$220
billion)," he said.
The value of depreciation, which is bigger than usual, will
also hurt their products' competitiveness on the market, and thus
they will seek protection from the government, either in the form
of higher import tariffs for the same products or business
management, Mar'ie continued.
When the products are already protected by the government, it
will victimize the public because they have to pay more for the
products than they should.
Mar'ie noted that mark-up practices are the potential source
of bad debts. "If it (bad debt) happens, it will attract other
serious problems, such as additional allocations of banks' equity
and the writing-off of interest for certain periods of time."
(rid)