Mining Companies' Under-Invoicing Schemes Exposed

JAKARTA — Under-invoicing practices were one of the reasons for establishing PT Danantara Sumberdaya Indonesia (DSI), a commodity export agency. The state-owned enterprise (BUMN) aims to reduce export recording leaks that have been harming government revenue.

Policy and Program Director Prasasti Piter Abdullah said under-invoicing occurs when exporters fail to transparently report exported quantities and production.

“They [businesses] already have that wealth, yet they’re still greedy,” he told Kompas.com on Tuesday, 26 May 2026.

“Why does this happen? It’s done intentionally,” he added.

For example, an Indonesian coal mining company produces 1 million tonnes and exports to Singapore. In Singapore, the importer is an affiliated company of the Indonesian mining firm. With the market price at $100 per tonne, the two companies conduct sales at $50 per tonne. The Singapore company then resells to Japan, South Korea, or India at $100 per tonne.

“This is under-invoicing. It’s legally bilateral with the Singapore company. Yes, same group,” he explained.

Thus, Indonesia’s records show under-invoicing, affecting tax and export fee payments.

“How much do we lose? Royalties are reduced — royalty rights belong to the Indonesian people and the state. Taxes are stolen, export fees are stolen,” Piter said.

“It uses legitimate documents, legal, but we know it’s actually theft,” he added.

Meanwhile, DSI’s presence will not disrupt mining companies’ contracts and operations. The difference is companies can no longer export directly; they must sell to DSI.