POPSI supports transparency in method of proving palm oil 'under invoicing'

The Indonesian Palm Oil Farmers Association (POPSI) supports transparency in the methodology for proving under invoicing in palm oil exports to boost state revenue. POPSI Chairman Mansuetus Darto stated in Jakarta on Thursday that the party fully backs the government’s efforts to increase state revenue, strengthen international trade governance, and take action against legally proven violations. “However, every strategic policy that has the potential to change the palm oil export trade system must be built on strong evidence, transparent methodology, and testable analysis,” Darto said. According to him, this is crucial so that policies on the management and trade system of strategic commodities like palm oil do not harm the ecosystem within, considering the contribution of palm oil products and their derivatives is projected to reach 35.87 billion US dollars or Rp590 trillion in 2025. Darto further emphasised that smallholder palm oil farmers must not bear the brunt of policies formulated based on unverified assumptions or estimates. POPSI assesses that claims regarding potential state revenue losses due to practices such as under invoicing, transfer mispricing, or other irregularities must be accompanied by explanations of the calculation methodology, data sources, economic assumptions, validation processes, and the legal basis used. In international palm oil trade, Darto noted that transaction prices are influenced by many factors, including long-term contracts, pricing formulas, product quality, transaction volume, logistics costs, hedging mechanisms, and incoterms. “Therefore, a difference between the transaction price and the market reference price cannot automatically be concluded as evidence of a violation,” he said. He also assessed that the government already possesses various monitoring instruments, such as the Indonesia National Single Window (INSW), Customs and Excise CEISA, Natural Resources Export Proceeds Foreign Exchange (DHE SDA), tax supervision, and transfer pricing documentation as regulated in Minister of Finance Regulation Number 172 of 2023. “If there is a suspected violation, these instruments should serve as the basis for data-driven verification and law enforcement,” Darto said. He considers that any fundamental change in export governance, including the implementation of a more centralised trading mechanism, must be preceded by a clear identification of the problem, strong empirical evidence, and an impact assessment on state revenue, trade efficiency, business competition, and farmer welfare.