Prabowo questions why critics of free meals programme ignore 'transfer pricing'

President Prabowo Subianto has questioned why economic leakages such as transfer pricing and under-invoicing receive minimal attention, while the Makan Bergizi Gratis (MBG) programme is criticised as wasteful. “Feeding Indonesian children, pregnant women, and the elderly is considered wasteful, but thousands of trillions that evaporate, that leave Indonesian soil every year for 34 years, draw no comment. No expert protests,” Prabowo said at the State Palace in Jakarta on Monday. Transfer pricing and under-invoicing are practices used by companies to shift profits to low-tax jurisdictions in order to minimise the overall tax burden of a business group. Such manipulation is highly detrimental to the state due to the loss of potential tax revenue and valuable import duties. The President noted that the government instead faces criticism when implementing a programme to provide nutritious meals to schoolchildren, pregnant women, and other vulnerable groups. “But when we want to feed children, at least a quarter of whom are clearly stunted, and many of whom do not eat at school, we are accused of wastefulness, told the economy will collapse, share prices will plummet, and the currency will weaken,” Prabowo said. The President previously revealed economic leakages through practices such as under-invoicing, falsified trade reports, transfer pricing, and smuggling, which he said cause Indonesia’s wealth to flow abroad. According to the President, data on these practices comes from various international institutions and was not compiled by the government. Prabowo said the government remains convinced that the MBG programme is part of implementing the constitutional mandate to improve public welfare. He also stressed that the government’s economic policy is based on the mandate of the 1945 Constitution of the Republic of Indonesia, particularly Article 33 and Article 34, which regulate economic management for the greatest prosperity of the people and the state’s obligation to care for the poor and abandoned children.