PALMOILMAGAZINE, JAKARTA – Indonesia’s palm oil industry is once again under scrutiny following reports that under-invoicing practices remain present in exports of crude palm oil (CPO) and its downstream products. The Indonesian Palm Oil Association (GAPKI) has emphasized the need for stronger oversight and law enforcement to close loopholes that continue to enable such practices.
According to IDXChannel, Fadhil Hasan, Head of Foreign Affairs at GAPKI, said that under-invoicing and transfer pricing remain challenges in international trade, including within Indonesia’s palm oil sector. While the government has introduced several monitoring mechanisms, he noted that gaps in supervision still allow irregularities in export value reporting to occur.
“These practices do exist, particularly in the form of under-pricing and under-invoicing. We already have safeguards such as the National Single Window system and independent surveyors that are supposed to ensure exports comply with regulations and prevent such activities,” Fadhil said, as quoted by Palmoilmagazine.com from IDX Channel on Saturday (May 30, 2026).
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According to Fadhil, the government sets a monthly Export Reference Price (HPE), which serves as the basis for calculating export duties and levies. The HPE is determined using international market price trends and is intended to be the primary benchmark for exporters when reporting transaction values.
Despite this framework, export documents are still occasionally submitted with transaction values below the government’s reference price. Such discrepancies can reduce tax obligations and export levy payments if not properly monitored.
Fadhil explained that Indonesia’s export administration system already provides authorities with the ability to track invoices that are significantly lower than the HPE. When inconsistencies are identified, the government has the authority to conduct further verification or impose administrative restrictions before shipments are cleared for export.
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However, he believes weak supervision at certain export gateways remains one of the main reasons why documents containing questionable transaction values continue to pass through the system. Since export documentation forms the basis for calculating various fiscal obligations, inaccurate reporting can directly affect government revenue.
Beyond under-invoicing, GAPKI also highlighted concerns over transfer pricing practices, which are often associated with multinational companies operating across multiple jurisdictions. Under such arrangements, products may be sold between affiliated companies within the same corporate group at prices below prevailing market levels.
The products are then resold in destination markets at higher international prices, allowing a larger share of profits to be recorded in other countries while reducing the taxable income reported in Indonesia.
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Fadhil noted that transfer pricing practices are more likely to occur within complex supply chains, particularly for downstream palm oil products such as refined, bleached and deodorized palm oil (RBDPO), cooking oil, and various value-added palm-based products exported to international markets.
Given the strategic role of the palm oil industry in Indonesia’s economy, GAPKI is urging the government to strengthen data integration and coordination among relevant agencies. More effective oversight, supported by consistent law enforcement, is considered essential to preventing trade document manipulation and minimizing potential revenue leakages.
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GAPKI also stressed that greater transparency in export activities has become increasingly important as global expectations for accountable and traceable trade continue to rise. With stronger supervision and enforcement, Indonesia’s palm oil industry is expected to maintain its competitiveness while delivering greater contributions to national economic growth and state revenue. (P3)
