Indonesia faces a critical economic issue of wealth outflow, with a significant portion of the country’s economic wealth stored and used overseas. This outflow of wealth has been a longstanding issue that dates back to the colonial period, with Indonesia effectively hemorrhaging financially, as wealth leaks out of the country every year.
During the Dutch East India Company era, Indonesia’s wealth flowed outward to the Netherlands, much like it does today, albeit in a less overt manner. Economic indicators such as trade balance and ownership structures of exporting companies highlight how Indonesia’s wealth is drained abroad.
Analyzing export-import ledgers from 1997 to 2014, it was found that the reported export amounts might not accurately reflect the real value of exports, with potential underreporting ranging from 20% to 40%. The Global Financial Integrity estimates export leakages due to misinvoicing to be substantial, amounting to billions of dollars, further draining Indonesia’s wealth.
The Finance Minister revealed a significant amount of Indonesian wealth, approximately IDR 11,400 trillion, parked overseas, a sum five times greater than the national budget and equivalent to the GDP. This outward flow of wealth hinders economic growth and development in Indonesia, as funds that could stimulate the economy are not retained within the country.
Indonesian export profits largely benefit foreign companies with accounts abroad, who control most of the value from exports conducted in Indonesia. This systemic issue has persisted for centuries, as highlighted by Sukarno in the 1950s and criticized for the massive outflow of wealth from Indonesia.
Prabowo Subianto emphasizes the need for transparency and addressing the root causes of wealth outflow, as Indonesia’s wealth being siphoned off to other countries hinders economic progress and stability within the nation. The lack of transparency from Indonesian elites in conveying the truth about the country’s financial status and the marginalization of the poor further exacerbates the issue of wealth outflow.
Addressing this fundamental problem of wealth outflow is essential for Indonesia to thrive economically and ensure stability and prosperity for its citizens. It is crucial for Indonesian elites to work towards repatriating funds parked abroad and fostering economic growth within the country.
