AmCham Update Vol. 7 #064

DG Tax Warns of Revenue Risks from Populist Programs, Indonesia Grid Reliability under Scrutiny from Blackouts, Medical Device Industry Raises Regulatory Worries, AGO Confiscates Stolen Assets from 1990s, Dutch Apologize for Post-War Injustice against Moluccans

Jun 22, 2026

DG Tax Warns of Revenue Risks from Free Meals and Village Cooperatives

The Directorate General of Taxes (DGT) has identified potential risks to state revenue arising from the government’s Free Nutritious Meals (MBG) and Red and White Village Cooperatives (KDMP) programs, citing tax-policy ambiguities, compliance challenges and data integration gaps.

Speaking during a Ministry of Finance seminar on June 18, Director General of Tax Bimo Wijayanto said the concerns stem from the implementation of priority government programs that involve large-scale public spending and expanded economic activity.

Bimo said one source of potential revenue loss relates to a circular issued under the now-jailed head of the National Nutrition Agency (BGN), which runs the free-lunch program. The circular was not made publicly available but is said to have classified operational funds distributed to MBG kitchens as grants that are not subject to tax.

The former head of BGN, Dadan Hindayana, and two deputies were fired and arrested as corruption suspects earlier this month, setting off a major shake-up in the agency.

According to Bimo, the classification created regulatory ambiguity because decisions on taxiing income or goods should be established through laws and regulations.

“There is a circular from the previous BGN head stating that all MBG grants are not subject to tax. In fact, determining taxable and non-taxable objects should be based on law,” Bimo said.

He noted that incentives distributed to free-meals kitchens are received by businesses that are subject to income tax under prevailing regulations.

The DGT also identified risks associated with the cooperatives program, particularly during the construction phase of facilities.

Bimo warned that growing transaction volumes among thousands of village cooperatives could increase the risk of noncompliance under Indonesia’s self-assessment tax system.

“As transactions increase without continuous tax education, there is a risk that formal taxpayer obligations will not be fulfilled,” Bimo said.

DGT officials said the focus will be on strengthening coordination with BGN, the Ministry of Cooperatives, and other relevant institutions to integrate financial transaction data and improve oversight.

The issue comes as tax collections hit Rp 834.4 trillion through May 2026, up 22.1 percent year-on-year. The government aims to collect Rp 2.357.7 trillion in tax revenue in 2026.

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Blackouts in Java Create Uncertainty over Grid Reliability

Rolling electricity outages in parts of Java over the past weekend have deepened concerns over the reliability of the country’s energy infrastructure. The blackouts are becoming increasingly common and the reasons are unclear.

"I suspect these conditions may continue for perhaps another two weeks," Fabby Tumiwa, CEO of the Institute for Essential Services Reform (IESR), said in an interview with Kompas TV on June 20.

He called on the state electricity company PLN to be more transparent about scheduled outages, so that consumers could better prepare. Fabby said outages lasting three to five hours have forced many businesses to suspend operations or rely on costly diesel generators. The problem is especially acute for small businesses that have little financial buffer.

No one excuse seemed to explain the situation and officials pointed fingers at each other.

PLN president director Darmawan Prasodjo blamed the disruptions on failures at two large power plants owned and operated by independent power producers (IPPs), which were temporarily disconnected from the Java grid.

"We are also facing technical challenges at two major power plants in Java owned by our partners," Darmawan told a press conference on June 19.

While PLN blamed technical issues, Fabby of the Institute for Essential Services Reform argued that the outages should not have happened at all, given the installed generating capacity in the Java-Bali grid.

He suggested that coal inventories may have fallen below safe operating levels, forcing generators to reduce output. As a result, some plants may be operating below full capacity.

The reduction in power output, combined with technical disruptions at multiple facilities, may have created a supply deficit large enough to necessitate rolling blackouts across the interconnected grid, he added.

House of Representatives Commission XII member Ateng Sutisna said the energy ministry and PLN should explain the outages and fix the problem. Ateng had warned during a June 15 hearing that PLN could face a coal supply gap of around 20 million tons in 2026.

Last week, ministry officials said the coal shortage problem was being solved through existing mechanisms but Energy Minister Bahlil Lahadalia said the outages were not caused by fuel shortages.

"Ensuring that the coal reaches the power plants is not the responsibility of the Directorate General of Minerals and Coal. That is a matter of PLN's logistics management," Bahlil said.

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Centralized Procurement among Concerns of Medical Device Industry

Four national medical device associations have raised concerns over healthcare procurement governance and evolving regulatory requirements, warning that recent policy changes could affect industry operations, regional supplier participation and the delivery of healthcare services.

The concerns were aired during Health Ecosystem Week 2026 at Sebelas Maret University in Surakarta on June 18, where representatives from the Indonesian Medical Devices and Laboratory Companies Association (GAKESLAB Indonesia), Indonesian Medical Device Manufacturers Association (ASPAKI), Association of Indonesian Medical Gas Installation Association (AIGMI), and Indonesian Medical Device Ecosystem Development Association (HIPELKI) discussed challenges facing Indonesia's medical device ecosystem.

Industry representatives said centralized procurement systems may improve efficiency but could reduce participation by regional suppliers and limit local economic spillover effects. They also pointed to fiscal pressures, including reduced transfers to regional governments, which may constrain local healthcare spending and procurement activities.

The associations further noted that rupiah depreciation, higher logistics costs, and rising raw material prices have increased production and distribution costs. They also cited new regulatory and tax requirements, including changes to business reporting, licensing, and tax restitution, as adding to compliance burdens.

Representatives also raised concerns over administrative delays in the Goods Procurement Policy Institute (LKPP) e-catalog system, particularly product listings under version 6.0, which they said could slow supplier participation in public procurement.

“Distribution is not merely part of the supply chain, but an essential element in ensuring medical devices reach communities safely, on time, and in accordance with applicable quality standards,” said GAKESLAB Chair Raden Kartono Dwidjosewojo.

The associations said healthcare procurement should consider not only cost efficiency, but also product quality, after-sales support, maintenance and patient safety. “Efficiency is important, but patient safety and service quality must not be overlooked,” said ASPAKI Chairman Imam Subagyo.

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AGO Goes Back in Time to Seize Stolen Assets

Reaching back in time to recover stolen funds, the Attorney General’s Office (AGO) has recovered assets worth approximately Rp 82.68 billion ($4.6 million) linked to long-time fugitive corruption convict Eddy Tansil, who disappeared from prison thirty years ago. The recovery, announced last week forms part of a broader government push to reclaim state losses and increase non-tax state revenue.

Eddy was convicted in the 1990s for causing an estimated $430 million in state losses through fraudulent loans from the now-defunct Indonesian Development Bank (Bapindo). He escaped in from prison in 1996 and remains at large.

The AGO’s Asset Recovery Agency recovered the assets through what agency head Kuntadi described as a voluntary handover by Eddy’s family. Kuntadi told reporters that the recovery effort involved lengthy negotiations because some assets were under the control of state-owned Bank Mandiri.

“We received around Rp 51 billion in cash, and all [the other] assets have a total value of around Rp 30 billion,” Kuntadi told reporters on June 15. The recovered assets were included in a broader Rp 1.03 trillion package of non-tax state revenue handed over by the AGO to the Ministry of Finance.

Attorney General Sanitiar Burhanuddin said the recovery demonstrates the government’s commitment to asset restitution. “This is our answer to the public’s long-standing question as to whether we see a case through to the very end,” Burhanuddin said on June 15.

The recovery has also renewed discussion over Indonesia’s proposed Asset Forfeiture Bill. Legal experts and lawmakers cited the nearly 30-year process required to recover the assets as evidence of the need for a stronger legal framework to trace, confiscate and manage criminal assets.

Meanwhile, lawyer Tri Adhyaksa Viravibawa urged the AGO to continue tracing additional assets linked to Eddy, saying previous asset sales and auctions may have generated proceeds beyond the amount required to satisfy the state’s compensation claim.

Tri, whose late father was one of 33 prosecutors involved in the Eddy case, said questions remain regarding the disposition of the remaining proceeds. “There should be clarity on the proceeds from those sales and whether any excess funds were returned to the state,” Tri said in a statement on June 21.

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Dutch Finally Apologize for Injustices against Moluccans

Dutch Prime Minister Rob Jetten issued a formal state apology on June 21 to members of the Moluccan community who fought for the Dutch army during the Indonesian war of independence.

After the war ended in 1949, around 12,500 Moluccans were brought to the Netherlands to escape feared reprisals. They were supposed to stay briefly and then return to a promised independent homeland but the Dutch reneged on their promise to repatriate them and most were housed in dire conditions, with little attempt to integrate them into broader Dutch society.

Jetten unveiled a monument to that dark chapter of Dutch history and was visibly moved. In recent years, the Netherlands has undertaken a period of reflection and sorrow for the injustices it committed during the time Indonesia was a colony.

The colonial legacy of the Netherlands is widely seen in the profusion of Indonesian food present in the Netherlands and the eventual integration of the stranded Moluccans and others into Dutch society.

Jetten told hundreds of Moluccan descendants gathered in Rotterdam that it was "high time" to apologize.

"For the inadequate reception and housing. For being unseen and abandoned. For the unfulfilled longing for home. And for the grief and pain in so many families. For this, I offer my apologies today on behalf of the Dutch government," said Jetten.

The Ulu Kora monument was unveiled in Rotterdam, where the first ships transporting Moluccans arrived in the Dutch port. Those who were in the army were immediately discharged and many were sent to live in former Second World War concentration camps.

Activism by descendants of those first Moluccan families in the 1970s – including a school hostage-taking and an armed train hijack – ended in a bloody raid by Dutch Special Forces. The community now numbers about 70,000 people.

"I realize the injustice cannot be suddenly removed with apologies. We cannot change the course of history and the reality of today with a few sentences," said Jetten. "But I do hope that the words I just spoke are perceived as a form of recognition and an act of historical justice for you," he told members of the community, many of them clutching family photos of first-generation Moluccans now dead.

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Donna Priadi and written by the AmCham Staff.

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