Commodities still Non-tax Revenue Backbones

With commodity prices potentially weakening at any time, the government needs to optimize non-tax revenues from other sources.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

(left to right) Special Staff to the Minister of Finance Yustinus Prastowo, Director General of Budget of the Ministry of Finance Isa Rachmatarwata, Director of Non-Tax State Revenue (PNBP) Natural Resources (SDA) and Separated State Assets (KND) Directorate General of Budget of the Ministry of Finance Rahayu Puspasari, Director of Revenue Non-Tax State Ministries/Institutions Wawan Sunarjo, Secretary of the Directorate General of Budget Roni Toni in a discussion with the media entitled "2023 PNBP Policy Strategy in the Middle of Global Economic Dynamics", Jakarta, Tuesday (21/3/2023).

JAKARTA, KOMPAS — This year’s non-tax revenues are expected to rely on royalties from natural resource commodities as was the case last year as Indonesia's coal and crude oil prices will still be high even though they have started to decline compared with 2022.

In the 2023 state budget (APBN), non-tax revenues (PNBP), are targeted at Rp 441.4 trillion (US$29.22 billion), compared with last year’s Rp 588.3 trillion. The non-tax revenues are made up of royalties in natural resources (SDA) projected at Rp 196 trillion, other non-tax components at Rp 113.3 trillion, public service agencies (BLU) at Rp 83 trillion and separated state assets (KND) making up Rp 49.1 trillion.

Natural resource royalties are estimated to contribute the largest portion (44.44 percent) to the total non-tax revenues. The percentage is slightly lower than last year’s 45.67 percent, but much higher than 2021’s 32.6 percent.

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Natural resources’ large contribution is attributed to the high prices of coal and crude oil on the world market. The coal’s reference price is estimated at $200 per ton, which despite showing a significant drop from $277 last year is still considered relatively high.

The price of Indonesian crude oil this year is also expected to remain high at $90 per barrel.

Isa Rachmatarwata, budget director general at the Finance Ministry, explained that expected a lower collection of non-tax revenues this year than last due to the decrease in natural resource commodity prices such as coal and oil.

Non-tax revenue collection fluctuates from year to year due to dynamic commodity prices.

“With the natural resource sector accounting for large portion [of non-tax revenue], world commodity prices affect the non-tax revenue collection," Isa said in a media forum titled 2023 Non-tax Revenue Policy against Global Economic Dynamics in Jakarta on Tuesday (21/3/2023).

Non-tax revenue collection fluctuates from year to year due to dynamic commodity prices.

The ratio of non-tax revenues to gross domestic product (GDP) has experienced an increasing trend, with the value reaching 2.23 percent in 2020, increasing to 2.7 percent in 2021 and 3.32 percent in 2022.

KOMPAS/TOTOK WIJAYANTO

Coal loading and unloading activities at Tanjung Priok Port, North Jakarta, Tuesday (20/12/2022). Based on data from the Central Bureau of Statistics, the volume and value of coal exports amounted to 29.69 million tonnes and US$4.16 billion, respectively.

As of February, the non-tax revenue collection amounted to Rp 86.4 trillion, equivalent to 19.6 percent of this year’s target. The collection also showed 86.6 percent growth compared with the same period last year.

Given the composition, the revenues came from non-oil and gas natural resources royalties (45.6 percent), oil and gas royalties (14.1 percent), other non-tax revenue sources (24.5 percent), separated state assets (9.4 percent) and public service agencies (7.2 percent).

Another source

Rahayu Puspasari, director of non-tax revenue procurement in natural resources and separated state assets at the budget directorate general of the Finance Ministry, said the government would look to optimize other sources, instead of relying too much on natural resources levies.

In an effort to build non-tax revenues from other components she said her office had coordinated with other ministries and agencies, looking to optimize the dividends of state-owned enterprises by taking into account the company's profitability and funding needs.

The government is also trying to optimize the inflow to its coffer from public services offered at the police and immigration office.

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However, Puspa expressed her pessimism about increasing non-tax revenues given the ongoing economic conditions. She said any levies imposed might potentially hinder economic recovery and growth.

Instead, she added, the Finance Ministry was still imposing various tax payment reliefs.

Contacted separately, Center of Reform on Economics Indonesia executive director Mohammad Faisal said Indonesia had benefited greatly from commodity royalties, especially when commodity prices were high. However, he said, the prices would fluctuate and weaken any time.

He said the government would need to optimize income from sources other than natural resources levies. However, he reminded about the need for prudent calculation when opting for levy increases as businesses had yet to fully recover from the pandemic’s scarring effect. “Don't let it burden the business actors, who are still trying to recover from the pandemic’s economic adversities.”

This article was translated by Musthofid.