Jakarta. The government would get much more money from seizing assets lost in corruption compared to raising the value-added tax or VAT,  according to a retail association. 

The government will increase the VAT from 11 to 12 percent in January as a means to boost state revenue. The controversial policy has sparked backlash from experts, retailers, and customer associations alike, many citing that the tax hike could further weaken Indonesia’s economic growth. 

The Indonesian Affiliate Global Retailers Association (AGRA) is urging lawmakers to pass the overdue asset forfeiture bill—which was first drafted in 2008—into law. The bill can enable asset recovery without a court order as long as the state suspects that they are ill-obtained. The asset forfeiture bill finally made it to the national legislation priority list in 2023, and has yet seen any remarkable progress. More and more state officials even get embroiled in graft cases. Even so, the key anti-corruption bill was missing from the House of Representatives' priority legislation list in 2025.

“The tax hike is not the only way to raise the state revenue. … The government should take a look at the underground economy, which is far bigger in value. Why haven’t we ratified the asset forfeiture bill to this day?” AGRA’s chairman Roy N Mandey told a forum held by B-Universe Media Holdings in Pantai Indah Kapuk 2 on Tuesday. 

Lost assets that the government could potentially recover could reach up to hundreds of trillions of rupiahs, Roy claimed. For reference, Rp 100 trillion is equivalent to about $6.3 billion. 

“Assets stolen by imprisoned corruptors are even forecast to cover 50-60 percent of the state debts. If only we could ratify the asset forfeiture bill, we would probably no longer need to have the [12-percent] VAT,” Roy said. 

A single percentage point increase to the VAT will only add Rp 70 trillion to Rp 80 trillion in state revenue. In other words, it is only slightly more than the total budget that the government had set aside to run the ambitious school-feeding program next year. In 2025, the government will spend no more than Rp 71 trillion to help President Prabowo Subianto deliver his campaign promise of feeding Indonesian school kids free nutritious meals. 

Last year, the government earned Rp 749 trillion from VAT, up from Rp 694 trillion recorded in 2022.  The government had raised the VAT from 10 percent to 11 percent in April 2022.

“Assuming that we end up imposing an additional 1-percentage point next year, well, let’s suppose that our VAT revenue increases by even up to Rp 80 trillion, … I doubt that’s enough to fund the upcoming free meal plan and the bigger cabinet spending,” Roy said.

He added: "It'd be best for the government to delay the VAT hike by at least another year. A two-year postponement would be even better."

Roy’s statement on the swelling cabinet spending came just a day after all seven of Prabowo’s coordinating ministers asked the House to grant a much bigger budget to spend next year.  Their requests for extra spending had totaled a whopping Rp 5.18 trillion, although the House's budgeting committee said they would need at least three months before making a decision.