Newsmaker Interview: Ken Dwijugiasteadi

Indonesia’s new Director General of Tax says his strategy is to ‘keep quiet’ and get the job done

By Gilang Ardana
Sunday, May 15, 2016

When the Indonesian government set a tax revenue target of Rp 1,294.5 trillion in 2015, many argued that it was very ambitious target. By the end of the year, the Directorate General of Tax (DJP) – the official responsible for achieving the target – had only reached 82 percent, still short of the minimum target of 85 percent set by the government. That led to the resignation of the Director General of Tax, Sigit Priadi Pramudito.

Undaunted and in need of revenue for its ambitious infrastructure program and other projects, however, this year the government increased the target to Rp 1,360.2 trillion. Now the spotlight is focused on Ken Dwijugiasteadi, who just two months ago was appointed the new head of the DJP.

Ken has long experience in the tax sector, serving in tax offices in Pekanbaru, Bojonegoro and East Kalimantan. IN 2015, he was a member of the finance minister’s expert staff. He graduated from Brawijaya University where he studied economics and received his master’s degree in tax auditing from the Opleidings Institute of Finance in the Netherlands. 

He recently sat down with AmCham Indonesia to share his strategies for the DJP to achieve this year’s tax revenue target.

AmCham Indonesia: What is the current state of our tax revenue?

Ken Dwijugiasteadi: I think we are now still on track. We have two sectors that are decreasing in this quarter [from the same period last year] ­ oil and gas and tobacco. In the oil and gas sector, the tax revenue has decreased by almost 50 percent. We have already received six trillion rupiah from income tax, but last year it reached twelve trillion rupiah. The other industry that is decreasing is tobacco VAT [value added tax]. We received about one trillion rupiah less than what we got in the same period last year. I think for those two sectors, the decrease is due to the falling price of commodities. But I am fully optimistic that it will recover soon. Aside from those two sectors, I think we are doing fine.

Are you still optimistic that the tax revenue target can be achieved?

Indeed. I think the key is gotong-royong [mutual cooperation]. If everyone involved in the process really wants to get the job done, we surely can make it. I have consistently said to all DJP staff that we should try to reach 100 percent of our target this year. The president has instructed us to fulfill 73 percent of targeted state revenue. By law, the budget deficit is not allowed to be above 3 percent of GDP. Last year tax helped the country by reducing the [budget] deficit from 3.5 percent to 2.5 percent. I am optimistic that we can make it.

The government has announced that this year it is focusing on individual taxpayers (WPOP). What has been done under this new focus?

One of the efforts that we are doing is implementing a geo-tagging system. This is similar to Google Street View, where a tax officer can easily track a taxpayer’s assets as well as identify potential taxpayers that do not yet have a taxpayer identification number [NPWP]. This geo-tagging is part of the IT taxation system that was planned by the Coordinating Ministry for Economic Affairs. We have implemented this since December last year in all regions in Indonesia.

This geo-tagging will be included in the NPWP and we get all the data directly from on-field surveys based on the taxpayer ID card (e-KTP). Since its implementation, we have seen an increase in WPOP [individual tax payer] tax revenue. For the first quarter of 2016, we saw an increase of 200 billion rupiah. We got 2.7 trillion, where last year we got 2.5 trillion.

This geo-tagging is also the actualization of our intensive efforts this year to find new potential taxpayers.

What are the other strategies that the DJP is implementing to reach this year’s target?

We are focusing on the use of technology to ease our work, to give easy services to the taxpayer and to provide tax information to the taxpayer. We are also trying to improve our database and data processing system by implementing big data analysis. The DJP with the Directorate General of Customs and Excise have also established cooperation in monitoring Kawasan Berikat [bonded zones] in real time. So we are really focusing on IT to help us achieve the target.

We also have this new Directorate General on Tax Intelligence, which was established just this year to help the DJP with intelligence work. We have 600 staff already under this Directorate General that are located in all regional tax offices, with the coordination directly from the DJP. We have a lot of improvement since it was established, especially for information regarding tax objects and subjects.

I think in achieving the tax target we should not make a lot of “noise” outside. You can see now the news over the Panama Papers is everywhere. But the DJP actually had a list that was similar long before the Panama Papers were released.  With that list, we check whether or not they are reporting their Annual Tax Report (SPT), if we found they haven’t, then it becomes our concern. Since August 2015 we have actively invited people over lunch, we asked them to fill their SPT and from one single lunch we can gain 50 trillion [rupiah] in tax revenue. That should be the way the DJP works, by not making a lot of noise outside.

Who else have you invited to these ‘informal’ lunch meetings?

A lot. We already have our list. We have met also with industry associations from palm oil, coal, oil and gas, real estate etc. We have also met conglomerates. One conglomerate can have a lot of business branches and that is a big potential for tax revenue. I think we should make these kinds of relationships in doing our job, not by embarrassing them or making noise outside. Look at the BLBI case [in relation to the 2002 Bank Indonesia liquidity case], we have news everywhere, people argue a lot. But is the problem solved? At least not until now.

We have crosschecked data from the Panama Papers with our own list, and it turned out that 79 percent of the list is the same as our own data. Now we are checking the list again to see what we can do further. But again, the most important thing is not making noise, because it will affect the business climate.

A tax amnesty is still being discussed in the DPR. What is the government’s main goal in this? How can it can help the DJP?

The goal is to have the money back in the country. Why? If the money comes back it can be channeled as investment, and investment leads to employment. Furthermore, if employment increases, purchasing power will increase as well and result in growing industries. We can also generate tax revenue well, have new tax objects and new taxpayers. So I think the tax amnesty goal is to go beyond tax revenue. For the DJP itself, it serves our goal to create new tax sources.

Now the Tax Amnesty Bill is already being discussed in the DPR. For the DJP, with or without a tax amnesty, we will always consistently get the job done to ensure that people fulfill their tax obligations.

There is concern that the DJP lacks human resources, is it true? Do you think that you have sufficient human resources to achieve your very optimistic tax revenue target?

I think we are now not lacking nor do we have excess human resources. We have around 37,900 staff in total for the DJP. With the help of IT innovation, one DJP staff member is currently capable of handling 1,000-2,000 taxpayers. In comparison, Japan [with a 127 million population] has around 90,000 staff. I think the ideal ratio should be 100 taxpayers per staff. However, half of our staff are young, and they are very effective. They are not really keen on complicated bureaucracy. Their focus is just to get the job done.

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