Politics · Indonesia · 4 hrs ago
Hashim Says Up to 40% of Indonesia’s Economy Is Outside the Tax Net
Hashim Djojohadikusumo says about 40% of Indonesia’s economic activity is not reached by taxes.
He said the activity takes place in a gray market, where transactions are outside government records.
He cited a World Bank estimate that the gray economy is 35% to 40% of the economy, worth about US$1.5 trillion, and said the bank believes the true share could be as high as 45%.
Hashim illustrated the issue with a barber who comes to his home and does not issue an invoice or collect Indonesia’s 11% value-added tax.
The unrecorded activity means the government misses potential tax revenue.
Electronic tax collection began about one or two weeks ago, Hashim said at a policy forum in Jakarta.
The system is being handled by machines that will collect taxes, state revenue and royalties.
Hashim Djojohadikusumo said up to 40% of Indonesia’s economic activity is outside the tax system.
He cited World Bank estimates that the gray market accounts for about 35% to 40% of the economy, worth about US$1.5 trillion.
Hashim said the World Bank believes the actual share could reach 45%.
He said the government had begun implementing electronic tax collection about one or two weeks earlier.
Hashim made the remarks at the Prasasti Indonesia Policy Forum 2026 in South Jakarta.
- Who
- Hashim Djojohadikusumo, an adviser to the Prasasti Center for Policy Studies.
- What
- He said a large share of Indonesia’s economy is outside the tax net and described the government’s electronic tax collection system.
- When
- October 13, 2026.
- Where
- The Prasasti Indonesia Policy Forum 2026 in South Jakarta, Indonesia.
- Why
- He said economic activity in the gray market is outside the government’s records, leaving it untaxed.
This story does not have two clearly opposing sides.
Hashim said the government’s electronic tax collection program had started running.
Hashim discussed the gray economy and electronic tax collection at the Prasasti Indonesia Policy Forum 2026 in South Jakarta.
- Gray economy estimate
- 35% to 40% of Indonesia’s economy, according to the World Bank estimate cited by Hashim
- Estimated value
- About US$1.5 trillion
- Possible actual share
- Up to 45%, according to Hashim’s account of the World Bank’s view
- Electronic tax collection
- Began running about one or two weeks before October 13, 2026
- Forum
- Prasasti Indonesia Policy Forum 2026, South Jakarta
What people are saying
The World Bank estimates that Indonesia’s gray economy reaches around 35 to 40 percent of the economy, reaching around US$1.5 trillion
I have my own barber. I am quite fortunate because my barber comes to my house. When I pay for his services, he does not give me an invoice. I pay him without receiving an invoice and he does not collect 11 percent VAT
The program has now started running about one or two weeks ago. Electronic taxation is now handled by machines. The machines will collect taxes, state revenue, and royalties