World Bank: Coretax Issues and Weak Demand Weigh on Revenue

JAKARTA. The World Bank sees Indonesia’s state revenue currently experiencing a decline, resulting in very limited fiscal space.

In its report titled Indonesia Economic Prospect, June 2025 edition, the World Bank cites several factors contributing to the drop in state revenue.

First, due to technical issues in the use of Indonesia’s tax administration system, Coretax. Second, because of tax deductions that exceeded expectations.

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For reference, the Ministry of Finance stated that net tax revenue realization from January to May 2025 totaled IDR 683.26 trillion.

This realization represents a 7.4% contraction compared to the revenue collected during the same period in 2024.

Weakening Domestic Demand

In addition to highlighting pressure on tax revenue, the World Bank also addressed non-tax revenue (PNBP) in its report released on June 23, 2025.

According to the World Bank, the decline in PNBP was driven by several factors, including the loss of dividend contributions from State-Owned Enterprises (BUMN), falling commodity prices, and weakening domestic demand.

Nevertheless, the World Bank views Indonesia's economy as still relatively strong. This is reflected in the Gross Domestic Product (GDP) growth figure, which reached 4.9% year-on-year in the first quarter of 2024. (ASP/KEN)