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Shadow Economy Runs Rampant Amid Election

In the context of the 2024 general election, nearly every definition of “shadow economy” rears its head. From online transactions, buying and selling services without tax reporting, to suspicious fund flows.

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15 Feb 2024 - 17.06
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Shadow Economy Runs Rampant Amid Election

A number of residents are enjoying the atmosphere at Bundaran Hotel Indonesia (HI) on the platform of the Trans Jakarta Bus Stop at Bundaran HI, Jakarta, Friday (21/10/2022). Campaign spending poured into the real sector will automatically contribute to the consumption of non-profit institutions serving households (NPISH). ANTARA FOTO/Aditya Pradana Putra.

As is usually the case, the general election has a significant impact on the economy. However. instead of producing large and widespread effects, this year it has seemingly instead nurtured the shadow economy.

In general, shadow economy can be defined as activities that escape the government’s eyes and go unrecorded. It includes illegal activities such as smuggling, transactions of prohibited goods, illicit transactions, or laundering from criminal activities. However, legal activities can also be classified as a shadow economy if the income is not reported.

The Fiscal Policy Agency of the Ministry of Finance has expanded the definition of shadow economy to include the digital and informal scopes. This indicates that online transactions and informal labor have become more prevalent in Indonesia’s shadow economy.

In the context of the 2024 general election, nearly every definition of “shadow economy” rears its head. From online transactions, buying and selling services without tax reporting, to suspicious fund flows.

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