On January 1, 2025, Indonesia launched the Core Tax Administration System (CTAS) with the promise of modernizing the country’s tax administration. The system was supposed to streamline processes, improve efficiency, and boost transparency. Instead, within weeks of its implementation, it collapsed under its own weight, forcing the Directorate General of Taxes (DJP) to revert to the old system while scrambling to fix the new one.
At the heart of this billion-rupiah fiasco are two foreign consulting firms: LG CNS, a South Korean IT solutions provider, and Qualysoft Group, an Austrian tech consultancy. Tasked with developing the Core Tax system at a cost of Rp 1.2 trillion ($74 million), these companies promised a cutting-edge solution tailored to Indonesia’s needs. But as businesses and taxpayers struggle with system failures, data mismatches, and operational chaos, the question arises: why does Indonesia continue to trust foreign consultants for critical digital infrastructure, while its own IT talent remains sidelined?
The Costly Illusion of Foreign Expertise
The reliance on foreign consultants for government-led digitalization projects is not new. From e-KTP (electronic ID cards) to the National Data Center, past initiatives have repeatedly exposed the pitfalls of outsourcing Indonesia’s technological backbone to external firms. These projects have been plagued by corruption scandals, data breaches, and operational inefficiencies—promises of modernity that often fall apart at the seams.
The Core Tax project follows the same pattern. Rather than investing in homegrown solutions, the government poured taxpayer money into a foreign-led initiative, assuming that overseas expertise would automatically result in a superior system. The result? Failures so severe that the DJP had to roll back to its outdated infrastructure while scrambling to salvage a system that should have been operational from day one.
If this sounds familiar, it’s because it is. Time and again, Indonesia has placed its trust—and its budget—in the hands of consultants who neither understand the local context nor deliver sustainable solutions. The Core Tax fiasco is just another chapter in this ongoing cycle of outsourced incompetence.
Meanwhile, Indonesia’s IT Talent Is Left Behind
Each year, Indonesia produces more than 200,000 IT graduates—yet many struggle to find meaningful employment in their field. Despite the government’s rhetoric about fostering digital transformation, local IT professionals are rarely entrusted with large-scale projects. High-value contracts routinely go to foreign firms, while local developers either seek work abroad or shift into unrelated jobs.
The usual justification for hiring foreign consultants is a “lack of experience” among Indonesian IT professionals. But experience can only grow where opportunities exist. Countries like India and Vietnam have successfully nurtured their tech industries by prioritizing domestic talent for government contracts. Today, Indian IT firms dominate global tech outsourcing, while Vietnam’s homegrown software companies are gaining international recognition.
Indonesia, however, remains trapped in a colonial-era mindset—believing foreign expertise is inherently superior. This dependence not only drains national resources but also prevents the country from cultivating a truly independent digital economy. The Core Tax debacle shows that outsourcing does not guarantee success. If anything, it has consistently led to costly, avoidable failures.
A Cycle of Expensive Failures
The Core Tax collapse is more than a technical failure—it’s a symptom of deep-rooted governance problems. Rather than building local capacity, the government continues to:
• Prioritize foreign consultants over local expertise
• Waste billions on digital systems that fail to deliver
• Repeat the same mistakes without learning from the past
As long as this pattern continues, Indonesia will remain vulnerable to overpriced, underperforming solutions—leaving taxpayers to foot the bill for ineffective projects. Meanwhile, the country’s digital infrastructure remains fragile, and its IT professionals remain locked out of opportunities in their own homeland.
How Many More Failures Will It Take?
Every time the government announces a new digitalization initiative, we must ask:
• Who is benefiting from this project—the people, or foreign consultants?
• Why is taxpayer money being funneled into systems that fail to function?
• When will Indonesia trust its own IT professionals to lead its digital future?
If the government truly wants to build a strong digital economy, it must break free from the cycle of dependency on foreign firms. The answer to Indonesia’s tech challenges isn’t in South Korea or Austria—it’s right here at home.
But until that shift happens, we will continue seeing the same story: billions spent, promises made, systems broken, and Indonesian talent left in the dust.
