Govt loses US$3.8b from import under-invoicing<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The Indonesian Importers Association (Ginsi) estimated on
\nThursday that the government has been losing at least Rp 40
\ntrillion (US$3.8 billion) a year in revenue from import duty,
\nvalue added tax (VAT) and income tax due to the widespread
\npractice of under-invoicing import prices.<\/p>\n
Still more damaging is the market distortion caused by under-
\ninvoiced imports and unfair competition imposed on Indonesian
\nproducts, the association's chairman, Amirudin Saud, said, when
\nhe released the results of an import data investigation conducted
\nby his organization.<\/p>\n
Using data from the Central Bureau of Statistics and revenue
\nfigures from the state budget, Amirudin said the government
\nshould have collected Rp 52.7 trillion from import duties, VAT
\nand income tax from non-oil imports in 1998, Rp 43.4 trillion in
\n1999 and Rp 57 trillion in 2000.<\/p>\n
\"However, actual state revenue amounted to just Rp 2.3
\ntrillion in 1998, Rp 4.1 trillion in 1999 and Rp 3.4 trillion in
\n2000,\" he added.<\/p>\n
Amirudin said his estimates of the revenue losses were based
\non an average import tariff of 10 percent, 10 percent VAT and 2.5
\npercent income tax on non-oil imports valued at Rp 234.5 trillion
\n($24.6 billion) in 1998 (Rp 9,500 to the dollar), Rp 193 trillion
\n($20.3 billion) in 1999 and Rp 253.5 trillion ($26.6 billion) in
\n2000.<\/p>\n
According to the study, actual state revenues from imports
\nshould amount to at least 22.5 percent of the total import value.<\/p>\n
\"Even though more than 75 percent of our imports consist of
\nindustrial raw materials that are subject to zero or very low
\ntariffs, more than 5,345 categories of imported goods, or 78
\npercent of the total number of tariff classifications listed in
\nthe 2001 Indonesian Import Tariff Book, are still subject to
\nimport tariffs ranging from 5 percent to 20 percent,\" he pointed
\nout.<\/p>\n
\"Under-invoicing on such a scale could not have occurred
\nwithout collusion between importers and customs officials,\"
\nAmirudin alleged.<\/p>\n
He acknowledged, though, that part of the problem should be
\nblamed on the 1985 Customs Law, which applies a self-assessment
\nsystem, meaning that customs officers are required to accept
\nwhatever prices are submitted by importers as long as they are
\nvalidated by legitimate sales\/import contracts.<\/p>\n
\"This system has often been abused by importers who ship their
\nimports in from Hong Kong and Singapore in collusion with customs
\nofficials,\" he added.<\/p>\n
The government urgently need to reapply the pre-shipment
\ninspection system for non-oil imports, like what was in effect
\nfrom 1985 to 1995, at least at selected ports of origin, Amirudin
\nadded.<\/p>\n
The conclusion of the study validates the findings made
\nearlier this year by a World Bank-sponsored diagnoses on
\ncorruption in Indonesia that the customs service was one of the
\nmost corrupt public institution, alongside the traffic police and
\njudiciary.<\/p>\n
The customs service performance at detecting the under-
\ninvoicing of imports and outright smuggling has been so poor that
\nan increasing number of businesspeople have urged the government
\nto strengthen the customs and excise duty directorate general
\nwith an independent import inspection mechanism.<\/p>\n
The corruption-infested customs service was stripped of its
\nimport inspection authority in 1985 but it regained that
\nauthority in 1995 under a new customs law.<\/p>\n
Ade Sudradjat, secretary general of the West Java Textile and
\nGarment Association, disclosed recently that every month almost
\n1,500 containers of textiles from China, Vietnam and South Korea
\nwere being smuggled into Indonesia through Surabaya's Tanjung
\nPerak port and Jakarta's Tanjung Priok port.<\/p>\n
This smuggling, Ade added, has adversely affected domestic
\ntextile companies, particularly because their exports have
\nalready been hit badly due to the gloomy outlook of the world
\neconomy.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-loses-us38b-from-import-under-invoicing-1447893297",
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"sponsor": "Okusi Associates",
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