SGS assignment questioned<\/p>\n
It obviously ran counter to our national sense of pride to
\nhave been forced, by decades of bitter experiences, to distrust
\nour own customs service. And it was quite regrettable that
\neconomic imperatives compelled us to vest part of our customs
\ninspection authority with a foreign entity -- the Geneva-based
\nSociete Generale de Surveillance (SGS) inspection company.<\/p>\n
Nonetheless, we see the well-meaning suggestion of a review of
\nthe assignment of SGS and replacement of the pre-shipment
\ninspection of import goods with a post-audit system, which was
\nmade by the Econit economic research center, as unreasonable. The
\nconclusions of Econit's public policy review of the pre-shipment
\ninspection of imports, as announced to the mass media on Monday,
\nseems to have been drawn from inaccurate and incomplete
\ninformation on the overall objective of the pre-shipment
\ninspection procedure.<\/p>\n
Econit's review concludes that the bottom line of the SGS
\nassignment is negative because of the large amount of service
\nfees the company charges and the delays in shipment caused by
\ninspection. It also suggests that the pre-shipment inspection
\nruns counter to GATT rules and argues that since the country's
\nimport tariffs have been lowered to an average 19 percent there
\nis now little incentive to under-invoice import prices.<\/p>\n
As recently as June, the Indonesian Importers Association --
\nactually the most relevant and competent party to assess the
\nperformance of SGS -- announced the findings of the
\nquestionnaires that 1,000 members had been asked to fill out. Of
\nthe 821 importers who responded to the questionnaires, 99 percent
\nconsidered the pre-shipment inspection the most effective and
\nefficient procedure for facilitating import flows. They also
\nstrongly recommended the maintenance of the procedure. That means
\nalmost all of the importers oppose the restoration of the upon-
\narrival (post-audit) customs checks at Indonesian ports as
\npracticed before May, 1985.<\/p>\n
The government itself, which as the employer of SGS is
\nnaturally most concerned about its performance, earlier announced
\nthat even though import tariffs have been lowered steadily in
\nline with the economic reform measures and total imports now
\nconsist mostly of capital goods and basic materials, which are
\neither exempted from tariffs or subject to very low duties,
\ngovernment receipts from import duties rose sharply from Rp 544.5
\nbillion in 1984 to Rp 2.65 trillion (US$1.2 billion) in fiscal
\n1993\/94. That indicated that under-invoicing of imports has been
\nreduced to a negligible level.<\/p>\n
Econit seems to be inadequately informed of the overall
\nobjective of the pre-shipment inspection. This procedure is
\ndesigned not only to verify export prices and customs tariff
\nclassifications, but also the quality and quantity of imports.
\nThe government acknowledged that during the first five years of
\nits assignment, SGS had saved more than $4.5 billion in foreign
\nexchange through the correction of the prices of capital goods
\nand materials imported by oil mining contractors. Had the prices
\nnot been corrected, the government would have lost a great deal
\nof income because the development and production costs deducted
\nby the contractors would have been much higher, thereby cutting
\ninto the government's share of the concession's output.<\/p>\n
The inspection also is designed to check whether the capital
\ngoods to be imported by licensed investors under the duty-free
\nfacility are really not available from local suppliers. The
\ncorrection resulting from pre-shipment inspection has also saved
\nhundreds of millions of dollars by diverting imports to local
\nsourcing.<\/p>\n
The pre-shipment inspection for customs clearance does not
\nviolate any rules of the General Agreement on Tariffs and Trade.
\nIn fact, the Agreement on Pre-shipment Inspection concluded by
\nthe GATT negotiators on Dec.15, 1993, recognizes the need of
\ndeveloping countries to have recourse to pre-shipment inspection
\nas long as and so far as it is necessary to verify the quality,
\nquantity or price of imported goods.<\/p>\n
Despite all the benefits of using SGS, the government has been
\nwise to plan early on its gradual phasing out by establishing PT
\nSurveyor Indonesia which now has more than 12 offices in
\nexporting countries. Seven more offices will have been opened
\nbefore the end of this year, so that the new company, which is 80
\npercent owned by the government and 20 percent by SGS, will be
\nresponsible for inspecting 85 percent of Indonesia's total
\nimports.<\/p>\n
The most formidable challenge now is to see to it that PT
\nSurveyor Indonesia will gain as high a reputation, credibility
\nand technical competence as that of SGS, which has so far been
\nhired by 30 foreign governments and hundreds of private companies
\nto do inspection jobs.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/sgs-assignment-questioned-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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