APEC members urged to adopt customs reforms
JAKARTA (JP): The Brussels-based World Customs Organization urged members of the Asia Pacific Economic Cooperation (APEC) forum to support broad-based customs reform in the region instead of relying on pre-shipment inspection.
"The full support of the government and the customs management will be crucial as no solution can be imposed on unwilling administrations," the organization's director for valuation, J.M. Siegrist, told the second APEC customs and trade symposium at the Jakarta Convention Center on Saturday.
He said that reform is now a widespread expectation among governments, considering that the current customs services under the pre-shipment inspection system, thus far carried out by private inspection companies, are incompatible with the best interests of customs.
There are around 35 governments worldwide using pre-shipment inspection services for their customs operations, as compared to 136 governments which have joined the organization and tapped the post-audited clearance system for customs activities.
Pre-shipment inspection, which has been conducted for the last 30 years worldwide, is mostly adopted by developing countries in Africa, Asia and Latin America, the organization's Secretary General James W. Shaver said at the symposium.
Since 1985, Indonesia has used a pre-shipment inspection system for its imports to eliminate red tape and corruption at customs offices, as well as to prevent under-invoicing by importers wanting to reduce duty and tax payments.
High costs
Shaver said one of the negative impacts of pre-shipment inspection is high costs of operations.
"This is a question that has prompted the World Bank to carry out a very extensive survey of pre-shipment inspection," he said, adding that the final report will be completed soon.
"It is a fact that while the pre-shipment inspection operations are paid for by the client government, the negative impacts of its implementation are felt in the country of export," he added.
Siegrist said that pre-shipment inspection should be adopted only temporarily as a governmental instrument to help control customs services, which are vulnerable to malpractice, corruption and various mismanagement practices.
"The effectiveness of pre-shipment inspection as a means of overcoming some of the problems experienced in developing countries is not proven. It is self- evident, however, that in some countries, the problems of commercial fraud and corruption within customs have reached such levels that urgent action is needed to restore some semblance of order to the public finances," he said.
He also said that pre-shipment inspection companies, which are usually contracted to provide training and management services, have in fact done little or even nothing to enhance the efficiency, effectiveness or integrity of the national customs administrations.
"I also would say that countries currently using pre-shipment inspection for price verification information, or even for determining values, will find that a significant modification of practices should be necessary when the switch to the GATT system occurs," he said.
Insistence
Indonesia is one of the developing countries insisting on using pre-shipment inspection for its imports. In 1985, the Indonesian government appointed the Geneva-based Societe Generale de Surveillance (SGS) to inspect the country's imports at points of loading and decided in 1991 to assign state-owned PT Surveyor Indonesia to gradually take over SGS's jobs.
Minister of Finance Mar'ie Muhammad told reporters on Friday after opening the symposium that the government has thus far no intention of changing the country's current pre-shipment inspection policy.
"It is clear, that the General Agreement on Tariffs and Trade (GATT) does not oblige its signatories to use customs services. It also does not force any country to adopt a post audit system," the minister said.
I Nyoman Moena, president of Surveyor Indonesia, concurred that Indonesia still needs his company's services because they are in line with the government's policies, among others, for generating revenues," he said.
He said that his company, in cooperation with SGS, has helped the government tackle irregularities by foreign exporters.
Nyoman said: "I believe the government is now thinking of adopting a post-audit clearance system. But the problem is that the government is short of funds to improve the infrastructure for customs services."
He added that the new system will require computerized customs clearance and document management, professionals and enormous space for accommodating imported materials in the ports.
"And the most important thing is that our existing rule on customs and excise administrations should be amended," he said.
Minister Mar'ie on Friday assured reporters that the government is now preparing a new bill on customs and excise to replace the existing law, which is still based on the Dutch colonial system.
The planned bill will be delivered to the House of Representatives for deliberation this fiscal year.
Surveyor
Managing director of Econit Advisory Group, Rizal Ramli, who also presented a paper at Saturday's symposium, said that it is time for Indonesia to shift to the post-audit clearance system to reduce costs.
"The contract of the surveyor for the last 10 years has cost the government about 15 percent of annual import duties, or more than US$200 million per annum," he said.
He pointed out that Indonesia has become one of the major source of revenues for SGS.
"In contrast, the budget for the Directorate General of Customs and Excise is less than $15 million per annum," Ramli added.
Henning Jensen, the assistant regional coordinator for the trade efficiency programs of the United Nations Conference on Trade and Development (UNCTAD), told The Jakarta Post that Indonesia should adjust its policy to adopt the post-shipment inspection system, in order not to be left behind other countries in the APEC region.
"I would remind you that all of the developed countries in Europe and the United State have adopted the post-audit clearance system," he said. (fhp)