APEC members urged to adopt customs reforms

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)