Bonded areas reportedly used by smugglers

Rendi A. Witular, Jakarta

The Directorate General of Customs said on Friday that it had deployed its officials to closely supervise bonded warehouse facilities in the wake of reports that they were often being used by smugglers to stockpile illicit goods.

Sofyan Permana, customs director for inspection and investigation, told The Jakarta Post that the directorate had found indication that several businessmen had misused the facilities to smuggle goods into the country.

"The practices have been out of control since early the first of the year. We have discovered dozens of bonded warehouses in Jakarta and Surabaya, belonging to private businesspeople, that have been used to stockpile smuggled goods," said Sofyan.

He explained that the owners of the warehouses and the others who rent them were cooperating to allow such practices to occur.

"There are several big companies involved in such practices. But I cannot name them right now, because we are still investigating them ... Thus far, no suspects have been processed over the violation," he said.

By law, all goods in a bonded warehouse are exempted from taxes, import duties and excise as long as they are intended for re-export in the form of value-added goods, or to be transferred as raw materials to bonded zone areas.

Smugglers imported the goods based on normal customs procedures, but once the goods arrived at the bonded warehouse, they illegally sneak them out, or make a fake document stating that the goods are to be processed for export in some other place.

The smuggled goods are usually include sugar, rice, pharmaceutical products and toxic chemicals.

The smugglers manage to illegally get the goods out of the bonded zone by colluding with corrupt customs officials.

Director-General of Customs and Excise Eddy Abdurrachman has sent around a memo on May 27 stating that all senior customs officials must closely supervise their people punish those who colluded with smugglers in misusing the facilities.

Eddy also urged them not to tolerate the violations, and to revoke the licenses of the bonded warehouse operators involved in the crime.

As previously reported, the inflow of smuggled goods to the country has surged during the first quarter of this year through various means, according to an internal report from the customs directorate.

While the report did not provide a clear explanation of the reasons for the increase, analysts and business players believed that it was due to weaker law enforcement during that period as many were focussing on the general election.

For example, the report said that customs officials had managed to confiscate some 1,814 metric tons of smuggled rice and 5,743 tons of sugar during the first quarter of the year, up from 374 metric tons and 5,675 tons respectively in the same period of last year.