Business leaders criticize office

Business leaders criticize office

The Jakarta Post, Jakarta

Sofjan Wanandi, a leader of the Indonesian Chamber of Commerce
and Industry (Kadin), has urged economics ministers to strengthen
the customs service due to the domestic market being flooded with
foreign goods entering the country illegally, either through
outright smuggling or underinvoicing.

Sofjan, chairman of the Gemala Group, noted that local
industry had only barely survived the crisis thanks to exports
and domestic sales, but exports had now become much more
difficult due to the global recession.

"We now need the domestic market to survive, but even this
market is being destroyed by smuggling and underinvoicing. This
problem must be tackled immediately because we are running out of
time," Sofjan said here on Friday during a meeting between the
Cabinet's members and business leaders organized by the
International Finance Corporation (IFC), the commercial arm of
the World Bank.

James Castle, from the American Chamber of Commerce,
concurred, saying that there was an urgent need to solve the
problems of corruption within the customs service by establishing
an independent monitoring mechanism.

Castle also criticized the grossly inefficient and corrupt tax
system, warning that if the system was not renovated in a
comprehensive and timely manner, the money disbursed by the
Consultative Group on Indonesia members would be wasted because
the economy would not recover and the loans would not be repaid.

"The problem is so pervasive and destructive that there is
little doubt in the minds of the Indonesian audit community that
if taxes were honestly collected, the current budget deficit
would be significantly reduced by as much as 50 or even 60
percent," he said.

Castle suggested that the government cease its current
practice of harassing good taxpayers and instead harass corrupt
tax collectors.

Minister of Finance Boediono said the government would need to
learn more from the private sector about problems with the
customs service.

The corruption-infested customs service was stripped of its
import inspection authority in 1985 but regained that authority
in 1995 under a new customs law.

Javed Hamil, regional director of the International Finance
Corporation, pointed out that the private sector still lacked
confidence in Indonesia due to inadequate law enforcement and
complications resulting from the decentralization process.

Instead of capital flowing in, a steady stream of capital has
now been flowing out of the country, Hamil added.