Curbing smuggling an immense task

By Moeslich Somowiguno

JAKARTA (JP): Trying to find out which came first, trade or smuggling, is like trying to answer the chicken or the egg question. Smuggling has been around since the early days of official trade, especially after regulations were first introduced by some countries to protect their domestic industries. Along with growing global business activities, many countries established new rules and requirements regulating trade with other countries in order to protect their own interests.

If only there were no regulations governing duties on imports and exports; if only all manufactured goods were allowed to move freely into and out of any country in the world without controls; and if only there were no rules such as tariffs, quotas, restrictions, prohibitions and the like. Then there would be no smuggling and customs certainly would not be needed.

Historically customs was unpopular among traders and was the subject of envy among many quarters. It goes back to the early days of the Bible, which says of Zacchius, the tax collector: " ... and he was rich."

Why was customs so unpopular? In what is now Great Britain, the task of the officers was collecting tax and excise from traders for the king. These officials were so bitterly hated by people that cartoonists pictured them as devils sucking the blood out of the traders.

The unpopularity of the agency and the paradox of their task continues today. Customs has the task of maintaining the balance between the economy and the public good. The agency has to keep the flow of goods moving and collect revenue, while enforcing the law and rules laid down by different ministers to protect public interest.

Traders, who do business to make as much profit as they can, naturally do not like their money taken from them. They do not want any interference in the process of their transactions.

Customs on the other hand, has the official task of taking money from traders and making sure that all transactions comply with prevailing laws and regulations.

However, in order to get as much profit as possible and pay as little tax as possible, traders have always tried to find loopholes, and quite often by means of underpricing (to get reduced import duties) or overpricing (to get capital gain). Such attempt to manipulate the system has led to customs fraud and sometimes to the even more serious offense of smuggling.

A few weeks prior to the enactment of the Customs Law in April 1997, then director general of customs and excise Soehardjo indicated that nearly 50 percent of importers in Indonesia who claimed drawbacks had no clear address, and out of 200 importers, 86 were fictitious. This led to substantial losses in customs duties.

But Amiruddin Saud, the chairman of the Association of National Importers (GINSI) said: "Those fictitious importers are not listed as GINSI members. The point is not the argument about the number of fictions importers, it is rather the compliance and the losses."

Do market forces and all the involved agencies in the trade industry comply with the prevailing rules and regulations, so as to minimize the possibility of any offenses? Do the officers of the enforcement agencies observe all the provisions and requirements so as to avoid the possibility of abuse and prevent the possibility of too great a loss?

Whether or not the existence of the Customs Law brought about the desired results, including the reduction of attempts at smuggling, remains to be seen.

Article 102 of the law stipulates the punishment for smuggling: Any person who imports or exports or attempts to import or export goods not complying with the provisions by virtue of this law, shall be penalized for smuggling and therefore shall be punished with a maximum imprisonment of eight years and a maximum fine of Rp 500,000,000. Despite the harsh punishment laid down by this article, smuggling remains rife.

Smuggling is not confined to imports only. The Customs Cargo Inspection Office at Soekarno-Hatta International Airport has often foiled attempts of illegal exportation of restricted and prohibited goods, endangered species and protected animals, as well as pirated goods.

During the one-year period from April 1998 to March 1999, the office seized a total of 89,844 pirated disc, ranging from software CDs to VCDs. The value of the goods was estimated at more than Rp 780 billion (over $US90 million).

The goods were intended for export to various countries, including Hong Kong and Singapore. How are all these pirated discs produced in Indonesia? According to Business Software Alliance (BSA), there are allegedly 25 machines operating in Indonesia with a production capacity of 45 CDs per minute per machine.

Wayne C. Eglinton, a consultant and representative of BSA in Indonesia, said there were 500 cases of piracy in 66 countries worldwide, including Indonesia. With the help of the National Police, BSA managed to uncover a number of criminal cases. However, these cases were never properly processed or referred to court for legal proceedings.

Why are many importers and exporters easily tempted to smuggle? For sure there is a lot of money involved. However, there are a few other factors behind the lure of smuggling. First, a popular saying in America is, "There is nothing money can't buy." In Indonesia we have the old saying, "Sobat lebih kental dari staatsblad", meaning friendship is stronger than a collection of rules.

This saying suggests that if you have established good friendships and relationships with people, including influential government officials, there will be no "problems" that cannot be solved.

Whatever the rules say, the "problems" are negotiable. As the late former vice president Adam Malik said: "Everything can be arranged." The combination of the above two sayings makes a lethal "weapon" that is devastating to any legal system.

Poor business ethics coupled with the yawning gap between the rich and the poor -- in which the corrupt administration offers special privileges only to certain groups of people, treats people unfairly and gives legal protection selectively -- law enforcement officers become vulnerable to such a "weapon".

Has the students' call of reformasi brought any change to the political and economic systems? Has it brought any change to the attitude of the authorities?

Many government officials who are supposed to implement the rules and enforce the law often find themselves in awkward positions. When confronted with telephone calls from top government officials they know very well, especially those with whom they have established friendships, asking for privileges and special treatment, they often cannot refuse.

Trying to play the game according to the rules might cost them their "comfortable" seats. The case of the notorious Eddy Tanzil is an example. Either fortunately or unfortunately, the case ended tragically, and the disgraced agencies, despite their declarations that they would chase Tanzil to the ends of the earth, could not do much to trace the fugitive.

Second, smugglers know very well that customs officials on the front lines handle staggering amounts of cargo and are not well- paid. General Secretary of the World Customs Organization James Shaver once expressed concern that underpaid customs officers could hinder international trade. An unidentified customs officer in Jakarta has expressed deep concern over the amount of officers take-home pay.

Many of his officers who live outside the city have to commute to work every day. "To get to the office on time, they must get up very early and leave for work when it is still dark to catch the early buses. Look at the workload. These officers don't get home until eight in the evening, while their salary is barely enough for the bus fare and their meals, not to mention the daily necessities for their families and regular bills they have to settle .... How can they survive?"

Indeed, the greed of dishonest traders who constantly seek loopholes to make more money has often created irresistible temptations for underpaid customs officers. Eventually, payoffs and kickbacks become part of the job.

Computer automation does not sufficiently guarantee expeditious service. An importer once said: "Who presses the buttons of the computer, Aladdin's genie?"

A solution to this problem might well be sought through the consolidation of rules and regulations. Giving credits as well as rewards for outstanding achievements and seizing goods, as well as auctioning confiscated shipments might also work.

The writer is a social observer based in Jakarta.