Curbing smuggling an immense task

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.