Customs law to get tougher
Rendi A. Witular, The Jakarta Post, Jakarta
While offering incentives to encourage private investors, the draft revision of the customs law also promises stiffer sanctions for businesspeople attempting to smuggle goods into the country.
Based on the draft revision of Law No. 10/1995 on Customs, which was made available to The Jakarta Post, the Ministry of Finance's Directorate General of Customs and Excise has increased all administrative sanctions and criminal sentences for smugglers.
The directorate's director for inspection and investigation, Sofyan Permana, told the Post that the government had broadened the definition of smuggling in the draft law in order to prevent businesspeople from escaping criminal charges.
"The current definition of smuggling is too basic. That is why many businesspeople take advantage of loopholes to escape charges. In the draft law, a slight mistake in the inventory of imports would be seen as a deliberate attempt at smuggling," he said on Thursday.
Based on the prevailing law, a mistake in an itemized list of imports, whether intentional or otherwise, is not categorized as a smuggling attempt but as an administrative error that is subject to a fine.
The definition of smuggling in the prevailing law is limited only to importations of goods in the absence of documentation legalizing the process.
The draft law also increases administrative fines to a minimum of Rp 50 million (US$4,850) and a maximum of Rp 250 million from a minimum of Rp 10 million and a maximum of Rp 100 million.
For criminal charges, the minimum fine is Rp 50 million and the maximum is Rp 5 billion. Under the prevailing law, the maximum fine is Rp 500 million and no minimum is stated.
Under the draft law, smugglers could also face a minimum of two years' and a maximum of 10 years' imprisonment, from the current maximum sentence of eight years.
Sofyan said the directorate would establish an independent commission at the finance ministry's inspectorate general to investigate and impose administrative sanctions on corrupt customs officials before pursuing criminal prosecution.
Based on the draft, the finance ministry is also tasked with forming a special and independent commission to monitor and supervise the performance of the customs directorate.
A survey by Transparency International Indonesia in February -- conducted in 21 cities and regencies -- showed that the Directorate General of Customs and Excise was the most corrupt institution in the country.
Sofyan said the draft law was not only aimed at improving the compliancy of both businesspeople and customs officials but also accommodated several requests from the business community for an incentive in import duties, in order to revitalize the manufacturing sector.
"When drafting the law, the directorate also accommodated requests from the business community by introducing a simpler goods clearance procedure as well as an exemption from import duties for several goods," he said.
Based on the draft law, capital goods and raw material for industry and other investments will be exempt from import duties. A presidential decree will be issued at a later date to make a new category for the duty-free goods.
The prevailing law only provides duty exemption for capital goods in the form of machinery.
Other key items in draft customs law
1. Materials for government projects that are financed by foreign loans or grants will be exempt from duties.
2. Government-imported medicine will be exempt from duties.
3. Medical equipment will be exempt from duties.
4. A presidential regulation is needed to itemize goods eligible for import duties exemption.
5. The failure to report imported goods, or trying to unload goods prior to going through customs procedures, may be viewed as smuggling.
6. Making a false report on imported goods or their volume, importing the goods with incomplete documentation and unloading them outside the customs territory may be considered as smuggling.
7. Import duties for sports equipments imported by the National Sports Council (KONI) will be reduced or an exemption from duties will be offered.
8. An import notice can be officially delivered through electronic means, such as through the Internet, and will be accepted as legal documentation.
9. Temporarily imported goods should be re-exported within three years. Failure to meet the deadline will result in a fine amounting to 50 percent of the duties on the goods and 100 percent if the goods are eventually not exported.
10. Aside from antidumping duties, the government can also impose "secure" duties to protect the domestic industry.
11. Customs officials are authorized to take necessary actions against parties importing goods that will be used for terrorism or transnational crimes.
Source: The Directorate General of Customs and Excise