Customs law to get tougher

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