EDI to curb collusion between importers and officials
By Riyadi
JAKARTA (JP): Importers, after subscribing to the customs electronic data interchange (EDI) system, would meet customs officials only once to clear imported goods.
All previous procedures within the customs clearance process could be carried out electronically through EDI system. That is the concept which has been promoted by the customs service.
Directorate General of Customs and Excise Soehardjo Soebardi said the EDI therefore would automatically reduce possible collusions between businessmen and customs officers.
"With EDI, everybody must be transparent. If all parties involved are transparent, there will be no more collusion," Soehardjo said at a recent the House Budgetary Commission hearing.
The customs office plans to launch the paperless customs service through the EDI system as a pilot project at Jakarta's Tanjung Priok port and Soekarno Hatta airport on April 1, when the 1995 customs law comes into effect.
The pilot project would connect the customs office to port and airport authorities, shipping lines and airlines, importers, freight forwarders and banks.
However, only 31 companies consisting of 223 importers, five shipping and airline companies and three banks, have thus far been included in the pilot project.
Other importers and related parties, who are not taking part in the pilot project, including those outside Jakarta, will have to process their documents manually and to meet personally with customs officers.
The EDI system would not only reduce physical contact between importers and customs officials but also cut time in processing importers' documents.
With EDI, document processing by the customs office could be completed in one hour, provided there were no irregularities, Soehardjo claimed last week.
With its current Customs Fast Release system, the customs office promises to process import-related documents within four hours. The system is currently applied to sea-cargo imports worth less than US$5,000 or air-cargo imports.
"We have not heard any major complaints or criticism concerning our airport services. The main complaint we have heard is that importers often have difficulties finding their cargo. So, the problem is in the cargo terminal," Soehardjo said.
The document processing by customs, however, is only one of a string of lines needed by importers to release imported goods from customs areas.
Procedures
The following are the current procedures of clearing imported goods from customs areas:
Importers must settle all duty and tax obligations, involving physically traveling to their banks, bringing with them physical documents, including customs declarations and accompanying documents including invoices.
Banks then check all documents and verify taxes and duties due. The bank then accept payment, and give importers tax and duty payment receipts. This process may take only one day.
Bank counters for importers are usually open only half-days, as they have to process all physical payments and then deliver them to the customs office, tax office and state treasury.
Importers then submit payment receipts and all accompanying physical documents to the customs office. Customs officials process the documents by physically rekeying all data in the documents to the customs office database.
This document processing by the customs office theoretically takes only four hours provided importers have recorded all data in their documents in computer diskettes. But in reality, it can take a day or more.
The customs office then verifies the imported goods' prices and the duties importers must pay.
If there are large discrepancies, the customs office returns the documents to importers to make necessary changes.
If there are no discrepancies, the documents are recorded. The customs office then decides whether the goods mentioned in the documents need physical inspections.
Physical inspections should be done only if the goods are subject to random inspection or if an intelligence note necessitates physical inspection.
The customs office then decides whether the goods need to be held up or not. The goods can be held up only if the result requires importers to pay more duties and taxes or if there are discrepancies between the actual situation and those reported in the documents.
The fastest process following these procedures would be three days.
Following the implementation of the 1995 customs law on April 1, the customs office will introduce a combination of self- assessment (in duty payment), on-arrival inspections and post- release audit.
Customs director Permana Agung said the process in the customs office would be much quicker than the current system because customs officials would not be dealing with documents.
Physical inspections are to be done sparingly and only if there is a random inspection or if an intelligence note necessitates physical inspection.
Eddy said that if importers were connected to the EDI system, all documents could be processed within minutes -- or even seconds.
Importers can electronically send their customs declarations to the customs office and banks simultaneously. They can also send electronically debit advice to their banks.
Banks then electronically send credit advice to the customs office, informing it that certain importers have paid all duties for their goods.
After advising their banks, importers exchange the bill of loading on their imports for a delivery order from shipping lines carrying their imports.
With such delivery orders, importers come to a customs gate to clear their imports. Customs officials at the customs gate check at the importers' mail box whether they have settled duty obligations.
When there is no random inspection or an intelligence note on the imported goods, the goods must be cleared.
However, if there is a random inspection, or if an intelligence, the customs office can bring the imported goods to a "red" lane for closer inspection. After the inspection, customs officials will allow importers to clear goods from the port area, even if irregularities are found.
Further verification on the prices and amount of duties will be carried out at the customs verification section, while the goods have been cleared from customs areas.
The new import clearance system stipulates that customs officials have 30 days from submitting documents to verify the imported goods' prices.
Whenever customs finds under-invoicing within the set time, they may penalize importers.
But if they find the discrepancy after 30 days, they cannot impose penalties. They could only audit imports, and if they discover discrepancies they could demand the duty shortfall.
Document verification is also applied to look for possible commercial frauds such as the misdescription of goods, under and overvaluation, false declarations of quantity or quality, the abuse of import or export licensing requirements and the like.
If possible commercial fraud is detected, the verification section is to inform the auditing section and advise it to audit the importers.
Maman Surachman, head of EDI project at Bank Bali, said the process would be quick, but banks still have to submit physical documents to state treasury.
"We hope the EDI pilot project also links with the state treasury to make the overall process much faster," Maman said.
Eddy, also chairman of the pilot project, said the EDI system would ideally connect the customs office to all related parties, including the tax office, Ministry of Industry and Trade, the Investment Coordinating Board and the Export Service Facilitating Agency.
"At least, we have initiated the program. Yes, it would need some time to be complete, to cover all related parties," Eddy said.
Even to connect the system with major importers and 109 recipient foreign exchange banks, it needs some effort. The large number of recipient banks will make it more difficult to implement the EDI in the banking community.
There is also a perception of "no benefit" in some areas; for example, the shipping companies are expected to submit an electronic declaration of goods held, which involves considerable effort and cost, and many see no benefit to themselves.
Small and medium importers do not see the benefit of joining the EDI. For automotive firms, which import many spare parts, they would have to enter all data in invoices into their customs declaration.
Eddy said cases like automotive firms would be rare. Moreover, if importers had keyed their data into their customs declarations, banks and the customs office would not need to rekey the data into their data base.
Both Eddy and Soehardjo said the government was committed to making the EDI system a success by providing subsidies for one year.
The subsidy is to include the provision of translator software, applications (importer, shipping or bank modules), training, hardware installations and one year free-of-charge traffic use.
Soehardjo said the government has earmarked Rp 30 billion (US$12.5 million) for the subsidy.
"It's now up to the market forces. If they want us to serve them better, they should subscribe to the EDI," Soehardjo said. (rid)