Export smuggling of CPO 'continues'

JAKARTA (JP): While the 60 percent export tax on crude palm oil (CPO) has not proven effective in securing adequate supplies of CPO for domestic cooking oil producers, it has prompted profiteers to smuggle the commodity to foreign markets, industry analysts here said.

Although olein processors have been complaining since early last year about the rampant export smuggling of the commodity as the main reason for the shortage of CPO in the country, the 60 percent export tax seems too powerful a temptation for both corrupt officials and profiteers to resist.

Some officials and businesspeople suspected of being involved in the smuggling have been investigated, but thus far no one has been brought to court.

Several CPO and cooking oil producers in North Sumatra, the largest CPO producing area in the country, have been so frustrated by what they see as unfair competition caused by rampant smuggling that they recently pooled their resources to investigate the province's interisland CPO trade.

"Given the elaborate set of precautionary measures already in place to curb smuggling, we are convinced that export smuggling would not be possible without collusion with officials," one of the producers told The Jakarta Post.

"We strongly believe that export smuggling is rife because while officially recorded CPO exports have been declining, we are finding it increasingly difficult to get CPO," added the businessman, who insisted on anonymity.

The export tax on CPO cut Indonesia's export earnings by an estimated US$1 billion last year. The country earned $1.7 billion from palm oil exports in 1997, but analysts estimate that number declined by more than 60 percent last year when foreign exchange earnings were most needed.

Indonesia is the world's second largest producer of CPO, with an estimated output of 4.8 million tons last year. Domestic consumption of CPO last year was around 3 million tons.

The conclusion of the investigation, pieced together from documents of CPO shipments from the North Sumatran port of Belawan and interviews with officials, points to strong evidence of smuggling in collusion with local customs officials and port officials.

The results of the investigation, revealed to the Post, conclude that while the findings were related only to one shipment, they nonetheless demonstrated how easy it was for companies to evade all precautionary measures and smuggle CPO out of the country, pocketing billions of rupiah in illegal, untaxed profits.

The object of the investigation was CPO shipments aboard three tankers. The shipments departed from Belawan and were to be unloaded at the southern Sumatran port of Panjang in Lampung, between the last week of October and the first week of November.

The investigation was based on a telegram from the Belawan port administration office to the Panjang port administration office on Nov. 4 notifying the officials at Panjang of the departure of the shipments.

'Hua Yun-5'

The Panjang port administrator was asked to duly notify the Belawan port administrator whether the three tankers, Tirta Karsa, Istana VI and Hua Yun-5, had arrived and unloaded their CPO shipments at Panjang port.

This verification process is part of the preventive measures taken to ensure that interisland CPO shipments are not diverted to foreign markets without paying the 60 percent export tax.

A further preventive measure is the requirement that anyone making an interisland shipment of CPO deposit a surety bond amounting to the value of the 60 percent export tax on the CPO shipment with the customs office at the port of origin.

This bond can be reclaimed from the local customs office only after it is proved that the CPO shipment has been unloaded at the domestic port of destination.

This proof must be supported by statements from the customs office, the local buyer of the shipped CPO in the port of destination and PT Sucofindo's surveyor report on the unloaded CPO shipment.

The investigation initially concluded from documents submitted by the three shippers of the CPO that they had fulfilled all the requirements to reclaim their surety bonds.

However, further investigation found an irregularity in the records of Hua Yun-5, which carried around 6,000 tons of CPO for PT Bina Medan Sejahtera in Medan to be sold to CV Citra Alam Abadi in Panjang.

To prove that the 6,000 tons of CPO had been unloaded at Panjang port and received by the buyer, the shipper produced statements of verification from the Panjang customs office, signed by Sjamsul Muarif; surveying company Sucofindo's Panjang branch, signed by Rudy Lumanauw; and the buyer in Panjang, CV Citra Alam Abadi, signed by Rudi Hidayat.

However, Hua Yun-5 was not recorded as ever docking at Panjang port between mid-October and mid-November.

The computer printouts of ship calls obtained from the Panjang port office did list Tirta Karsa and Istana VI as calling at the port between mid-October and mid-November, but Hua Yun-5 was not listed.

Records at other departments of the Panjang port office, such as those which record berthing positions and which supervise bunker services and cargo handling, recorded hundreds of ships, including Tirta Karsa and Istana VI, but not Hua Yun-5.

"If Hua Yun-5 is not listed in our computer printouts of ship calls that means the tanker did not visit our port during that period," Achmad Hanafiah, deputy harbormaster at Panjang port, said to the Post.

Yet the shipper produced documents that the CPO shipment aboard Hua Yun-5 was unloaded at Panjang, enabling the reclamation of its surety bond and the evasion of the export tax, which would have amounted to about Rp 15 billion on the 6,000 ton shipment of CPO, the reports of the investigation said.

Lumanauw, chief of the Panjang office of PT Sucofindo, denied that his company had ever issued a surveyor report on the unloading of 6,000 tons of CPO from Hua Yun-5 at Panjang port between Nov. 3 and Nov. 7.

"Sucofindo Certificate No. 2252094 which is claimed to represent the surveyor report on the 6,000 tons of CPO unloaded from Hua Yun-5 was issued for 2,999 tons of CPO unloaded from tanker Tirtagama at Panjang port on Aug. 21 and Aug. 22," Lumanauw told the Post.

Lumanauw made this denial when asked to verify the Sucofindo certificate, a copy of which was attached to the investigation reports, which named PT Bina Medan Sejahtera as the shipper, Hua Yun-5 as the freighter and CV Citra Alam Abadi in Panjang as the buyer of the CPO shipment.

PT Bina Medan Sejahtera could not be reached for comment.

The statement of receipt by Rudi Hidayat, director of Citra Alam, which was endorsed by Panahatan L. Toruan of the Panjang customs office, confirmed that his company had received the delivery of 6,000 tons of CPO from Belawan port and unloaded from Hua Yun-5.

However, Hidayat's statement named PT Aspasindo Permata Lines as the handling agent of the tanker, which differed from the Belawan port office, which named PT Malta Meridian Lloyd as the handling agent. (vin)