Export smuggling of CPO 'continues'

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)