Foreign businesses ask for review of customs law

Foreign businesses ask for review of customs law

Rendi A. Witular, The Jakarta Post, Jakarta

Foreign business groups have said a revised customs law is a
necessary part of the government's efforts to reform the
country's customs service.

Speaking on behalf of the business groups, Phil Bell, a
technical adviser for consultancy firm PriceWaterhouseCoopers
(PWC), said the customs law should be revised to enhance
accountability within the country's customs service and reduce
the opportunity for corruption.

"Customs modernization and reform is used as the platform to
achieve structural changes and efficiencies in the whole import
and export process, and deliver significant economic benefits,"
said Bell.

PWC is a member of the Customs Advisory Committee set up by
the finance ministry with the main task of developing, evaluating
and supervising customs policy and administration. PWC was
included on the committee to represent the International Business
Chamber of Indonesia, which groups all foreign business chambers
in Indonesia.

The establishment of the advisory committee was part of the
government's ongoing efforts to reform the country's customs
service, which is notoriously riddled with corruption.

There are at least seven articles in Law No. 10/1995 on
customs that require revision, Bell said in a e-mail to The
Jakarta Post.

One of them is Article 16, which regulates tariffs and import
taxes.

Bell said there was no simple and clear mechanism in the
article for importers to report honest errors in underpaying
import duties and to settle the payment.

At present, in case of underpayment the customs office will
audit the company in question to confirm the underpaid amounts
and then issue an underpayment notice. In some cases, the office
imposes penalties.

The good reputation of an importer can be tarnished once it
receives the underpayment receipt, as customs personnel will make
of record of the error, which can deny a company the opportunity
to receive special facilities in the future.

"There are therefore no incentives to a company reporting and
settling honest mistakes," said Bell.

Several importers said that due to the complex bureaucratic
process of settling underpayments, many companies would rather
pay kickbacks to customs personnel than try to settle the matter
legally.

Bell added that Article 16 also caused uncertainty for
importers as it states that the customs office can provide a
tariff classification ruling before or after goods are imported,
but can only provide a valuation ruling after goods have been
imported.

"Customs valuation is a complex issue, and the inability to
gain a valuation ruling prior to entering into binding
contractual arrangements does not provide a company with
certainty," said Bell.

He also recommended for revision Article 93 and part three of
Chapter VI of the customs law, which includes articles 30 to 35.

Article 93 deals with the formalities for lodging an objection
to a customs assessment in relation to tariff classification and
valuation.

Part three of Chapter VI of the law deals with customs
declarations and liabilities for import duties.

When asked to comment on these suggestions, the head of the
Customs and Excise Division at the Directorate General of Customs
and Excise, Agus Sudarmadi, said thus far the directorate general
saw no reason to review the customs law.

"We shall not recommend the revision of the customs law to the
Ministry of Finance as the law can still adequately accommodate
the interests of all customs stakeholders," Agus said.