Government takes over Sucofindo export inspection service

JAKARTA (JP): The government said that, as of today, the customs and excise office would take over the export inspection service of state-owned surveyor firm PT Superintending Company of Indonesia (Sucofindo), despite criticism that the move was too sudden, putting at risk plans to attract investors to Sucofindo.

Secretary general of the Ministry of Finance, Widjanarko said on Tuesday that the government had decided not to extend Sucofindo's contract for the inspection service, which expired on July 31.

"The point is that Sucofindo's contract expired and we haven't extended it," he told The Jakarta Post.

He said that with Sucofindo's contract expiring, the inspection service fell back onto customs and excise.

The surveyor company had been in charge of the export inspection service since 1986 under a two-year contract from the government, which had since then been repeatedly renewed.

Widjanarko said that the government now felt it necessary to return the inspection service to customs and excise.

"It's only natural that customs and excise carry out the inspection service," he said.

Director general for customs and excise Permana Agung said earlier that the government paid Sucofindo Rp 500 billion (about US$52.63 million) a year for the inspection service.

According to him, the fee is much larger than the annual budget of Rp 297 billion received by customs and excise this year.

But several export-oriented industries criticized the takeover, saying that they had not been well informed about it.

"I don't know the motivations behind the move... it's too sudden," chairman of the Pulp and Paper Association Muhammad Mansyur was quoted as saying by Antara.

He added that because a new Cabinet was expected to be formed soon, the current finance minister should not make such a strategic decision.

An executive at the Indonesian Textile Association (API), Lili Asdjudiredja, said the government had decided on the matter without consulting exporters.

"We will have to ask the government about the new procedures," he told the Post.

Lili said that with the takeover, he expected export procedures to become more streamlined, thus faster and cheaper.

Before, he said, overlapping procedures between Sucofindo and customs and excise had caused inefficiencies.

"If customs and excise don't perform, the government could always return the contract to Sucofindo," he said.

Widjanarko, however, assured that customs and excise were up to the task.

"They (customs and excise) have been preparing for this for about six months," he said.

He also denied the government had decided the takeover too quickly without awaiting the formation of the new Cabinet.

"We made the decision some three to four weeks before the Assembly's Special Session and what I did was just carry out the instruction of the finance minister's decision back then," he explained.

The Special Session of the People's Consultative Assembly took place on July 14 and ended with the establishment of a new government.

Asked whether the takeover would undermine efforts to attract private investors to Sucofindo, he said it was possible.

"But if Sucofindo is good, it shouldn't rely too much on the government," he argued.

The government hopes to sell off a 15 percent stake in Sucofindo this year, as part of its privatization program.

It owns 95 percent of Sucofindo, while the remainder belongs to Geneva-based surveyor Societe General de Surveillance (SGS).

Sucofindo president Didie B. Tedjosumirat said relinquishing its export-inspection service would lower the company's value before investors.

"Sucofindo's earnings from this assignment stands at Rp 270 billion, or 48 percent of our total operational revenue," Didie said.

He pointed out that the government would lose Rp 211.9 billion in tax and dividend revenue with its decision to end Sucofindo's contract.

Nonetheless, he added, the company was developing new services to make up for the loss of earnings.

These services included, among other things, a surveillance system for the fishing sector and quality assurance for e- commerce. (bkm)