Government takes over Sucofindo export inspection service

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)