Govt defends hiring of SGS surveyor

Govt defends hiring of SGS surveyor

JAKARTA (JP): The government yesterday defended the hiring of
the Geneva-based Societe Generale de Surveillance (SGS) to
inspect Indonesia's imports as a means of maintaining the smooth
inflow of goods and preventing corruption and red tape.

I Nyoman Moena, the president of the state-owned PT Surveyor
Indonesia (SI), told The Jakarta Post yesterday that SI is
prepared to adjust to the new principles of the Valuation Code of
the General Agreement on Tariffs and Trade (GATT).

"We are prepared to jump into the new GATT system," Moena
said, while showing a letter from SI asking Minister of Finance
Mar'ie Muhammad to review the contract between SGS and the
government.

An independent research organization, the Advisory Group in
Economics, Industry and Trade (Econit), suggested on Monday that
the government redefine its contract with SGS because it runs
counter to GATT rules.

Rizal Ramli, the managing director of Econit, also suggested
that the government stop pre-shipment inspections and instead use
the post-audit system because Indonesia has significantly reduced
its import tariffs over the last 10 years.

He also questioned whether SI, a company 76 percent owned by
the government, 20 percent by SGS and four percent by PT
Sucofindo, another state-owned surveyor firm, could take over the
dominant position of SGS after its nine years of operation.

According to Econit, SGS carries out 68 percent of the import
inspections and gets 71.1 percent of the total inspection fees,
while SI administers 32 percent of the inspections but receives
only 28.9 percent of the fees.

Four chapters

Moena, however, said that SI has already founded 14 chapters
worldwide and plans to establish chapters in six more countries,
including the United States, China, Japan and South Korea, by
December.

"Compared to other service industries, banking for instance,
the transfer of technology in goods inspection into Indonesia is
more progressive," he said, adding that the heads of SI's
chapters around the world are Indonesians.

Moena said that SGS, which was licensed in 1985 to inspect
Indonesia's imports at points of loading, has helped the
government smoothen the flow of imported goods and enhanced the
country's competitive advantage.

"It is not relevant to say how much it costs," he said,
referring to Econit's statement that paying inspection fees to
SGS amounts to "an annual waste of Rp 450 billion (US$207
million)."

When asked to comment on the statements by Econit directors
Rizal Ramli, Laksamana Sukardi and M.S. Zulkarnaen, Moena bluntly
said: "They're young people and they want to do something for
their country. That's all right but they are too extreme."

Laksamana, a former executive of Lippo Bank, is concurrently
the treasurer of the Indonesian Democratic Party, while
Zulkarnaen is a well-known environmentalist. Both are associate
directors of Econit.

Robert P. Collier, the chief representative of SGS's Jakarta
office, has not been available for comment the past two days.

A public relations official of SGS, however, said that the
firm had decided to cool the tense situation before clarifying
the debate.

Brussels Code

Responding to the GATT issue, Moena said that both SI and SGS
must abide by the Brussels Valuation Code, instead of the GATT
Valuation Code, on the grounds that the contract was written in
reference to the Brussels code which encourages pre-shipment
inspections.

The GATT Valuation Code requires its signatories to value
imported goods based on the prices of actual transactions.

"As long as we have to do the work, we must abide by the
contract. Anyway, the implementation of GATT is still a few
months away, isn't it?" Moena added.

However, a source close to SGS said that the Uruguay Round of
GATT negotiations recognized the need for developing countries to
have pre-shipment inspections as a recourse as long as they are
necessary to verify the quality, quantity or prices of imported
goods.

Moena also pointed out that importers have recently aired
their satisfaction with the ongoing inspection services of SGS
and SI, referring to a poll conducted by the Importers
Association of Indonesia (Ginsi).

Ginsi revealed in May that 98.9 percent of the 821 responding
importers supported the current customs and inspection systems.
(09)