Wed, 10 Aug 1994

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)