Govt may end SGS contract this year

Govt may end SGS contract this year

JAKARTA (JP): Minister of Finance Mar'ie Muhammad said yesterday that the government might not extend the contract of the Geneva-based Societe Generale de Surveillance (SGS) to inspect Indonesia's imports at points of loading.

"If the company is still needed, we will hire it only for technical assistance," the minister told the Budgetary Commission of the House of Representatives during a hearing.

Mar'ie said that the termination of SGS's contract would not, however, mean the end of the pre-shipment inspection system now used by Indonesia for examining its imports.

In 1985, the SGS took over responsibility for inspecting Indonesian imports, using the pre-shipment inspection system. In 1991 the government assigned to the newly-established government- controlled company, PT Surveyor Indonesia (SI), the job of inspecting the country's imports at ports of loading. That company in turn appointed SGS as its sub-contractor to carry out its inspections on the condition that the Swiss company provides technical assistance and know-how, so that SI could gradually take over the job.

SI is 76 percent government-owned. Twenty percent of the company belongs to SGS and four percent to the state-owned domestic surveyor PT Sucofindo. SI is likely to take over SGS's functions when the latter's contract ends later this year.

SI has already founded 14 chapters worldwide and is now preparing another six in Asia and the United States to anticipate the transfer of the inspection jobs from SGS.

The government has been widely criticized for using the foreign surveyor to inspect Indonesia's imports. Critics say that using the foreign surveyor is not only too expensive, but also violates the principles of the General Agreement on Tariffs and Trade.

Some analysts have suggested that the government stop pre- shipment inspection and instead use a post-audit system in order to further smoothen the flow of imported goods into the country.

Minister Mar'ie said that replacement of the pre-shipment system with the post-audit system would lengthen the time required, given the limited receiving capability of Indonesia's ports.

Mar'ie said that given the present condition of Indonesia's sea ports, pre-shipment inspection was still much better than the post-audit system.

"The handling capacity of most Indonesian ports is still too small for post-audits of imported goods," the minister said.

He said that the government had paid a total of Rp 2.22 trillion (US$1.03 billion) to SGS for its services since 1985, with an average fee of about Rp 222 billion per year.(hen)