Govt plans to change import inspection system

JAKARTA (JP): The government will gradually reduce the use of the pre-shipment inspection system for Indonesia's imports to cut costs.

Director General for Customs and Excise Suhardjo said here yesterday that the pre-shipment inspection system, used since 1985, is not only outdated, but also too expensive.

"We have been using the pre-shipment system too long, therefore, it is reasonable if there is a change," the high ranking Ministry of Finance official told the Budgetary Commission of the House of Representatives (DPR) in a hearing.

The Geneva-based Societe Generale de Surveillance (SGS) was contracted in 1985 to carry out pre-shipment inspection of Indonesia's imports following widely reported irregularities and complaints of extensive red tape at the Directorate General of Customs and Excise.

The government has paid a total of Rp 2.22 trillion (US$1.03 billion) to SGS for its services since 1985, at an average of Rp 222 billion per year.

The use of the pre-shipment system for Indonesia's imports has been widely criticized not only for being too expensive, but also for causing long delays in the delivery of imported goods.

Economists said the system is ineffective in curbing smuggling attempts.

Minister of Finance Mar'ie Muhammad said recently that the government would not renew the contract with SGS which will end in July.

The minister, however, said that the pre-shipment inspection procedures would be maintained despite the planned suspension of the contract with the Geneva-based SGS.

PT Surveyor Indonesia (SI), a surveyor firm 76 percent owned by the government, 20 percent by SGS and four percent by the state-owned domestic surveyor Sucofindo, will take over SGS's tasks, he said.

SI has already established representative offices in major exporting countries in anticipation of handling the pre-shipment inspection of imports.

Abandon

In yesterday's hearing, Suhardjo said that developed countries have mostly abandoned pre-shipment inspection procedures for checking their imports due to high surveying costs.

"In Switzerland, from where SGS originates, the pre-inspection system is no longer in use," he said. "The system is used only by developing nations."

Mar'ie said the handling capacities of most Indonesian ports are still too low to introduce the post-audit system and that the immediate change in the inspection procedure could worsen the flow of imported goods.

The government is currently proposing that the House of Representatives draft laws on customs and excise as part of the gradual adjustment of the country's customs administration to the free-trade principles set out under the General Agreement on Tariffs and Trade (GATT).

Suhardjo said that the customs and excise bills do not explicitly stipulate which system Indonesia should adopt for checking its imports.

"The present policy of the government is to reduce the surveyor's work, while improving its own customs administration," he said. (hen)