Govt urged to maintain pre-shipment inspection

Govt urged to maintain pre-shipment inspection

JAKARTA (JP): Five trade associations yesterday urged the
government to maintain its current system of pre-shipment import
inspection because of its effectiveness in expediting import
flows and minimizing the invisible costs of importing.

"We want the government to continue using the pre-shipment
inspection system for Indonesian imports even after the new
customs law comes into force on April 1, 1997," the associations'
spokesman, Amirudin Saud, told a news conference here yesterday.

The new customs law stipulates a self-assessment system for
customs duties and selective inspection of imports on arrival. It
also grants the customs office a 10 year post-audit period,
requiring exporters and importers to keep their documents for
that period.

The strong recommendation to maintain the pre-shipment
inspection system was signed by the chairmen of the Indonesian
Importers Association (GINSI), the Indonesian Exporters
Association (GPEI), the Association of Indonesian National
Shipowners (INSA), the Association of Electronics and Electric
Companies and the Indonesian Footwear Association (APRISINDO).

The associations' statement stressed that the 11-year-old pre-
shipment inspection system was effective in facilitating import
flows and greatly reducing import costs.

"We are still traumatized by our bitter experience with the
customs service before the middle of 1985. We are worried that
malfeasance will again occur, import flows will slow down and the
invisible costs of importing will rise sharply if the system of
on-arrival inspection is introduced," Amirudin said.

Chairman of INSA Firdaus Wadjdi agreed that major seaports
might face heavy congestion if the current system of pre-shipment
import inspection is replaced by on-arrival inspection.

"The pre-shipment system has proven its effectiveness also in
preventing under and over-invoicing of imports and smuggling as
well as in increasing government receipts from customs duties,"
said Amirudin, who is also the chairman of GINSI.

Pre-shipment inspection was introduced in May, 1985 as part of
a massive deregulation package which stripped the customs service
of its inspection authority.

Pre-shipment inspection was initially conducted by the Geneva-
based Societe Generale de Surveillance (SGS). In 1991, the
inspection service was contracted to a newly-established state-
owned company, PT Surveyor Indonesia, which then hired SGS as a
sub-contractor.

PT Surveyor Indonesia, which has about 20 offices world-wide,
is 80 percent owned by the government and 20 percent by SGS.

The associations issued their recommendation apparently
because of a recent finance minister's decree which will
terminate PT Surveyor Indonesia's pre-shipment inspection
contract in April 1997, or three months earlier than its original
expiry date.

The decree, however, does not stipulate if the pre-shipment
inspection system will be maintained. It only asks PT Surveyor
Indonesia to prepare for the termination of its contract.

"We are concerned only about the pre-shipment inspection
system and not about which company will do the job," Amirudin
said.

Imports, he added, play a very important role in determining
the competitiveness of Indonesian exports because manufacturers
still depend largely on imported basic and intermediate
materials.

Amirudin said that before May, 1985 importers were required to
obtain 37 official approvals to clear imports, and each permit
cost a lot of time and money.

"If the old on-arrival inspection system is restored who can
guarantee that the old extensive malfeasant practices will not
reappear?" he said.

In a related development, I Nyoman Moena, former president of
Surveyor Indonesia, said yesterday that businessmen want
certainty on import management.

Moena suggested the customs service cooperate with PT Surveyor
Indonesia to build an intelligence network which prevents
smuggling.

"As long as the customs service is not adequately equipped
with the much-needed software and hardware, why does it not
simply cooperate with the surveyor company?" Moena asked. (kod)