House probe pre-shipment inspection

JAKARTA (JP): Customs and Excise Duty Director General Soehardjo said yesterday he could not give any judgment on the benefits of pre-shipment inspection of imports.

Soehardjo told a hearing with the Trade and Finance Commission of the House of Representatives that he dared not venture any opinion as to whether the system, which was introduced in the middle of 1985, was efficient or not.

"The government itself has never evaluated the benefits of the pre-shipment inspection of imports," he said in reply to questions from the House members.

Minister of Finance Mar'ie Muhammad stated last week that the government had decided to maintain the system as it has proved to be most effective in facilitating the smooth flows of imports.

Mar'ie added that the maintenance of the pre-shipment inspection system was by no means related to the performance of the customs service.

The system, introduced as part of a massive deregulation package in mid-1985, virtually stripped the customs service of its authority to inspect imports at Indonesian seaports.

The pre-shipment inspection was initially assigned to the Geneva-based Societe Generale de Surveillance but starting last year the inspection was entrusted to state-owned PT Surveyor Indonesia, and the Swiss company has since then acted as the subcontractor.

The customs and excise duty director general quoted a study by the World Customs Union as concluding that the system of pre- shipment inspection proved ineffective for preventing corruption and expediting import flows.

Members of the commission seemed to be surprised to hear Soehardjo's explanations, wondering why the government has decided to maintain the system without assessing its effectiveness.

House member Yusuf Syakir contended though, that the government might have made an evaluation of the system but on a limited scale.

The Indonesian Importers Association, which polled 1,000 of its members throughout the country about the pre-shipment inspection system early this year, said 99 percent of the respondents saw the system as the most effective and efficient procedure for facilitating import flows.

The government announced early this year that the system had minimized under-invoicing of imports and greatly contributed to smoothing import flows.

The government based its assessment on the fact that receipts from import duties rose sharply and steadily between 1984 and 1993 even though the bulk of imports -- raw materials and capital goods -- have either been exempted from tariffs or subject to very low duties. (vin)