IMF, customs office agree on a reform program

IMF, customs office agree on a reform program

Rendi A. Witular and Dadan Wijaksana, The Jakarta Post, Jakarta

The International Monetary Fund (IMF) and the Directorate General
of Customs and Excise have agreed on a restructuring program
aimed at boosting the performance of the latter, long seen as one
of the most corrupt institutions in the country.

At a news conference on Monday, Director General of Customs
and Excise Permana Agung said that a steering committee, led by
Minister of Finance Boediono, would be set up to formulate the
technical implementation of a 17-point restructuring program.

"The committee will include our counterparts from all import-
export associations and other related state institutions. The
committee will convene every Wednesday to discuss the
implementation of the programs," said Permana.

Permana hoped that the program could be implemented early next
year to promptly enhance the performance of the customs office.

However, Permana did not elaborate on the 17 points in the
program. He only pointed out that the program comprises
correcting the personnel's integrity, which had been tarnished by
corruption scandals, smuggling and other illegal practices.

Furthermore, the program will also include the forming of an
advisory committee that comprises stakeholders and related state
institutions, which will regularly convene to give advice and
criticism to the customs office.

The 17-point program is a result of the fourth letter of
intent (LoI) signed in Dec. 2001 with the IMF, which stipulates a
plan to improve procedures and strengthen the administration of
the corruption-ridden customs service.

There had been increasing complaints from businesses about
unfair competition from foreign goods, which enter the country
through smuggling or under-invoicing practices. They blame the
problem mainly on what they consider as technical incompetence
and corruption by customs officials.

A research report conducted last year by the Economic and
Social Research Institute of the University of Indonesia
concluded that the undervaluation of imports outside oil and gas
led to US$1.2 billion in financial losses for the state in 2000.

According to the report, the problem began after importers
failed to properly pay duty and the 10 percent value-added tax.

Moreover, the losses amounted to almost $950 million in the
first six months of 2001 alone.

Chairman of the Indonesian Importers' Association Amirudin
Saud estimated the losses to be even larger at some $3 billion a
year.