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.