'Import verification has curbed smuggling'

Evi Mariani, The Jakarta Post, Jakarta

The Importer's Association of Indonesia (GINSI), said that the government's policy -- which requires the verification of textile and steel imports -- has been effective in curbing the smuggling of the two commodities into the country.

GINSI chairman Amirudin Saud said in a seminar on the verification of imports on Wednesday that the policy had helped suppress the smuggling of textile and steel via bonded zones.

He estimated that the government could save about Rp 1.5 trillion (US$176.5 million) per year, in potential customs and tax losses because of the rampant smuggling.

The government issued the decree on the verification of imported steel in 2002, and on textiles earlier this year. Under the two decrees, the import of the commodities by industries, located in bonded zones, must be verified to ensure that they are going to be reprocessed for the export market.

Imported goods enter bonded zones without being examined by custom's officials. But the imported goods must only consist of raw materials to be used in the production of goods intended for the export market.

Previously, GINSI had suspected that smugglers had taken advantage of these conditions by smuggling textiles and steel products into the country through bonded zones.

Goods are allegedly smuggled into local markets -- through such zones -- by the falsification of documents, such as contracts and money transfers.

Smuggling has been seen as the primary factor hurting local manufacturers, as they struggle to compete with cheaper foreign products. Some textile companies have been pronounced bankrupt partly because of smuggling activities in the country.

The two decrees aimed at protecting local industries and ensuring fair competition.

The decrees require imported goods to be verified in their country of origin before entering Indonesia.

State-owned surveyor companies PT Sucofindo and PT Surveyor Indonesia have been appointed to manage the verification program.

Amirudin said that since the verification of goods would be conducted overseas, it would helps cut the workload of custom's officials in Indonesia.

"Before, we paid fees to custom officials when we unloaded the imported products here," he said. "But since the verification program has been running... we can skip that process."

He acknowledged the process was still in a state of transition and there were some flaws. But, said, "I hope PT Sucofindo and PT Surveyor Indonesia can cooperate, so that there will be no delay in the issuance of verification reports, and the unloading process in ports will not be obstructed."