Importers urge restoration of pre-shipment inspection

The Jakarta Post, Jakarta

The Indonesian Importers Association (Ginsi) on Wednesday urged President Megawati Soekarnoputri to institute pre-shipment customs inspection of imports to curb smuggling and the under- invoicing practices that have damaged the domestic market and resulted in big losses in state revenues from duties and taxes.

Ginsi's chairman Amirudin Saud told reporters after a meeting with the President that the state lost about Rp 30 trillion (US$3 billion) a year due to smuggling and import under-invoicing.

"Such a scale of import under-invoicing, which has inflicted major losses on the state and resulted in unfair competition for domestic products, could not have occurred without collusion by customs officials," Amirudin pointed out.

It was therefore most urgent that imports be subjected to pre- shipment inspection, similar to the system in operation between 1985 and 1995, he added.

"Ginsi urged the government to assign the state-owned PT Sucofindo surveyor company to conduct pre-shipment inspection of imports at loading ports, notably those in Hong Kong, Singapore and other major points of origin for imports to Indonesia," he added.

According to Amirudin, smooth import flows were also vital for Indonesian exports because manufacturing industries largely depended on imported materials and components.

"The customs service is simply incompetent and too corrupt to conduct proper customs inspection of imports, as can be seen from the fact that not a single case of import violations or smuggling has so far been brought to court," he said.

President Megawati, who was accompanied at the meeting by Minister of Industry and Trade Rini M. Soewandi, said she would consider Ginsi's proposal.

Using import data from the Central Bureau of Statistics and revenue figures from the state budget, Ginsi announced last week that the government should have collected Rp 52.7 trillion from import duties, value added tax and income tax from non-oil imports alone in 1998, Rp 43.4 trillion in 1999 and Rp 57 trillion in 2000.

"However, actual state revenues amounted only to Rp 2.3 trillion in 1998, Rp 4.1 trillion in 1999 and Rp 3.4 trillion in 2000," he added.

Amirudin said his estimates of the revenue losses were based on average import tariff of 10 percent, 10 percent value added tax and 2.5 percent income tax and on a non-oil import value of $24.6 billion, or Rp 234.5 trillion, in 1998 (Rp 9,500 to the dollar), $20.3 billion, or Rp 193 trillion, in 1999 and $26.6 billion, or Rp 253.5 trillion in 2000.

According to the Ginsi study, actual state revenues from imports should have amounted to at least to 22.50 percent of total import value.

"Even though more than 75 percent of our imports consist of industrial basic materials that are subject to zero or very low tariffs, more than 5,345 categories of imported goods, or 78 percent of the total number of tariff classifications listed in the 2001 Indonesian Import Tariff Book, are still subject to import tariffs ranging from 5 percent to 20 percent," he pointed out.

Amirudin also lambasted the customs service on Wednesday for its incompetence in inspecting export goods, a service the customs directorate general took over from PT Sucofindo only in August.

"Ginsi therefore suggested that the government restore the authority to inspect exports to PT Sucofindo, which had built up decades of experiences in that service and had developed a large pool of skilled resources with which to perform it," Amirudin said.

Meanwhile, Finance Minister Boediono said he had not yet received the Ginsi report.

"I have yet to read the report, so I can't make any comment," he told the Jakarta Post prior to a meeting with the House of Representatives' budget committee.