Importers urge restoration of pre-shipment inspection

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.