Tue, 16 Aug 1994

Maintenance of pre-shipment inspection sought

JAKARTA (JP): Indonesian importers see the present pre- shipment inspection procedure as the most effective and efficient system to secure smooth import flows, prevent administrative smuggling and safeguard government receipts from import duties.

"Judging from the interests of the government and the objective of improving macro-economic efficiency, the pre- shipment inspection system which was launched in the middle of 1985 is the best," Amirudin Saud, Chairman of the Indonesian Importers Association (Ginsi), noted yesterday.

Amirudin was commenting on the suggestion by the Ekonit economic research center to replace the pre-shipment inspection with a post-audit procedure (upon arrival inspection).

Ekonit argued last week that the present system is very costly since the government is forced to pay a large fee to the Geneva- based Societe Generale de Surveillance (SGS) as the sub- contractor of PT Surveyor Indonesia to carry out the inspection work.

"I think the fee paid to SGS is insignificant compared to the benefits the pre-shipment inspection procedure generates for the whole economy," Amirudin added.

"If necessary, importers are willing to bear part of the costs of the pre-shipment inspection," he said in reemphasizing the crucial need to maintain the present system.

He said the country's manufacturing industry, which now accounts for the bulk of non-oil exports, depends largely on imported basic and intermediate materials and capital goods.

"Hence, smooth and efficient import flows will contribute greatly to strengthening the competitiveness of our exports," he argued.

He said that of the 821 out of the 1,000 most active importing companies who responded to Ginsi's questionnaire last May, almost 99 percent asked for the continuation of the pre-shipment inspection.

Amirudin also quoted official records as showing that government receipts from import duties rose sharply from Rp 544.5 billion in fiscal l984/85 (before the pre-shipment inspection system) to Rp 2.65 trillion in fiscal 1992/1993.

This rapid increase, he added, is very impressive given the steady decrease in import tariffs as a result of the deregulation measures and the fact that more than 85 percent of Indonesian imports now consist of raw and intermediate materials and capital goods which are exempted from or subject to very low tariffs.

"This shows that the pre-shipment inspection has minimized under-invoicing practices," he pointed out.


The importers are afraid that restoring the corruption-ridden old system whereby customs officials were empowered to make physical inspections upon arrival of imports (post-audit) would again subject them to arduous procedures and a high degree of uncertainty regarding the clearance of import documents, he added.

Amirudin argued that the customs service, which was stripped of its inspection authority in the middle of 1985 in coincidence with the introduction of the pre-shipment inspection system, would not be able to provide as efficient and credible service as that currently performed by PT Surveyor Indonesia and its subcontractor, SGS.

"Even now, there has been a tendency among several customs officials to abuse Presidential Instruction No.3/1991 which allows customs officers to make physical inspection of imports under several pre-conditions," he pointed out.

The 1991 ruling, for example, allows customs officers to make physical inspections at the ports of unloading whenever they receive intelligence on possible manipulations within particular import shipments.


"But some customs officers used this clause as an excuse for making inspections even though the quality and source of the information was questionable," Amirudin added.

The problem, though, is that importers cannot get compensation for the additional costs they must bear for the inspection even if the information turns out to be false and the import turns out to fulfill all the procedures.

According to Amirudin, such inspections are very costly because the importer has to pay Rp 50,000 (US$23) for the movement of every container box to the inspection site, not to mention other costs related to demurrage, storage and delays.

"That is why importers prefer maintaining the present pre- shipment inspection system, especially because PT Surveyor Indonesia, which is 80 percent owned by the government, will take over about 85 percent of the inspection work from SGS beginning next year," he said.

According to him, the pre-shipment inspection also protects Indonesian importers from dishonest suppliers overseas because the procedure ensures that importers will get precisely what they ordered in terms of quality and quantity. (vin)