Physical inspection will create problems

The Jakarta Post, Jakarta

Indonesian importers are wary of the customs service's plan to subject imports of electronic goods, textiles, footwear and toys to physical inspections upon arrival, pointing out that the procedure would only create more loopholes for collusion and corruption, hinder the flow of goods and cause congestion at ports.

"The new procedure, scheduled to be enforced next month, is simply a panic reaction from the customs and excise directorate general to the sharp criticism of its utterly substandard performance," Amiruddin Saud, chairman of the Indonesian Importers Association (Ginsi) said over the weekend.

The real problem, he added, is not lack of inspection but the technical incompetence and venality of customs officials.

The Directorate General of Customs and Excise revealed the plan to conduct physical inspections of imports in a meeting with several importers and businessmen last week following Ginsi's report of massive smuggling and under-invoicing on the part of the customs office, which causes huge losses to the state.

"(But) Physical inspection of imports on arrival will not be effective in curbing smuggling and under-invoicing. It will instead hamper the smooth flow of imports because the customs service does not have a reliable database to verify prices and it will create new opportunities for customs officials to accept bribes to facilitate things," Amiruddin said.

According to him, smooth import flows are also vital for Indonesian exports because manufacturing industries depend largely on imported materials and components.

"The customs service is simply too incompetent and highly corrupted 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.

According to Amiruddin, even the post-audit system currently used has caused uncertainty because customs officials often come up with customs duty bills much larger that what had been paid by importers before the audit was conducted.

Under the current system, most imports are not subjected to physical inspection on arrival, but importers must settle the payment of customs duties and other taxes based on prices stipulated in import documents.

"The problem though is that the audit is often only conducted two years later when the goods have been sold or used in production, and customs officials often set much higher customs duties and other taxes than what has been paid on the delivery of imports. This is the area that is very often vulnerable to collusive negotiations," Amiruddin said.

He also revealed that goods are often smuggled through door-to-door container services whereby bogus importers simply pay customs officials to have their imports delivered directly to their warehouses without being subjected to proper document verification.