Police probe firms over smuggling

Rendi A. Witular, The Jakarta Post, Jakarta

The police launched Tuesday investigations into dozens of companies suspected of smuggling and tax fraud in a new effort to show the government's seriousness in fighting the crimes blamed on causing severe damage to Indonesia's local industries.

The police will be assisted by the directorate generals of customs and excise, and tax in the investigations.

The three agencies agreed to launch the investigations during a meeting Tuesday at the Crisis Center's office at the Ministry of Industry and Trade, according to the center's chief executive Sofyan Wanandi.

Sofyan said the center had provided them with the list of suspect companies, which the center had gathered based on information provided by the country's business associations.

Sofyan said the investigations would first focus on textile, garment and electronic companies as these local industries were the most affected by the smuggling and tax fraud practices.

"We need prompt action to stop and prevent such practices, or else our domestic manufacturers will die and will lead to major unemployment problems," Sofjan said.

Sofyan refused to name the companies, but sources at the ministry of industry and trade said they included big companies.

Local textile, garment and electronic manufacturers have repeatedly complained about the rampant smuggling as they were unable to compete with the illegally imported products on the domestic market.

They also complained that many importers undervalued their imports to cut duties, which enabled them to sell their imported products cheaper than those made locally.

"Aside from hurting local manufacturers, these practices (smuggling and undervaluation) cause huge losses in revenue for the government," Sofjan said.

Sofyan said the government needed to protect the existing textile, garment and electronic industries given the huge number of workers employed by the industries.

The Crisis Center was set up in August this year to help resolve various problems in the business sector in a bid to encourage investors to come to the country or maintain their operations here.

The body is chaired by Minister of Trade and Industry Rini M. Soewandi.