'Pre-shipment inspection system temporary'
By Riyadi
SINGAPORE (JP): The current debates on the pre-shipment inspection system for Indonesia's imports has spilled over to PT Surveyor Indonesia's branch office in Singapore.
The general manager of Surveyor Indonesia in Singapore, Gannet Pontjowinoto, is joining the furor, saying that for the time being, the pre-shipment inspection is the best choice for Indonesia.
"I'm saying this not because I'm benefiting from the current system but because I believe that from whatever points we see it, Indonesia still needs this system, at least for the time being," Gannet said in a recent interview here.
Gannet argued that the capacity of Indonesia's ports and infrastructure could not yet accommodate the country's growth of imports, which stood at 15 percent to 20 percent per annum.
He acknowledged that the pre-shipment inspection system was only temporary. "Whenever our infrastructure has been adequate, we might need to turn to the post-shipment inspection system."
Anticipating the removal of the current clearance system, Gannet said the company was currently preparing to diversify its services, including quality control and certification of quality assurance.
Misunderstanding
Sharing Gannet's argument, Surveyor Indonesia's general manager for Rotterdam, Netherlands, Frederik Pasla, said here that the wave of disapprovals over the current pre-shipment inspection system is greatly caused by a misunderstanding of the system itself.
"As long as the government still relies on revenues from import tariffs to finance parts of its spending, we cannot abandon the pre-shipment inspection," Pasla said, adding that the workings in pre-shipment inspection included harmonized system tariff classification on goods and calculation of duties based on customs invoicing, not commercial invoicing which opened doors for under-invoicing and over-invoicing practices.
Pasla explained that the objectives of the pre-shipment inspection for Indonesia's imports included enabling fast clearance at customs, ensuring correct collection of customs revenues, ensuring proper execution of government regulations on imports, deterring fraud and smuggling and the importation of substandard goods, as well as helping provide trade statistics.
The origin of the pre-shipment inspection program can be traced back to the early 1960s, when the Zaire government asked the Geneva-based Societe Generale de Surveillance S.A. (SGS) for assistance in checking import frauds by performing pre-shipment quality and quantity inspection of that country's imports.
Many countries experienced similar abuses but were more related to the avoidance of paying import duties and taxes. In 1983, the authorities of Haiti expressed a wish to obtain not only price reductions on over-invoiced imports, but also price and classification information for customs purposes.
Most pre-shipment inspection systems renewed or initiated since then have combined the two main features of import verification -- customs revenue enhancement and foreign exchange conservation.
The pre-shipment inspection system was introduced in Indonesia in 1985, when the government appointed SGS to inspect Indonesia's imports at points of loading to ease the flow of trade and increase customs revenues.
In a later development, the government established PT Surveyor Indonesia, a joint-venture surveyor company with SGS. The government awarded the main contract on import inspection to Surveyor Indonesia, which then hired SGS as a subcontractor. Surveyor Indonesia is expected to eventually take over all inspection jobs from SGS.
Basically, Surveyor Indonesia and its contractor, SGS, conduct customs inspections on incoming goods and issue inspection reports, called Laporan Pemeriksaan Surveyor which detail the particulars of the shipment, including the quality, quantity, tariff classification and prices of the goods inspected.
"We are required to issue inspection reports within two days of the exporters submitting their final documents," Gannet said, adding that the Singapore branch of Surveyor Indonesia could issue 80 percent of the inspection reports within two days.
He noted that part of the customs work, including tariff classification, duty classification and duty payment, could be done during the shipping time, so that the importers could get their inspection reports ahead of time and clear their imported goods on time.
"Many times, importers get their inspection reports several days before the arrival of their imported goods. This of course attributes to the smoother flow of imports," Gannet said.
Largest
He said the Singapore branch issued about 4,500 inspection reports per month, or over 150 a day. Last year, the branch brought out 49,458 reports, with a total import value of US$3.54 billion.
Formed in January last year, the Singapore branch of Surveyor Indonesia is the second largest branch office after the Japanese branch office in terms of import value. For comparison, the Japanese office produced 58,154 reports last year for total imports of $7.05 billion. Surveyor Indonesia has so far opened 15 branches overseas.
With 92 employees, mostly local people, the Singapore office occupies 1,200 square meters of space on the ground floor and another 409 square meters on the second floor of the Keppel Distripark in Singapore.
Gannet, who was Surveyor Indonesia's general manager for Taiwan until August last year, said that his office inspected only goods imported from Singapore. As for goods trans-shipped via Singapore, the office only checks the labels given by other branches in other countries to make sure that the labels are still intact and the containers are not changed.
Gannet and Pasla rejects arguments that Surveyor Indonesia often marks up prices of imported goods because the fee the company collects from the government is based on the value of the imports being inspected.
"Our business is just like the business of an egg seller who has to sell only good eggs. Once he sells a rotten egg, nobody will come to him anymore. So, what we are selling is trust, both to the government and traders," Gannet said.