'Pre-shipment inspection system temporary'

'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.