Pre-shipment inspection system will stay

Pre-shipment inspection system will stay

JAKARTA (JP): Minister of Finance Mar'ie Muhammad said here
yesterday that the government will maintain its pre-shipment
inspection procedure to secure smooth import flows.

Mar'ie hastily added, however, that the pre-shipment
inspection of imports, introduced in 1985, has nothing to do with
the performance of the Customs and Excise Duty Directorate
General.

"The primary objective of the pre-shipment inspection system
is to smooth out the flow of imports," he said when answering
questions from the House Budgetary Commission.

He said even in the mid-1980s when the volume of imports had
not been as big as now, import flows routinely encountered major
stagnation at the seaports.

"You can imagine how serious the stagnation would be now if
our imports had increased sharply and steadily over the past
decade along with economic expansion.

The government introduced pre-shipment inspection in the
middle of 1985, following concern over the country's notorious
red tape at the ports. They then assigned the Geneva-based
Societe Generale de Surveillance (SGS) to conduct the
inspections.

In 1991, the government established PT Surveyor Indonesia (SI)
with 76 percent of the shares owned by the government, 20 percent
by SGS and four percent by PT Sucofindo, a state owned surveyor
firm. Since then, SGS has served as a subcontractor for SI, which
is expected to take over all the pre-inspection jobs from SGS in
1995.

Mar'ie argued that smooth import flows are very important for
Indonesia because the manufacturing sector depends largely on
imported basic materials, parts and components while investment
projects tend to require imported capital goods.

Readiness

"If we return to post-shipment inspection, are our port
facilities and personnel really ready?" he asked rhetorically,
adding that such a procedure might lead to increased stagnation
at the ports.

Several analysts and House members have criticized the hiring
of SGS as a waste of resources. But for the most part,
businessmen have welcomed the pre-shipment inspection system due
to its great contribution to facilitating import flows.

Minister Mar'ie yesterday especially expressed concern with
the quality of human resources at the seaports, arguing that good
hardware would be useless if they were not managed by good-
quality personnel.

He did not, however, rule out the possibility of not renewing
the contract with SGS after it expires next July.

"We don't want to depend on a single foreign company. After
all, PT Surveyor Indonesia has significantly improved its
capabilities and has opened offices at 16 major ports of origin
of Indonesian imports," Mar'ie added.

He said if the condition still required the hiring of a
foreign surveyor company "we could select the company through a
selective bidding process."

Answering another question from the Budgetary Commission,
Mar'ie said the government would spend about Rp 165.3 billion
(US$75.8 million) for the pre-shipment inspection of imports
during the current (1994-1995) fiscal year.

Of the total, Rp 83.7 billion will be paid to SGS, Rp 43.1
billion to PT Sucofindo (also state-owned) and Rp 38.3 billion to
PT Surveyor Indonesia. (rid)