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)