Pre-shipment inspection under fire

Pre-shipment inspection under fire

JAKARTA (JP): Director General of Customs and Excise Soehardjo
Soebardi suggested yesterday that the system of pre-shipment
inspection applied to Indonesian imports since 1985 be ended to
facilitate the implementation of free trade in ASEAN in 2003.

Soehardjo told journalists after speaking at a seminar on the
new customs law that Indonesia's pre-shipment inspection system
would hinder the harmonization of customs procedures among
members of the Association of Southeast Asian Nations (ASEAN),
which is set to liberalize internal trade under the ASEAN Free
Trade Area (AFTA) arrangement.

"As long as we use the pre-shipment inspection for our
imports, don't expect customs procedures in ASEAN to be
harmonized," Soehardjo said.

ASEAN groups Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam.

Apart from Indonesia, the Philippines also enforces the pre-
shipment inspections for its imports which are conducted by the
Geneva-based Societe Generale de Surveillance (SGS).

The Directorate General of Customs and Excise has been
lobbying strongly for the restoration of its whole customs
inspection authority which was curtailed with the introduction of
the pre-shipment inspection in 1985.

Counter-campaign

However, domestic and foreign businessmen, still traumatized
by the red tape and rampant corrupt practices within the
directorate general, have launched a counter-campaign to convince
the government of the great benefits of maintaining the current
pre-shipment inspection system.

Last August, the government extended a contract with state-
owned PT Surveyor Indonesia for another two years to carry out
inspections of imports at points of loading. SGS continues to act
as a sub-contractor for the state company.

I Nyoman Moena, former president of Surveyor Indonesia,
totally disagreed with Soehardjo's suggestion.

He contended that the customs law centers not on the customs
clearance system but on ensuring a smooth flow of both exports
and imports.

"For the sake of a smooth flow of goods, the current customs
clearance system can be modified... However, it does not mean
that it has to be done by a single agency," Moena said.

He noted that the government has maintained the current pre-
shipment inspection system because it ensures a better flow of
goods.

The pre-shipment inspection system was launched in mid-1985
under a presidential decree designed to improve the clearance of
imports at customs areas.

The decree stripped the customs and excise directorate general
of its inspection authority. The government later assigned SGS to
the job of conducting the inspection job overseas.

The contract with SGS was modified in 1991 after the
government set up Surveyor Indonesia in a joint venture with SGS.
The main contract for the inspections was later awarded to
Surveyor Indonesia, which in turn hired SGS as a sub-contractor.

In reference to the new customs bill, which will come into
force on April 1, Soehardjo said physical inspections of imports
must be carried out on a selective basis only.

"To back up these selective inspections, customs officials
have the authority to conduct post audits of imports," Soehardjo
said.

The new law gives the customs office 10 years to audit export
and import documents. Therefore, exporters and importers are
required to keep their documents for 10 years.

A number of parties, especially importers, have expressed
their concern over the 10-year statute of limitation under which
they can be investigated any time. They consider it too long and
costly.

Customs officials have contended that the 10-year period
defined in the customs law was set in conformity with the tax law
which also set a 10-year statute of limitation for tax audits.

Soehardjo explained that the new law requires the government
to establish an arbitration board. Importers can appeal to the
board against any decisions by the customs office which they
consider unfair. (rid)