Preshipment inspection

The government's decision to extend the contract for import inspection with PT Surveyor Indonesia for another two years starting yesterday should be welcomed. The move also automatically guarantees the continued use of the preshipment inspection system for Indonesian imports until at least 1997.

Over the last few weeks, the House of Representatives' deliberations on the customs bill have been dominated by debates over the continuation or abolishment of the preshipment inspection system. Importers and almost all other port users are fully in favor of the maintenance of the present system, while the customs service naturally wants to reinstate the previous system of on arrival inspection.

Importers, who apparently still suffer from the trauma of dealing with what they called bureaucratic inertia and corruption in the customs service in the period before June, 1985, are obviously among the happiest with the government's decision.

We should also remember that in as far as Indonesia is concerned, when we refer to importers we do not talk about traders as in most developed countries, but about industrialists and investors. That is because 50 percent of Indonesia's non-oil imports, which are handled by PT Surveyor Indonesia, consist of industrial basic and intermediate materials, 43 percent of capital goods and only 7 percent of consumer goods.

The composition of the imports also indicates how crucial import facilitation is for the country's manufacturing sector, which now accounts for more than 70 percent of total non-oil exports, and for the implementation of investment projects. The pivotal role of smooth import flows also can be judged from the export-led development strategy the government has been pursuing to expand the economy.

The continuation of the present inspection system, which was introduced in the middle of 1985, also means that the government has been satisfied with the performance of PT Surveyor Indonesia and its sub-contractor, the Geneva-based Societe Generale de Surveillance (SGS).

PT Surveyor Indonesia, which is 76 percent owned by the government, did not take over the responsibility for the inspection job from SGS until early in 1992. But now, after less than four years, the company is handling 85 percent of Indonesia's non-oil imports through its offices in 18 countries. That means that the process of transfer of technology from SGS has been running smoothly.

It is nonetheless too early to expect PT Surveyor Indonesia to do the job wholly by itself. Moreover, we think, it is economically inefficient for the company to further extend its overseas branches or offices to countries from which Indonesia makes only small volumes of imports. Hence, it made a lot of business sense that PT Surveyor Indonesia also extended its technical-assistance agreement with SGS for another two years. Hopefully, PT Surveyor Indonesia will be able to further improve its capability so that it will no longer have to depend entirely on the government contract, but will eventually be capable of getting jobs from private companies.