Tue, 09 Aug 1994

Redefinition of customs service urged

JAKARTA (JP): An independent research group yesterday suggested that the government redefine its contract with the Societe Generale de Surveillance (SGS) in inspecting Indonesia's imports because it runs counter to GATT rules and gives no profits.

"It's ridiculous to continue assigning SGS to pre-shipment inspections since we reduced our import tariffs to an average of 19 percent," Rizal Ramli, the managing director of the Advisory Group in Economics, Industry and Trade (Econit), said at a press conference yesterday.

SGS is a Geneva-based surveyor firm, which was licensed in 1985 under a three-year contract to inspect Indonesia's imports at the point of loading following concern about the country's notorious red tape and corruption among customs officials.

PT Surveyor Indonesia, a company 76 percent owned by the government, 20 percent by SGS and four percent by PT Sucofindo, a state-owned surveyor firm, is expected to take over all the pre- inspection jobs from SGS by December.

Ramli said yesterday that the pre-shipment inspections are against the Valuation Code of the General Agreement on Tariffs and Trade (GATT), which requires its signatories, including Indonesia, to value imported goods based on the prices of actual transactions.

"It should not be based on the value of merchandise at the country of origin or on arbitrary or fictitious value. The customs value of imported goods shall be based on actual transactions," he added, referring to the practice whereby Indonesian customs and SGS estimate the value of imported goods.

The government claims that SGS's inspections have given it more revenue because importers can no longer under-invoice their goods in an attempt to reduce payments for import duties. On the other hand, importers often complain that they have to pay excessive duties because the check prices set by SGS are higher than the actual prices.

Robert P. Collier, the chief representative of SGS's Jakarta office, was not available yesterday for comment. "He has a meeting," said Collier's secretary.

Laksamana Sukardi, an associate director of Econit, said that the practice of pre-shipment inspections should be abandoned on the grounds that Indonesia's import tariff rates have been reduced from 37 percent in 1984 to the present 19 percent.

"Industrialists are not interested in risking under- invoicing," Laksamana said.


"It's better to implement a post-audit system than the pre- shipment inspection," he said. "No other country employs SGS the way Indonesia does."

"We're the biggest customer of SGS. We pay them some Rp 450 billion (US$207 million) annually just for inspection fees," he bluntly said.

He noted that the Indonesian government could purchase SGS within 10 years at such a fee schedule.

SGS and the government in 1991 founded PT Surveyor Indonesia (SI) in a bid to transfer know-how on goods inspections to Indonesia.

Ramli questioned whether SI could replace the dominant position of SGS after nine years of operation.

According to Econit, SGS carries out 68 percent of import inspections and gets 71.1 percent of the total inspection fees, while SI administers 32 percent of the inspections but receives only 28.9 percent of the fees.

"What kind of technology do they possess? Those people are just filling out forms and don't even know when a number of containers full of toxic waste were imported into this country," said M.S. Zulkarnaen, another associate director of Econit and also an ardent supporter of protecting the environment.

Zulkarnaen, Ramli and Laksamana agreed that it is better for the government to redefine its policy on customs service and, if the government agrees, to implement post-audit inspections with the help of prime intelligence service.

"It's just like paying taxes. Let the business people fill in the forms themselves. We just do the checking," Ramli said.

All of the three said that Econit is prepared to defend its research-based analysis by inviting related parties to open debates with them. (09)