RI customs law triggers panic
JAKARTA (JP): Frightened producer importers have stockpiled six months of supplies, fearing that the implementation of the 1995 customs law starting on April 1 could hinder the flow of imports for quite some time.
The Indonesian Importers Association's chairman, Amirudin Saud, said yesterday the stockpiling of raw materials was likely to cause a deficit in Indonesia's merchandise trade balance during the first three months of this year.
However, he continued, the country would regain a surplus in merchandise trade after April 1, when the customs office introduced its new imports procedures.
"Importers worry that the customs office cannot ensure smooth flows of imports after April 1, considering there is to be no transition period for the new customs procedures. That's our main concern," Amirudin told journalists after addressing a tax seminar here.
"However, we do hope the flow of goods after April 1 will be as smooth as and even smoother than the current system of preshipment inspections," he added.
The current preshipment inspection system requires all imports to be checked by the designated surveyor, state-owned PT Surveyor Indonesia, at points of loading.
The new customs procedures involve self-assessment on duties and taxes due, on-arrival inspections and post-release audit.
Amirudin said importers usually stock raw materials for no more than three months due to the high cost involved.
"They stockpile many raw materials because they do not want their production to be hindered by the unavailability of raw materials," Amirudin said.
Amirudin said importers who had stockpiled imported raw materials include those working in the textile, footwear, plastic and steel industries. Such industries depend on imported elements.
Indonesia recorded a trade surplus of US$6.94 billion last year. The trade surplus was built on total exports of $49.81 billion against imports of $42.86 billion.
Last December alone, exports amounted to $4.68 billion, $3.76 billion of which was from oil and natural gas. Imports in the same month totaled $3.76 billion.
Speaking on taxes, Amirudin said importers paid $5.35 billion last year in taxes, mainly in 10 percent sales tax and 2.5 percent withholding income tax on their imported goods.
"That does not include import duties and value-added tax imposed on a number of imported products," Amirudin said.
Services
While recording a surplus in merchandise trade, Indonesia has had a much higher deficit in services, mainly from foreign debt servicing as well as from financial and freight account deficits.
The government has projected that the country's deficits in services would reach $15.2 billion next fiscal year, from $13.97 billion this fiscal year. The biggest deficit has always been in the sea transportation sector.
Indonesia is projected to spend $5.61 billion in foreign exchange on paying foreign shipping companies to transport Indonesia's exports and imports next fiscal year, which begins in April.
Foreign shipping companies transport more than 95 percent of Indonesia's exports and imports.
The government has taken various steps, including the scrapping of value-added tax on the purchase of vessels, to empower local shipping companies to transport more exports and imports. However the situation has not improved significantly.
To reduce the deficit, Amirudin suggested that the government introduce a ruling requiring importers to pay their freight in rupiah.
"It's quite an easy business. By introducing that measure, you would be able to reduce the deficit in freight alone by 10 to 20 percent," Amirudin said.
He also suggested the government empower state-owned shipping companies by providing them with soft loans to buy more vessels.
"We importers also want to use local shipping companies to transport our imports. However, we just cannot find enough locally owned vessels for our imports," he said. (rid)