Rini proposes PSI system on imports

Adianto P. Simamora, The Jakarta Post, Jakarta

Minister of Trade and Industry Rini MS Soewandi has proposed reestablishing the pre-shipment inspection (PSI) system on imports as one way of curbing rampant smuggling into the country.

"To help resolve the smuggling problem, it is no exaggeration to reconsider the possibility of reinstating the PSI system," Rini told reporters on Wednesday.

Smuggling is seen as a serious threat to local industries, which have been facing shrinking markets both at home and overseas. Some manufacturers, such as textile firms, have reportedly been bankrupted because they can not compete with cheaper imported products.

Rini said that she had ordered a special team to examine the possibility of reintroducing the PSI system.

"We will discuss it further with other related ministries to examine the possibility of applying the PSI system next year," she said, adding the proposed-measure had been discussed with several business players and importers.

Under the proposed PSI system, imported goods which have often been a target of smugglers must be inspected at the port of origin before entering Indonesia.

"This is like the Container Security Initiation system which is currently used by the U.S. on imported goods from Singapore," Rini said.

Indonesia currently uses a post-audit system.

The government applied a pre-shipment inspection system on imports in 1985 and awarded the contract to Societe General de Surveillance (SGS) amid massive corruption at the country's customs office.

The government, however, ended the contract in 1995 following the implementation of the 1995 Customs Law, and the import inspection authority was returned to the customs office.

Local manufacturers have long complained that smuggled goods are threatening their products on the domestic market.

They claimed the smuggling and under-invoicing practices were made possible by collusion with corrupt customs officials.

There have been growing calls for the government to use the expertise of SGS for the PSI work.