The customs of corruption

The customs of corruption

Nothing seems to have changed within our customs service. It
remains among the most corrupt public institutions in the
country, together with the directorate general of taxation and
the police.

Even former president Soeharto, fed by the strongly entrenched
web of corruption within the customs directorate general, felt it
necessary to ask for foreign assistance to rein in the
department. He stripped the customs service of its authority to
verify and clear imports, handing the job over to Switzerland's
Societe Generale de Surveillance for 10 years beginning in 1985.
However, it was business as usual after the contract with the
Swiss company ended in 1995 and the customs service was handed
back its authority.

Reforming the customs service was supposed to be at the top of
the government's agenda between 2001 and 2003, under the
supervision of the International Monetary Fund. Yet there has
been little progress. Foreign chambers of commerce and import
associations still see the customs department as the most corrupt
public institution.

President Susilo Bambang Yudhoyono demonstrated his
comprehensive understanding of the most pressing problems facing
the economy by including the customs and taxation services among
the four government institutions (Bank Indonesia and the Attorney
General's Office were the other two) he visited during his first
few days in office last October.

Yet the Economic and Social Research Institute at the
University of Indonesia revealed last week that corruption
remained a major problem in the customs service.

About 82 percent of 600 businesspeople the institute surveyed
in April and May admitted to paying illegal fees to customs
officials. The survey, conducted in cooperation with the World
Bank, covered businesses at five major seaports: Tanjung Priok in
Jakarta, Tanjung Perak in Surabaya, Semarang in Central Java,
Makassar in South Sulawesi and Belawan in North Sumatra.

The respondents also complained of gross inefficiency in the
customs service, saying it took at least six days to get a
document cleared.

We wonder then what is the purpose of the Coordinating Team
for Facilitating Imports and Exports, which is chaired by chief
economics minister Aburizal Bakrie. Customs problems should be at
the top of the team's agenda since an efficient and competent
customs service is key to smooth trade.

Even though graft in the customs service is simply a
reflection of the embedded culture of corruption in our nation,
the government should realize that the impact of a corrupt
customs service on the economy is more devastating than, say,
malfeasance in the National Police or tax office.

The effects of malfeasance within the tax service are limited
to the loss of state revenue as the government receives much less
than is due it from taxpayers. But corruption within the customs
service causes far-reaching damage, resulting in revenue loss and
creating distortions in the domestic market because foreign goods
pay much lower duties and taxes than mandated by law. This
creates unfair competition for domestic products such as
electronics, garments and produce like rice and sugar.

The customs service plays a vital role in facilitating the
smooth flow of imports, which is vital for the domestic
manufacturing industry due to its heavy dependence on imported
goods.

No trade policy will be effective if the customs service,
which is responsible for guarding the gateways (airports and
seaports) to the country, remains as corrupt and technically
incompetent as it is now. Put another way, there will never be
fair trade without an efficient, fairly clean customs service.

The findings of the latest survey clearly show how technically
inept the current customs and excise tax director general, Eddy
Abdurrahman, is in managing his office.

Abdurrahman's comment that businesspeople should not pay
illegal fees to customs officials and should report directly to
him any corrupt customs officials indicates one of two things: He
is either completely ignorant of what is really going on at his
office, or the internal controls and internal audit system in his
directorate general is ineffective.

True, the corrupt mentality at the customs service is a
disease that cannot be cured in one or two years, and cannot be
treated in isolation from other government and state
institutions. But the finding of the University Indonesia-World
Bank survey warrants an overall reform of the customs service
that should start with its chief.