World Bank urges customs office to improve service

World Bank urges customs office to improve service

By Prapti Widinugraheni

JAKARTA (JP): The World Bank yesterday urged Indonesia's
customs office to expedite its new customs clearance system if it
did not want to risk being a barrier to sustainable economic
growth.

World Bank staff member Lloyd Kenward warned that if the
customs office failed to ensure a smooth and quick transition
from the previous pre-shipment inspection system to the current
on-arrival inspection system, Indonesia's competitiveness would
weaken.

This could in turn reduce foreign direct investment flow into
the country and slow economic growth, he said.

Kenward said that while the World Bank recognized the need to
end the pre-shipment inspection system, it was concerned about
how the transition process would take place.

"Business people around the world will observe the
transition ... The customs office will be under their magnifying
glass," he said.

Kenward suggested the customs office allow an independent
agency to monitor the transition process to make sure it did not
jeopardize the economy.

"If no improvement is achieved, we suggest more forceful
measures be imposed," he said. He did not elaborate.

Kenward was speaking at a discussion on the new customs law
held by the Directorate General of Customs and Excise Tax.

The discussion, led by Director General of Customs and Excise
Soehardjo Soebardi, was also attended by Secretary General of the
World Customs Organization, James W. Shaver, Director General of
Taxes, Fuad Bawazier, and representatives from importer companies
and international organizations.

The government launched in April a combination of on-arrival
inspection and post-entry audit systems with self assessment of
import duties, in coincidence with the enforcement of the new
customs law.

The system replaced the pre-shipment inspection of imports
which was introduced in mid-1985 to bypass the then corruption-
infested customs service.

Shaver reminded the customs office of the tremendous task it
had managing and implementing the new customs law.

"In terms of quickness and magnitude, the change that the
customs office must go through is perhaps the biggest to have
ever happened in the world," Shaver said.

Shaver acknowledged that a big challenge of the transition
process would be educating those involved to apply the electronic
data interchange (EDI) system -- the backbone of the new customs
clearance system.

"It's a big responsibility, but it's not impossible," he said.

The EDI system was designed to enable importers to send their
customs declarations electronically to the customs office and
electronically pay import duties to designated banks.

The system electronically connects the customs office with
importers, shipping firms, foreign exchange banks and port and
airport authorities.

So far, only a few institutions have connected to the system,
causing many observers to question its effectiveness.

Last month, only 222 or 2.7 percent of the 8,000 licensed
importers were connected to the EDI system.

Soehardjo said that the customs office was not the only
institution involved in the process of clearing imports and
exports, so it should not be the only one blamed for the
unsatisfactory service that still prevailed.

"There are many institutions involved, including port
authorities, shipping agents and brokers, importers and
exporters," he said.

Shaver suggested the government set a common minimum standard
for all agencies, offices and companies that want to be involved
in port activities.

"A threshold such as this will allow them to have a common
understanding of customs procedures and laws, so they can
facilitate -- instead of slow down -- import and export
activities," he said.