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.