JAKARTA (THE JAKARTA POST/ASIA NEWS NETWORK) - The recent establishment of an inter-ministerial anti-smuggling task force - one that comprises the National Police chief, the Armed Forces commander-in-chief, the attorney general, the finance and trade ministers and the heads of the Corruption Eradication Commission (KPK) and the financial intelligence unit, as well as the presidential chief of staff - is simply official admission that smuggling remains a major and complex problem in the world's largest archipelagic country.
The government seems determined to achieve what has eluded similar anti-smuggling teams under previous administrations. Even authoritarian president Suharto resorted to a draconian measure in 1985 by stripping the customs service from its core mandate and entrusting the import custom clearance services to the Geneva-based SGS inspection and verification company for 12 years. But administrative and physical smuggling still seemed rampant.
The domestic industry is not afraid of fair competition, but an influx of grossly undervalued finished goods seems to have been flooding the domestic market. This means many importers can still collude with customs officers and get away with declaring an invoice priced at a fraction of the true value of the goods, so that importers pay less VAT and sell at ridiculously low prices, hence damaging domestic manufacturers.
Many local manufacturers of finished goods have suffered from unfair competition from imports that enter the country through either outright physical smuggling or under-invoicing practices. Every day, we can visit major stores in Jakarta and see foreign shoes for sale that were brought in almost entirely through a collusive door-to-door container service.
Finance Minister Sri Mulyani Indrawati, who chairs the task force, said the government had identified 1,500 "high-risk" importers who were often engaged in the shady import trade, either through collusion with corrupt customs officials or with the support of senior officers of law enforcement agencies.
Much progress has been achieved in customs service reform, but the process of customs inspection and clearance has been made more challenging and complex because a large number of commodities have been subjected to import restrictions (non-tariff barriers) at the recommendation of various ministries. The main objective of the restrictions is to protect domestic agricultural produce and manufacturers from unfair import competition.
However, given the porous coastal areas across the vast archipelago and the large number of seaports that handle international trade, the task force needs to implement risk management strategies, as it would be impossible for the team to catch every single contraband trade or smuggler. Hence, it is important to ensure that at least the largest seaports and the smaller, high-risk seaports remain under observation.
On paper, the new anti-smuggling task force should perform effectively, given the collective authority of all the government ministries and law enforcement institutions supporting it. But the perpetual problem with such an inter-ministerial team remains an acute lack of coordination within the bureaucratic machinery.
Once again, Sri Mulyani should stake her reputation on leading the task force. However, since the task force also includes the President's chief of staff, we are willing to give it the benefit of the doubt.
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