Pro-business customs law on the cards for enactment

Urip Hudiono, The Jakarta Post, Jakarta

Exporters and importers may finally be seeing some light at the end of the tunnel as the House of Representatives appears set to approve amendments to the Customs Law that promise to cut bureaucracy and improve services.

However, whether the amended legislation will indeed prove to be a boon for Indonesia's trade and investment still has to be proven as it also introduces a new "outbound customs duty" on certain strategic products in order to protect security of supply on the domestic market. It is feared that this new duty could hamper the flow of trade.

The House is scheduled to approve the government-proposed amendments to the 1995 Customs Law during a plenary session Wednesday.

The amendment bill is part of the government's plan to revise Indonesia's taxation, customs and excise, and investment legislation so as to improve the business and investment climate.

"The revision of the Customs Law is basically intended to change its function from merely being a fiscal instrument into more of a means of improving the customs office's services and the prevention (of smuggling)," the chairman of the House committee deliberating the bill, Irmadi Lubis, told The Jakarta Post.

Irmadi said that some of the most important changes to be introduced involved reducing the bureaucratic chain and the time needed to process declared goods to 30 days at most.

"Customs-related procedures will no longer be set out in detail by government regulation, but can be issued through decrees of the finance minister or even the director general for customs and excise," he said.

"This will make customs-related services more flexible and better able to adapt to current needs."

Irmadi said that under the newly amended law, importers and exporters could now require the customs office to process their declarations, and the calculation of customs duty and processing of its payment, within 30 days or less.

"The only exception is where the customs office has to conduct a detailed inspection on a shipment of goods. This must be completed within a maximum of 60 days," he said.

No time limits are specified in the current Customs Law.

However, Irmadi admitted that the revised law would also include the introduction of a new "outbound customs duty" of up to a maximum of 40 percent of a shipment's value, which he said was to guarantee the security of supply of certain products on the domestic market.

"With the recent price increases affecting certain commodities, like crude palm oil and coal, there will be a tendency to prioritize exports and neglect the local market. This new arrangement will prevent such a situation from arising," he said.

The Association of Coal Exporters had recently objected to such export duties by filing a case with the Supreme Court, which eventually struck them down.

When asked whether the new duty could adversely affect trade and state revenue, Irmadi said that the trade minister and finance minister would carefully determine which products should be covered.
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