RI urges China to help combat smuggling

The Jakarta Post ,  Jakarta   |  Wed, 05/10/2006 12:06 PM  |  Business

Rendi Akhmad Witular, The Jakarta Post, Jakarta

Indonesia is seeking China's cooperation to prevent suspected rampant smuggling of Chinese goods into Indonesia given the huge discrepancies in the trade figures between the two countries, a minister says.

Trade Minister Mari Elka Pangestu said Monday that ""technical talks"" between the two governments had just started in a bid to ascertain to what extent the discrepancies were the result of smuggling and underinvoicing.

""Although it is obvious that discrepancies will arise given the different reporting methods used by importers and exporters, we should remain alert to the possibility of illegal activities giving rise to the differences,"" she said.

Officials from the two countries are still comparing trade figures to detect the scale of the possible smuggling and the modi operandi employed by the smugglers.

""There should be an agreement between the two countries on how to handle this problem, including what actions should be taken by Indonesia and China, respectively, to prevent the smuggling,"" said Mari, who is a former economic and trade analyst.

One glaring example of the discrepancies in the trade data concerns low-end textile and garment products.

The Indonesian Central Statistics Agency (BPS) reported that imports of these products from China last year were worth US$202 million, while the Chinese authorities claim that the value amounted to more than $700 million.

With its vast archipelagic territory and poor law enforcement, Indonesia has become a paradise for smugglers.

According to Industry Ministry figures, the volume of illegally imported textile products increased by 180 percent in just one year, from 195,000 tons in 2004 to 548,000 tons in 2005.

These illegal imports have badly hurt the country's labor-intensive manufacturing sector as local products are unable to compete with the cheaper smuggled products.

The prices of smuggled goods are lower than those produced locally as the smugglers evade taxes and import duties.

Finance Minister Sri Mulyani Indrawati recently fired the director general of customs and excise, Eddy Abdurrahman, following his failure to prevent, or at least reduce, smuggling and underinvoicing.

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