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Cross-border electronic invoicing could prevent HS code fraud
Indonesia can look to India on how to introduce e-invoicing seamlessly in gradual stages.
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Coordinating Political, Legal and Security Affairs Minister Mahfud MD (second left) is accompanied by (from left) Finance Minister Sri Mulyani Indrawati, Financial Transaction Reports and Analysis Centre (PPATK) head Ivan Yustiavandana and National Police detectives chief Comr. Gen. Agus Andrianto during a press conference on April 10 on suspicious transactions involving Finance Ministry officials. (Antara/Asprilla Dwi Adha)
T
he alleged use of falsified Harmonized System (HS) codes to import gold bars, which involved suspicious transactions and alleged money laundering worth Rp 189 trillion (US$12.85 billion) through the Directorate General of Customs and Excise (DGCE), has again raised a big question about the integrity and competence of the Indonesia’s Customs Office.
We share the suspicions of the Financial Transactions Report and Analysis Centre (PPATK) and Coordinating Political, Legal and Security Affairs Minister Mahfud MD that the method of falsifying HS codes, which was intended to avoid paying taxes and duties on gold imports, could not have been possible without the collusion of individuals in the Customs Office.
How indeed could the HS codes been changed without involving customs officers? This is because in the country of origin, the produce was recorded as semifinished gold, which would be subject to import duties.
We were painfully surprised by the revelation of the suspected fraud over the last few weeks. We thought that the Customs Office had improved its competence and integrity.
We still remember clearly how authoritarian president Soeharto, a very nationalist leader, took a bold move against the customs service in 1985: He was so fed up with the corruption, inefficiency and competence within the DGCE that he stripped it of its import inspection and clearance authority and transferred that mandate to Geneva-based Société Générale de Surveillance (SGS) for more than 10 years.
Soon after regaining its inspection and clearance authority in 1997, the DGCE pledged to clean house and improve its efficiency and competence.
But it seems that the Customs Office simply reverted to its “business as usual” mode, as indicated by the incidents of falsified HS codes that allegedly took place between 2016 and 2019. And this malfeasance was apparently caught by Geneva-based Transparency International (TI) while conducting a survey for its annual Corruption Perceptions Index (CPI).
