Custom's Service with Less Red Tape, Stiffer Penalties

(11/4/2006)

As part of the Government's pledge to create a more favorable investment climate through the reduction of red tape and corruption, the Indonesian House of Representatives recently ratified a new Customs Law.

Highlights of the new law, include:

• The eventual introduction of a fully computerized customs clearance system in accordance with agreements made by Indonesia under the World Trade Organization (WTO).

• Absolute time limits of 30 days imposed on the Custom's department for determining applicable duties payable on any import or export commodity.

• An absolute time limit of 60 days has been set in deciding any challenge filed by an importer or exporter regarding a duty rate or commodity classification for a specific shipment.

• Exemptions or lower duty tariffs for raw materials or capital goods required by companies classified as "pioneering enterprises."

• The provision of interest-free installment payments for exporters and importers in the payment of any duties due to the government.

• Export duties of up to 40% of value on selected items deemed essential to the domestic market in order to stabilize both supply and prices.

• Stiffer penalties for smugglers of up to 20 years in prison and fines of US$10.8 million.

• Punitive penalties adding 33% to the sentences for Custom's officials found guilty of involvement in smuggling activities.

• Payment incentives of 50% of any penalties imposed by Courts or half of the value of seized commodities to those who assist the Government in preventing smuggling activities.

• Substantially enlarged investigative, audit and inspection authority for Custom's officials in the enforcement of export and import regulations.