Jakarta – The cost of illegal imports in lost revenue to the government almost doubled last year, with Industry Minister Fahmi Idris warning Friday the practice had reached a critical level that endangered the economy.
He said the losses in tax and duties due to growing illegal imports rose about 95 percent in 2005, reaching US$970.9 million from $498 million the previous year.
"The losses were mainly caused by illegal imports of six major industrial products – steel, textiles, shoes, ceramics, electronics and toys – mostly from China," he said following a meeting at his office with leaders of several governmental agencies, including the Directorate General of Customs and Excise, the National Police and the National Intelligence Agency, as well as several industrial associations.
Fahmi listed the increase in losses from the illegal imports, including in steel-related products, which soared from $330 million in 2004 to $860 million; textiles ($49 million to $59.4 million); shoes ($8.4 million to $11.64 million); ceramics ($5 million to $21.69 million); electronics ($3.6 million to $13.45 million); and toys ($2.17 million to $4.6 million).
His office estimated that the value of the smuggled goods reached $5.9 billion in 2005, 79 percent higher than $3.3 billion the previous year.
His office also found other illegal imported products, including chocolate and corned beef that were not registered with the Food and Drug Monitoring Agency, as well as dry batteries of a well-known brand whose quality was below the national standard.
The minister said the huge growth in smuggling also affected the workforce. It lowered industrial competitiveness, he added, which in turn led to the loss of more than 100,000 jobs in related industries.
The Industry Ministry plans to formulate a plan of action to tackle the problem when it meets in early July with related governmental agencies, including the Directorate General of Customs and Excise, the National Police, the National Intelligence Agency and the Supreme Court, and the industrial associations.
"We will tighten our monitoring of imported goods at ports and airports. Therefore, we need to work together with the National Police and the Customs and Excise Directorate General since they are under their authority," Fahmi said.
Director General of Customs and Excise Anwar Suprijadi said that his team would work together with the National Police as well as industrial associations to gather all information on smuggled goods.
Anwar also supported the amendment of the country's customs law to improve efforts in fighting illegal imports.