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Pre-shipment checks to boost import duties

Pre-shipment checks to boost import duties

THE Royal Government has introduced regulations requiring inspection of goods before

they are shipped to Cambodia in a bid to crackdown on illegal imports and corruption.

The new measures come into force on July 1 and cover imports of some categories of

goods worth more than $1,000. The inspections will be carried out by the British-based

multi-national Inchcape Testing Services.

At a well-attended seminar last Friday at the Cambodiana Hotel, Finance Minister

Sam Rainsy outlined the reasons for introducing the new procedures known as Foreign

Trade Supervision (FTS).

One of the most important, he said, was maximizing revenues from the collection of

customs duties.

Indonesia, Peru, Mali and Sierra Leone had noticed a dramatic increase in the amount

of revenues recovered after introducing a similar system, the finance minister said,

with Indonesia's increasing four times.

A Finance Ministry official told the Post the new procedure could eventually double

the amount of customs duties brought in and he projected 361 billion riel would now

be collected this year as against 237 billion riel last year.

Rainsy stressed that the Customs Department are not surrenderring their powers to

Inchcape and that the contractors are merely providing a service to the government.

He said he is keen to see strict quality, quantity and pricing controls enforced

solely by the Customs Department as there are great irregularities in customs declarations

from importers seeking to avoid paying duties.

Among some of the common fradulent practices by importers are goods being deliberately

underpriced, of a poorer quality, of a lesser or greater amount than stated, Rainsy

said. Some declarations even deliberately lie about what the imports are.

Rainsy used petrol as an example saying it is subject to 45 per cent customs duties

but is often declared as diesel which has a tax of 20 per cent. It can also be bad

quality which damages engines.

The minister was confident Inchcape's supervision would succeed where previous measures

had failed as the international company would "not risk its reputation in indulging

in illegal activities in Cambodia".

Rainsy said state bodies did not have the capacity to fully control goods coming

into Cambodia. He said this was due not only to a lack of technical means but also

because of corruption and a lack of political will.

In an interview with the Post, Rainsy said he had met strong resistance to the new

procedures from the Commerce Ministry and from some Western companies.

The Commerce Ministry currently oversees the inspection of the quality of imports

and Rainsy said the two Ministries' work could be complimentary. However, he said

the Finance Ministry has ultimate authority over the Customs Department and was entitled

to inspect any imports for quality.

Rainsy said: "[There were] so many loopholes caused by the corruption of the

Ministry of Commerce. We don't have the right to prevent them doing controls on quality

but we will do another."

Many Western companies are upset by FTS and were protesting loudly, Rainsy said,

but he felt sure this would be overcome as he has the support of both premiers.

"These new procedures I am implementing threaten many powerful Western interests.

Many companies are used to cheating the State and these new procedures will ensure

transparency," he said.

Not all goods coming into Cambodia are to be inspected and there was some confusion

among seminar participants as to what exactly will be affected.

The main target for inspection is oil, petrol and petroleum products. Other categories

are pharmaceuticals, all government-linked procurements including all major projects

and all goods imported under the prevailing investment law's tax concessions.

Some goods will be subject to inspection from time to time as the Government decides.

These are some goods covered under commodity aid/budget support provided by bilateral

and multi-lateral donors and some goods for humanitarian aid.

Rainsy said in addition some other goods could be subject to inspection according

to the economic situation of the country and the needs that could be filled by foreign

trade.

Clarifying the humanitarian aid area, Rainsy told the Post :"NGOs should not

be worried, it's mostly affecting trade and they should not be much affected."

Stopping counterfeit medicines is a primary reason for this provision.

Questioned on why he was introducing categories for inspection rather than inspection

of all imports, Rainsy said: "I want to inspect the most sensitive areas. It

may expand to more areas in the future, depending on the result."

Inchcape's service will include customs analysis, price analysis, goods inspection,

documentation inspection and the issuance of either a FTS certificate or a certificate

of non-conformance. No goods will be allowed into Cambodia without a satisfactory

FTS certificate which will tell the importer the amount of duties owed.

The procedure involves the importing company notifying Inchcape's Phnom Penh office

of an intended shipment and filling in pro-forma invoices and inspection certificates,

supplied by Inchcape.

Inchcape will then contact its office nearest to the point of export and arrange

an instant inspection. An FTS certificate is issued after a satisfactory inspection.

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