Will optional PSI help?

Will optional PSI help?

So the vacillation is yet to be over. The National Board of Revenue

(NBR)'s decision to stick to pre-shipment inspection (PSI), though as

an optional practice, seems to suggest a lack of belief in its own

capacity to shoulder the responsibility of customs valuation. It comes

as a partial reversal, if not an u-turn from the government's earlier

decision to do away with PSI by phases -- a practice followed for

around a decade in Bangladesh to ease valuation-related problems

faced by the customs authorities. To this end, the NBR has decided

to offer the existing four PSI companies the job of conducting

optional pre-shipment inspection of imported goods. The curious

part of the government's decision is that making PSI optional is not

being mentioned as a step in the direction of gradually scrapping it.

No doubt, the government is in a dilemma whether it can face up to

the task of customs valuation on its own, despite repeated

announcements of customs automation, believed to provide a good

respite in the intricacies of the job.

Mandatory introduction of PSI, in some countries including

Bangladesh, was mainly intended to ensure that imports comply with

the stipulated regulations. Non-compliance with these regulations

can result in the loss of duty and tax revenue, loss of foreign

exchange reserves and importation of substandard or prohibited

goods. To be more precise, the objective commonly attributed to it is

that PSI maximises duty collections. By undertaking duty assessment

in the country of export, the system offers no opportunity to

unscrupulous importers to prevail upon the customs people to assign

lower rates on arrival of the goods.

It is in keeping with the above that when the NBR introduced

mandatory PSI in the year, 2000, on the transaction value of

imported goods, the decision was welcomed by many including the

media mainly because of the apparent virtues of the system, which,

among others, included transparency. However, over the years, it

has come to light that the system is shorn of much of its virtues.

There were reported complaints of abuse in the name of fixing

transaction value, allowing sub-standard even at times restricted or

prohibited goods to be shipped. To address the issue, the

government instituted a taskforce in the year, 2009, to suggest

measures, and if felt appropriate, suggest a mechanism of phasing

out. The decision of phasing out came in the wake of the taskforce's

report.

Understandably, the decision to phase out PSI was meant to part

with a redundant exercise in an age of technology with automated

customs classification, valuation and assessment readily available.

Stopping the widely reported practices of misdeclaration and

improper fixation of transaction value also calls for an end to the

practice. With the optional practice on, it is not clear how long the

government plans to get along with it. If it is meant to be part of the

phase-out process, it is imperative that the government works out a

roadmap. There is a state of uncertainty at the moment as there is

also the need to frame new rules to suit the optional PSI.

Source:
Published : Wednesday, 28 August 2013

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