What happens after PSI system is 'withdrawn'

THE government, according to a report, is actively considering the withdrawal of the pre-shipment inspection (PSI) system for imports by 2010. The system was first introduced in Bangladesh in 1992 and made mandatory in 2000. This was done at the suggestion of the multilateral capital donors in the backdrop of widespread allegation by the businesses about slow and corruption-ridden method of inspection and assessment of import cargoes. Businesses except those involved in irregular practices of under-or over-invoicing had welcomed the introduction of the PSI system which is considered fast and efficient. However, the replacement of the slow and inefficient system of inspection and assessment with a fast and efficient one has not been without a cost. The PSI companies of foreign origin, selected by the government, are taking away a sum of Tk 3.75 billion a year in hard-earned foreign currency.brFor the sake of hassle-free imports, the government and the businesses should not have reasons to raise objections to the payment of fees to the PSI companies. But a few incidents of inspection - and assessment-related irregularities -- that were reported in a section of the media in connection with matters relating to investigations of a number of alleged corruption cases after the 111 change-over -- by a couple of operational PSI companies have stirred controversy over their role. A good number of trade bodies who once welcomed the PSI system have lately expressed their opposition to its continuation. This caretaker government, as the available indicators do suggest, has not also been happy over the operations of a section of PSI companies because of their alleged involvement in a number of irregularities. The government's disenchantment with the system was formally voiced last week by a person none other than the finance adviser at the end of a meeting where fresh selection of four PSI companies was made. He made it clear that the system would be done away with in 2009. However, the chairman of the National Board of Revenue (NBR) last Saturday, while claiming that the customs wing is capable of doing the job now being carried out by the PSI companies, said the system would be withdrawn by 2010. One cannot be certain at this stage whether the next elected government will also follow a similar stance on the continuation or discontinuation of the PSI system. But the fact remains incontestable the fate of the PSI system, is hanging in the balance.brOn his part, the current NBR chairman is confident about the customs wing developing its own capacity required for inspection and assessment of the import cargoes in a fast and efficient manner by the time the PSI system is, of late, expected to be withdrawn. A scheme to fully automate the Chittagong Customs House is now underway with the assistance from the Chittagong Chamber of Commerce and Industry and the task force. Such automation would enable the importers and exporters to access the customs server and submit their declarations online. In addition to technological development, the customs direly needs efficient manpower to handle the ever-growing export-import cargoes. The NBR is reportedly going for recruiting about 800 new inspectors who usually play the most important role in the department. With much needed automation and placement of the required number of manpower, the customs should be capable of carrying out the job now being done by the PSI companies. This would save the money being spent on the PSI companies. brHowever, the possible changeover will not eliminate the possibility of unnecessary hassle, a factor most loathed by the businesses. The automation is supposed to ensure speed in both inspection and assessment of imports. But if the men behind-the-machine decide to go slow unless and until they are paid 'speed' money or become party to irregularities by unscrupulous importers, all the improvements would bear no meaning. So the NBR, while ensuring technological improvements, would also have to ensure the quality and integrity of the officials who would otherwise be expected to take over the job of the PSI companies.