PSI firms may linger

Sajjadur Rahman

The government may extend the service period of pre-shipment inspection (PSI) firms until June next year despite their poor performances and irregularities, hinted National Board of Revenue (NBR) officials.

The NBR is yet to equip it to take over PSI activities, while the current term of contract of the PSI firms will expire on December 31.

The revenue board, especially its customs department, was seen busy throughout the last week centring a seminar on PSI scheduled for Sunday.

Although the seminar will look into whether the customs department can immediately take over PSI activities, or possibility of time extension for the firms, the NBR officials confidently forecast another extension as it happened earlier.

“The time extension decision may come at the Sunday meeting,” a senior NBR official told The Daily Star yesterday.

Stakeholders, including business and chamber leaders, are likely to give their opinions on the issue at the meeting.

Earlier, PSI of imported goods was made mandatory in August 2000 in the wake of growing complaints of corruption and inefficiency against customs officials.

The BNP-led government appointed four PSI companies -- Cotecna Inspection SA, SGS (Bangladesh) Ltd, Bureau Veritas BIVAC (Bangladesh) Ltd and Intertek Testing Service (ITS) -- in August 2005 for three years for certifying price, quality and quantity of imported goods.

Later, the caretaker government in 2008 extended their service period till December this year, saying that the country's customs department is not yet equipped enough to carry out the job of the PSI firms.

Bangladesh imported goods worth over $20 billion in fiscal 2007-08 and 2008-09. PSI firms charge one percent of import value of any goods as their fees.

These firms have earned nearly Tk 1,500 crore since 2005 as fees in addition to their 'income' from under-invoicing of goods, according to NBR officials.

The time extension, if allowed further, will come amid widespread allegations that the PSI companies have been involved in undervaluing goods, wrong declaration, or allowing entry of substandard and adulterated products in the country.

These firms were fined several times for their wrongdoings, according to the NBR.

Even, the caretaker government in 2008 was forced to scrap the deal of one of the four PSI companies, Cotecna Inspection, after an NBR probe had found that it was involved in under-valuation of imported goods.

Penalties were also imposed on other PSI firms following detection of irregularities in deciding valuation of imported goods.

Cotecna was penalised Tk 2.65 crore, SGS Tk 1.86 crore, Bureau Veritas Tk 78 lakh and ITS Tk 48 lakh in different times, according to the figures of the tax appellate tribunal of the NBR.

Mahfuz Ahmed, managing director of Gulf Orient Sea Ways, blamed SGS for delaying inspection reports.

“The firm is supposed to send the reports to banks and customs offices within four days of inspection, but it takes 15 to 30 days,” said Ahmed who imports goods from India.

However, the president of the country's apex trade body, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), hinted his support to the extension of the PSI services by six months.

“We need to develop our own database before scrapping the deals with PSI agencies,” said Annisul Huq. “We may support six months' extension proposal,” the FBCCI boss added.

The government was supposed to develop the customs department to replace the PSI companies. But the condition of the department remains more or less the same as it was previously.

“The NBR failed to develop a strong database and capacity of the customs officials,” a customs commissioner told The Daily Star seeking not to be named.

During the last time-extension, the then finance adviser of the caretaker government AB Mirza Azizul Islam had said the government would develop its own capacity to replace the PSI firms within the next 16 months till December 2009.

Meanwhile, the NBR had also failed to appoint an auditor to review the activities of the PSI companies in the last nine years despite having a provision in the rules to do so.

The NBR officials blamed the failure on resistance from vested interests, both from the revenue board and PSI firms.

sajjad@thedailystar.net