Debate heats up over PSI firms

Top business leaders have backed the pre-shipment inspection (PSI) firms, saying the government cannot get rid of the system right away.

The government has done little to equip the customs department in the past 10 years to replace the PSI firms, they pointed out.

But the government is ambiguous in its stance on the PSI firms.

“We will be in a huge trouble if we cancel the PSI system now,” Finance Minister AMA Muhith told a seminar chaired by National Board of Revenue (NBR) Chairman Nasiruddin Ahmed in Dhaka yesterday.

At the same time, Muhith said he is not in favour of the system. It was introduced in line with a WTO convention on valuation, he said.

“The customs was supposed to replace the system, but it could not do so due to its inability,” the minister told the seminar designed to take views from business leaders and customs officials.

Gazi Golam Dastagir, a member of the standing committee on the finance ministry, said business has improved significantly since the PSI system was introduced.

“The capacity of the customs department has not developed in the past 10 years. So it cannot take over the PSI firms,” said Abul Kashem Ahmed, acting president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

“Some 90 percent businesses support the PSI system, while 95 percent customs officials oppose it,” Ahmed said, quoting a taskforce report on PSI.

He said the FBCCI has suggested extending the service period of PSI firms for another six months to June 2010.

The government may extend their service period despite their poor performances and irregularities, NBR officials hinted earlier.

Revenue officials were also present at the seminar on “PSI system in Bangladesh: Perspective and future action plan”.

Muhith criticised the NBR for its failure to monitor PSI activities. No auditor had been appointed in the last 10 years, he said.

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.

Later, the caretaker government in 2008 extended their service period until December this year.

“I don't want the system to run forever. But the NBR has to develop its own capacity before scraping the deals with the PSI agencies, otherwise businesses will suffer,” said Abdul Awal Mintoo, a former FBCCI president.

Abdul Qaium Khan of Bureau Veritas said customs revenue has increased by 107 percent in the last one decade due to the PSI system.

The customs officials and the Dhaka Chamber of Commerce and Industry (DCCI) said the government is losing revenues and spending crores of taka a year on the PSI contracts.

“PSI system is weakening the customs department. But it's not possible to replace PSI firms now,” said Fariduddin Ahmed, member, customs administration, of NBR.

“We want the PSI system to go because it takes away our money outside,” said Shahidul Islam, a DCCI director.

Mushfiqur Rahman, another customs official, showed in a presentation how PSI firms cause revenue loss through under- and over-valuation of imported goods.

The government paid PSI companies Tk 1,384 crore between 2000 and 2008, NBR data shows.