Press Statement – Improving internal controls at the Customs Department

Press-Release

20th July 2018 – Transparency International Malaysia has taken note of Royal Malaysian Customs Department’s Director General (DG), Datuk Seri Subromaniam’s hope of generating some RM3 billion revenue through the import and export tax collection as part of the Department’s strategy to bridge the tax collection gap which is expected to occur with the reintroduction of the Sales and Services Tax (SST) replacing the Goods and Services Tax (GST).

Tax evasion and related corruption have been a general and persistent problem and challenge for most revenue collection agencies globally. TI-M welcomes the Customs’ DG proactive and friendly approach towards the nongovernmental organizations as it is also one of the criteria required by the Open Governmental Partnership (OGP) which enables civil society and governments to work closely together to shape and implement ambitious governance reforms. TI-M would like to suggest a few ways to generate and to increase revenues in the Customs department:

We would like to suggest that the Customs Department should consider re-assessing the Standard Operating Procedures (SOP) to reduce red tape that may encourage corruption. Efficiency will discourage corruption as there is a correlation between corruption and bureaucratic red tape. At the moment, TI-M feels that the Department has wide discretionary power in respect of their procedures which may result in some officers to be allowed to operate with low levels of integrity, accountability, and transparency. Hence it is important to reshuffle the officers in high corruption risk positions to improve the efficiency of the agency. It is recommended that such job rotation to be made every three years for those who work at the high-risk jobs and officers at borders in order to reduce the possibility of corruption. A pre-screening for new recruitment and current staff can also be considered as one of the preventive measures.

According to Association of Certified Fraud Examiners (ACFE), an organization typically loses 5 percent of the revenue due to fraud. Therefore it is important to reduce leakage by strengthening an organization’s internal control policies as this will eventually reduce the level of fraud.

We would also like to suggest to the government to consider upgrading the facilities at Customs to be more advanced, such as the use of scanners at Port Klang Penang and Johor Bharu. It was reported in the news that every year the Customs loses about RM2 billion due to smuggling of cigarettes alone and the problem could be due to the use of outdated scanners who lack of maintenance due to prohibitive maintenance costs. TI-M would like to suggest the Customs to consider establishing a special squad to curb smuggling of tobacco and liquor. There should be an amendment to the legislation to include mandatory jail sentences for illegal smuggling offenses under Section 135 of Customs Act and to increase the fines for the respective offenses.

There is also a need to improve the Customs checkpoints and facilities in Rantau Panjang, Bukit Kayu Hitam, Padang Besar as good working conditions will increase the officers’ productivity.

Needless to say there should be “tone at the top” through leadership by example, and there should be no political influence when the Customs is conducting raids or confiscating goods so that they can perform their duties without fear and favour. It is important to improve the intelligence to obtain information on smuggling syndicates and other organised crime elements. The Customs may also make it compulsory for the forwarding agents to establish a code of conduct for their organizations in order to reduce fraud.

Most importantly, there is a need to make the public aware that any attempt to bribe Customs officers will not be taken lightly and will be subject to arrest and prosecution by the MACC under Section 17B of the MACC Act 2009 with a penalty of 20 years’ imprisonment and fines.

Datuk Akhbar Satar

President

Transparency International-Malaysia

About Transparency International Malaysia

Transparency International-Malaysia is an independent, non-governmental and non-partisan organisation committed to the fight against corruption.

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