Wednesday, April 20, 2016

Batam and the transport of illegal and counterfeit goods

Image result for batam Batam is an island 10 km south east of Singapore, part of the Indonesian Archipelago.  Recent news and industry discussions have begun to highlight Batam's role in counterfeit goods shipment (which appears frequently connected with Singapore). The Indonesian government, based far away in Jakarta, is concerned generally with illicit goods entry into Battam. It recently identified approximately 44 illegal entry points in Batam in 2016 (that is entry points for shipments which don’t pass through Customs). Indonesian Customs are increasing the their security to prevent a huge array of illegal goods entering and exiting Batam. They found 36 examples of a variety of illicit goods in February 2016 via operations at the airport, seaports, and in the local market.

Illicit goods covers a wide array of offences, including counterfeits. Customs officials have observed that imported goods frequently do not pay tarrifs/tax when entering Batam, via Pelabuhan Sekupang on passenger ships. The goods are then transported to Jakarta and other ports in Indonesia, suggesting a large passenger hand carried goods smuggling problem too. Customs officials have a hard time controlling this with limited manpower. They often face physical resistance especially they say from women who bring these goods in, with the help of porters. Newspapers unsurprisingly report widespread bribery to keep this illegal practice under wraps.

Batam and Singapore share a Special Economic Zone with no tariffs or value-added taxes imposed on goods passing between the two.  In one recent case going through Singapore's courts now, a seizure in Singapore of transshipped luxury goods from Shenzhen bound for Batam for processing and re-export suggests Batam is being used by Singapore shippers, as a route for fake goods. Singapore is already widely known as the largest transshipment port in the world, and the general suspicion is that Batam, plays a role in counterfeiting transhipment too. Many Singapore trading and shipping companies are based there, presumably because of the lower risks involved in shipping via Indonesia. 

Indonesia's weak Customs border protection is only part of the problem. Singapore trading companies' involvement makes the problem far worse, along with the relatively easy passenger access. Singapore Customs are under fire for not controlling transhipped fake goods passing through Singapore; Batam's role is a further complication.

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