Wednesday, August 28, 2013

Will optional PSI help

Will optional PSI help

Published : Wednesday, 28 August 2013
Source: The finacial Express


So the vacillation is yet to be over. The National Board of Revenue (NBR)'s decision to stick to pre-shipment inspection (PSI), though as an optional practice, seems to suggest a lack of belief in its own capacity to shoulder the responsibility of customs valuation. It comes as a partial reversal, if not an u-turn from the government's earlier decision to do away with PSI by phases -- a practice followed for around a decade in Bangladesh to ease valuation-related problems faced by the customs authorities. To this end, the NBR has decided to offer the existing four PSI companies the job of conducting optional pre-shipment inspection of imported goods. The curious part of the government's decision is that making PSI optional is not being mentioned as a step in the direction of gradually scrapping it. No doubt, the government is in a dilemma whether it can face up to the task of customs valuation on its own, despite repeated announcements of customs automation, believed to provide a good respite in the intricacies of the job.

Mandatory introduction of PSI, in some countries including Bangladesh, was mainly intended to ensure that imports comply with the stipulated regulations. Non-compliance with these regulations can result in the loss of duty and tax revenue, loss of foreign exchange reserves and importation of substandard or prohibited goods. To be more precise, the objective commonly attributed to it is that PSI maximises duty collections. By undertaking duty assessment in the country of export, the system offers no opportunity to unscrupulous importers to prevail upon the customs people to assign lower rates on arrival of the goods.

It is in keeping with the above that when the NBR introduced mandatory PSI in the year, 2000, on the transaction value of imported goods, the decision was welcomed by many including the media mainly because of the apparent virtues of the system, which, among others, included transparency. However, over the years, it has come to light that the system is shorn of much of its virtues. There were reported complaints of abuse in the name of fixing transaction value, allowing sub-standard even at times restricted or prohibited goods to be shipped. To address the issue, the government instituted a taskforce in the year, 2009, to suggest measures, and if felt appropriate, suggest a mechanism of phasing out. The decision of phasing out came in the wake of the taskforce's report.

Understandably, the decision to phase out PSI was meant to part with a redundant exercise in an age of technology with automated customs classification, valuation and assessment readily available. Stopping the widely reported practices of misdeclaration and improper fixation of transaction value also calls for an end to the practice. With the optional practice on, it is not clear how long the government plans to get along with it. If it is meant to be part of the phase-out process, it is imperative that the government works out a roadmap. There is a state of uncertainty at the moment as there is also the need to frame new rules to suit the optional PSI.

Rupee hits new record low

Rupee hits new record low

Published : Wednesday, 28 August 2013
Source: The finacial Express

MUMBAI, Aug 27 (AFP): India's rupee plunged to a new low despite suspected central bank intervention and shares tumbled Tuesday on fears about the impact of massive new food subsidies on already strained finances.

Asian shares and currencies were also hit on concerns over possible US military intervention in Syria, raising fears of a spurt in oil prices.

The rupee, one of Asia's worst-performing currencies this year, fell to a lifetime low of 66.07 rupees to the dollar in afternoon trade, slipping past its previous low of 65.56 last Thursday.

Tuesday saw one of the sharpest single-day falls in history, with the rupee plummeting 2.73 percent in value from Monday's close of 64.31.

"The RBI (Reserve Bank of India) is suspected to have sold dollars at 65.90 levels, but it failed to prop up the rupee," a dealer with a forex firm said.

The benchmark Sensex index plunged 3.18 per cent to close at 17,968.08 points, while local prices of gold, considered a safer investment, rose.