“Scaling Customs Digital Transformation by Adopting a Data Culture and Building a Data Ecosystem” – Supplements

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TEXT: We live in the age of information technology. This has led to digital transformation affecting all facets of life, including public and private institutions, businesses and corporations. Modern international trade has also undergone massive changes and made greater strides.

It has grown tremendously over the years and has also become highly scientific and competitive, requiring compliance with a variety of standards and rules. Changes in technology and in the supply chain have put pressure on government institutions to catch up, particularly in efficiently managing cross-border trade. It is believed that sticking to digital transformation is now the only way out for governments and businesses alike to stimulate and enable trade-led growth, which has been recognized as the engine for global sustainable growth and jobs.

With this in mind, Pakistan Customs has a very proactive and dynamic role to play as it is the government’s main agency to handle international trade, including exports, imports and cargo in transit. On the one hand, customs must transparently ensure the smooth and uninterrupted flow of goods in accordance with the principles of business facilitation and trade facilitation, and on the other hand, strive for only legitimate cargo enters and exits international borders, namely air, land and sea. To achieve these two goals, customs must embrace digital transformation and embrace a data culture and ecosystem. The hindrance to the ever expanding trade in goods is highly undesirable as it affects the global supply chain and also escalates the cost of goods making them uncompetitive in international markets. With the introduction of these tools, Pakistan Customs can become more convenient and efficient than ever to process international business.

It is understandable that in today’s world, the automation and digitalization of business processes related to the handling of goods along with ancillary functions such as seizures, contraventions, auctions, warehousing and other related areas can no longer be handled manually, which can no longer continue trade according to primitive lines guided. The active coordination and integration between all the authorities and stakeholders involved from the production to the final delivery of the goods along with transportation and port clearance can only deliver the goods. Of course, harmonized and predictable customs regulations and procedures are essential for smooth trade flows. The availability of databases and ecosystems can enable merchants to transparently, predictably and quickly clear goods, reduce the administrative burden of going paperless and, more importantly, fight fraud and crime. It can also improve governance, reduce corruption, drive customs law reforms, and simplify procedures associated with customs work. The traders’ proper databases allow customs to inspect the containers based on selectivity criteria. Likewise, the valuation database can help to value the goods with proper collection of duties and taxes.

Customs value databases are used by customs administrations as a helpful tool for risk assessment. Likewise, the detailed information on Classification, Customs Tariff, Import/Export Regulations and Rules of Origin can guide traders to trade more predictably and smoothly. Therefore, the proper use of data culture and data ecosystem as relevant and practical tools can increase the efficiency and effectiveness of the department. These tools can also aid in the prevention, detection and thwarting of customs crime through the consolidated data collected, alongside data sharing and networking between cross-border regulators who can ensure proper enforcement and customs controls. The deviations of any kind can have a significant negative impact on world trade and economic growth.

Clearance of goods also requires compliance with trade regulations and the requirements of other government agencies. There are also stakeholders such as port authorities, terminal operators, shipping companies, banks and other entities that can impede cargo handling. Integration and data exchange such as container database, electronic cargo tracking system, data portals and online platforms between different authorities working on ports, especially logistics and shipping companies, can improve the overall trading environment.

Pakistan Customs has done a better job and achieved moderate success in the field of automation and digitization of business processes, but replacing a customs clearance system with the WEBOC system is not enough, since trade in the country, especially with exports, is likely in the near future in large ones amounts are growing. The lack of databases and lack of a data ecosystem, as well as the lack of coordination and decision-making based on Information Communication Technology (ICT) between various regulatory bodies and customs authorities have only added to the unreasonable costs, time and complications for smooth cross-border trade in Pakistan. This requires customs to properly link and exchange data with shipping companies, border authorities and other tax authorities through the integration of various electronic interfaces and portals. The WCO therefore strongly urges and attaches particular importance to the global coordination of customs administrations in the area of ​​databases and data ecosystems. Pakistan has been observed lagging behind in handling cross-border trade deals as a large number of regulators work in silos and rely on paper-based processing, leading to general inefficiency.

With this in mind, FBR has launched a major reform initiative in the form of Pakistan Single Window (PSW), which will provide traders with a single platform and which will remove barriers in managing imports, exports and transit trade, as well as cross-border trade rules and regulations as needed. Its implementation will enable Pakistan to comply with the WTO’s Trade Facilitation Agreement and also help unlock its potential to become a trade and transit hub. It is a significant step towards digital transformation of Pakistan’s cross-border trade ecosystem. This program, via an ICT-based platform, envisages the creation of simplified and automated regulatory processes related to cross-border trade, as well as the establishment of a Port Community System to facilitate logistics, e-commerce and the introduction of integrated risk management to improve government controls. It will reduce the cost and time involved in trading across borders, while enhancing government accountability and control measures and improving collaboration between government agencies and the trading community. PSW’s outstanding features include the unified registration and e-payment system; Integrated risk management system; Pakistan Trade Portal; Automation of licenses, permits, certificates and other documents; PCS coverage to major ports, inland ports and land border stations; B2B transactions for trade and logistics; e-commerce integration etc.

Additionally, in times of the COVID-19 pandemic, it has become crucial that Customs put in place the processes and modules that allow commercial transactions to be carried out without physical interaction between different stakeholders through coordination and proactive approach to continuous global supply chain facilitation. These challenges can be addressed through the digital databases and solutions.

Recognizing the need and importance, Gwadar Customs has already eliminated the manual system by adopting the WeBOC system for clearance at the Gabd border. It was also introduced in Gwadar Port and Gwadar Free Zone. This initiative is appreciated by the region’s trade and industry. Efforts are being made to replicate the system at Mand and Panjgur to ensure online clearance of goods. The TIR station in Reemdan, which is adjacent to Gabd, is also in the final stages of approval and is giving way to transit cargo. In the end, it is hoped that the FBR and Pakistani Customs will decide to implement the slogan of the WCO by driving the digital transformation of all business processes as utilizing a maximum right mix of technology and using tools like data integration, analytics and data mining together with integrated digital platforms can only help in handling large volumes of international trade with minimal cost and time investment.

Ch Muhammad Jawaid

Customs Collector, Gwadar

Copyright Business Recorder, 2022

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