Post on 25-Feb-2021
Agricultural Trade Facilitation : An Overview and Business Process Analysis (BPA) Findings in Myanmar
Khan Salehin Trade and Investment Division, ESCAP
Trade Training Institute, 2 July 2014
OUTLINE
Agriculture and Agro-food Trade in the Asia-Pacific Region
What is Trade Facilitation for Agro-products? – Facilitating trade in agro-food products: key issues
Findings from Business Process Analysis (BPA) studies in Myanmar
Agriculture in the Asia-Pacific Region
Agriculture accounts for a quarter of the gross domestic product (GDP) of Asia‐Pacific’s developing countries and employs about 60% of the region’s working population (ESCAP 2008).
Improving agricultural productivity could pull 218 million people out of poverty in this region (ESCAP 2008).
It can bring investment opportunities for the private sector, and be a driver for boosting agriculture related industries.
The World Bank estimates that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth originating outside agriculture.
Agriculture in the Asia-Pacific Region
Source: FAO 2009
Source: FAO 2009
0
50
100
Nep
alLa
o PD
RM
yanm
arCa
mbo
dia
Bhut
anVi
et N
amAf
ghan
istan
Chin
aIn
dia
Bang
lade
shPa
kist
anSr
i Lan
kaTh
aila
ndIn
done
siaPh
ilipp
ines Ira
nM
ongo
liaKa
zakh
stan
Mal
aysia
New
Zea
land
Rep.
of K
orea
Aust
ralia
Japa
n
Perc
enta
ge 2
006
Agricultural Population as Share of Total Population in Selected Asia-Pacific Countries
0102030405060
Aust
ralia
Bang
lade
shCa
mbo
dia
Chin
aIn
dia
Indo
nesia
Japa
nKa
zakh
stan
Kore
a, R
epLa
o PD
RM
alay
siaM
ongo
liaM
yanm
arN
epal
New
Zea
land
Paki
stan
Phili
ppin
esSr
i Lan
kaTh
aila
ndVi
etna
mPerc
enta
ge 2
007
Contribution of Agriculture to GDP in Selected Asia-Pacific Countries
34%
4
Key Drivers of Agricultural Trade
Agricultural Trade
Growth
Change in Dietary
Practices
Population Growth
Increased Disposable
IncomeChange in
Commodity Prices
Other Factors (export policy,
capacity etc.)
Trade Facilitation
What is Trade Facilitation?– Any measure that reduce barriers to the movement of
goods between buyers and sellers throughout the international supply chains (ESCAP 2010)
– Simply any measure that facilitate and simplify movement of goods and information along the supply chains
- i.e. TF reduces time, cost and complexity of trade transactions
What is agricultural trade facilitation?- Trade facilitation of agricultural or food products - For example, facilitating development of product
standards; improving SPS certification procedures, improving storage facilities, reducing paperwork for agro trade or implementation of e-traceability
Comprehensive Trade Costs (excluding tariff) for Agricultural Goods with Japan (2000-2005, 2006-2011)
0
100
200
300
400
500
600
700
800
Rep.
of K
orea
Uni
ted S
tates
Thail
and
Viet
nam
Chin
a
New
Zea
land
Aus
tralia
Phili
ppin
es
Indo
nesia
Uni
ted K
ingd
om
Ger
man
y
Mala
ysia
Sri L
anka
Indi
a
Russ
ian F
eder
ation
Fran
ce
Turk
ey Fiji
Mald
ives
Iran
(Islam
ic Re
p. o
f)
Paki
stan
Nep
al
Bang
lades
h
Lao
PDR
Cam
bodi
a
Tarif
f-equ
ivale
nt tr
ade c
osts
(per
cent
) Agriculture (2000-2005)
Agriculture (2006-2011)
Manufacturing (2006-2011)
Source: ESCAP-World Bank Trade Cost Database, updated August 2013
Benefits of Trade Facilitation
GDP gains from 25% reduction in time to export/Import, GMS and China
Source: Strutt, Stone, and Minor (2008) simulations
9
Why Facilitating Agricultural Trade is Crucial?Long Term Impact of Agricultural Trade Facilitation :
- Poverty Reduction and Food Security- Improves overall environment for agro-trade (domestic too)
- Opportunity for integration of smallholders into agri supply chains - Upgrading of small farmers in terms of production practices or capacities
Trade Facilitation Measures Applied in Agricultural Supply
Chains/Sectors
Improved Trade Policies, Efficient Trade Processes
Reduced Transaction Cost, Improved Trading
Environment
Improved Trade Competitiveness
Greater integration of MSMEs including
ProducersGreater Income for Poor
Source: ESCAP (2011) Facilitating Agricultural Trade in Asia and the Pacific, Studies in Trade and Investment No. 74
What is so unique about it?
Perishability – time and temperature sensitive
Food Product and Process Standards, Technical Regulation (SPS, private standards)
Logistics (warehousing) and infrastructure – special requirements
Financing is difficult
Cost of trading is higher than manufactured goods
Trade Facilitation for Agro food Products
There are significant constraints to Trade Facilitation in agriculture which eventually impact trade competitiveness.
These constraints can be divided into four main categories:
Trade Procedures
Product Standards
Trade Logistics
Trade Finance
Trade Facilitation for Agro-food Goods: Challenges
11
Trade Procedures: A Generic Agricultural Product Supply Chain Structure
Consumer
ExporterWholesalersProducer
Import Agent
Tran
spor
t
Regulatory Agencies
ImporterRetailers
Bank
Export Customs
Import Customs
Source: Sirimanne 2011
Building 2
Information,documents, procedures
Information, documents, procedures
Information, documents, procedures
Information, documents, procedures
12
Product Standards
Ensuring product standards for international trade ofagricultural products is a complex topic and Itencompasses:Institutions.Infrastructure.Logistics.Administrative Issues.
Standard
“A document established by consensus and approved by a
recognized body that provides for common and repeated use, rules, guidelines, or characteristics for
activities or their results, aimed at the achievements of the optimum
degree of order in a given context.” ISO (2004)
• Accreditation body• Mutual Recognition of conformity
assessment standards• National capacity development
13
Trade Logistics
Poor Trade Related Infrastructure and Transportation SystemInfrastructure
and Transportation
Border ProceduresServices
Agro-products Export From Export ToTransport & Handling Cost
(% of transaction cost)
Frozen Shrimp Bangladesh Japan 29
Cotton Yarn India Bangladesh 31
Hydrogenated Veg. Oil Nepal India 80
Tea Sri Lanka Japan 22
Transport and Handling Cost as percentage of transaction cost in South Asia
Source: Business Process Analysis Studies ESCAP 2010-11
Share of Transport Costs as percentage of transaction cost in Central Asia
Export Import
Kazakhstan 10% 8%
Kyrgyzstan 13% 10%
Tajikistan 14% 10%
Uzbekistan 12% 8%
Source: ADB 2006
14
Spoilage during Post-harvest Handling: Absence of warehousing facility,inappropriate goods vehicles or trucks, long distance from nearby railways orinland waterways stations and so on.
FAO (1994): Total loss of agro‐products during storage and transport could be as high as 16%.
World Bank in India shows that the lack of adequate storage and marketing infrastructure can be as high as 20‐40 % of the total production (ESCAP 2009).
IFC estimated the wastage caused by poor transportation and logistics system at $13 billion per year there (2010).
Thai fresh produce exports of fruits and vegetables, producers and exporters lose 2.92 billion baht (about $96.4 million) a year due to spoilage and poor storage.
Trade Logistics (contd.)
15
Reasons for not increasing lending in this sector
Trade Finance
’financing of imports and
exports’’
Risk of spoilage
Poor storage facilities Price volatility Weather
conditionsSeasonality of
productionVaried quality
of products
Inability of producers to meet the big
collateral guarantees
Stringent terms of trade
Lenders’ Lack of Understanding
Knowledge Gap of SMEs/producers
is
It is the most difficult bottleneck to overcome for agricultural trade
Trade Finance
16
Business Process Analysis (BPA) of Agro products in South and
Southeast Asia
Why conduct a Business Process Analysis?
18
Business Process Analysis is a practical study to understand attributes of business processes,
and their relationships
Who involved
Proceduresand Documents
required
Related Rulesand Regulations
Some quantitative
indicators
Business Process Analysis (BPA) Studies for Five Countries in South and Southeast Asia
Bangladesh Business (Trade) Process Analysis (BPA) for Export of Jute Bags to India and Import of Wheat from India
Cambodia BPA for Export of Maize and Cassava to China
Lao PDR BPA for Export of Maize to Thailand and Import of Animal Feed from Thailand
Myanmar BPA for Export of Mango and Rice to China, Import of Palm Oil from Malaysia
Nepal BPA for Export of Cardamom to India and Import of Rice from India
Available at: http://unnext.unescap.org/pub/bpa-cam.pdf
Use Case Diagram – Export of Rice from Myanmar
Time Procedure Chart – Export of Rice from Myanmar
25
Total Time23 days
20Total Time19 days
15
1.1 Conclude Sales Contract 2 days (1‐3 days)2.1 Make Advance Payment 3‐7 days3.1 Obtain Export License 1 day
10 3.2 Arrange Shipping (Maritime) 1 day3.3 Arrange pre-Inspection and Fumigation 1 day3.4 Declare CusDec 2 3‐5 hours3.5 Terminal Procedure and Customs Exam at Port 5 hours3.6 Arrange Berthing 7 days
5 3.7 Arrange Port Clearance for Vessel Departure 1 day3.8 Prepare Shipping Documents 2 days (2‐3 days)
Assumptions:
‐ Cash is paid immediately after the sales contract is concluded (buyer has the enough working capital to make the payment)‐ Exporter starts obtaining Export License immediately after the payment is made (not payment received)
2 days
1 day
1 day1 day 1 day
7 days
7 days
Tim
e in
day
s
2 days
Process
3.7 3.81.1 2.1 3.1 3.2 3.3 3.4 3.5
1 day 1 day
Time Chart for the Export of Rice to West Africa
3.6
1 day 1 day
1 day
1 day
3 days
1 day
1 day
2 days7 days
Use Case Diagram - Import of Palm Oil in Myanmar
Time Procedure Chart – Import of Palm Oil in Myanmar
Total Time
26 days25 With the Original Bill of Lading
Without the Original Bill of Lading 23 days
20
15
1.1 Conclude Sales Contract 1 day2.1 Prepare for Import Recommendation Application 2 days2.2 Obtain Import Recommendation 4 days
10 2.3 Obtain Import License 3 days2.4 Make Storage Contract 5 hours2.5 Opening Letter of Credit 10 days2.6 Declare CusDec 1 2 hours2.7 Obtain Delivery Order (with/without Original Bill of Lading) 2 hours / 4 days
5 2.8 Arrange Berthing 2 days2.9 Examine, Inspect, Test, Take Sample and Discharge Cargo 4 days2.10 Finalize CusDec 1 2 hours3.1 Payment concluded in step 2.5 through Letter of Credit (in step 2.5)
Assumptions: ‐ Storage Tank is available‐ No unexpected delays in document processing or shipment‐ The necessary documents for process 2.7 are obtained in process 2.6 after 6 days
3.1
Tim
e in
day
s
Time Chart for the Import of Palm Oil from Malaysia
4 days
Process
1.11 day
2 days
2.7 2.8 2.9 2.102.62.1 2.2 2.3 2.4 2.5
1 day
7 days1 day
2 days 4 days
1 day3 days
10 days
4 days 2 days
1 day 1 day
Activity Diagram – Obtaining Import Recommendation
Activity Diagram: Examine, Inspect……….(Import of Palm Oil)
Export country and product
Destination No. of days
No. of actors involved
No. of processes
Type of documents required
Cost ($)
Cambodia –Maize
China 20 15 13 22 1250-1360
Lao PDR -Maize
Thailand 16 11 8 21 735
Myanmar –Rice
West Africa 19-23 20 10 >25 425
Bangladesh-Jute bag
India 10 15 12 24 -
Nepal -Cardamom
India 15 11 9 14 1213
Source: ESCAP BPA Study Reports 2013-14, available at:http://unnext.unescap.org/tools/business_process.asp
Key Findings: Business Process Analysis Studies (South and Southeast Asia)
Obtaining Sanitary and Phyto-sanitary Certificate for export of agro-food products
Bangladesh Cambodia Lao PDR Myanmar Nepal Trading Partner and Export Products
India, Jute Bags
China, Maize
Thailand, Maize
West Africa, Rice
India, Cardamom
Number of Days Required
4 2-5 2 2 1
Documents Required
(i) Proforma invoice
(ii) packing list, iii) oil content
certificate, iv) Certificate of
Origin (COO)
(i) Phyto sanitary certificate application
(ii) Commercial invoice
(iii) Packing lists (iv) Release
container, (v) Fumigation
certificate
(i) Phytosanitary application form
(ii) Packing list, (iii) Export license (iv) Customs
certification (v) Business license
from Vientiane Capital Agriculture Department
(vi) Commercial contract among importer and exporter
(vii) Pro-forma invoice
(i) Shipping instructions
(ii) National Registration Card
(iii) Sealed case file from Customs head office -
? Export Declaration
? Export License
? Invoice ? Packing list
(i) Letter from Customs to Food Quarantine Office
(ii) Commercial Invoice
(iii) Packing List (iv) Customs
Declaration Form
(v) Sample
Stakeholders Involved
• Exporter (or representative)
• Department of Agricultural Extension (DAE)
• Clearing and Forwarding (C&F) Agent
• Exporter • Ministry of
Agriculture Forestry and Fisheries (General Directorate of Agriculture)
• Exporter or representative
• Vientiane Capital Agriculture Division -Agriculture Quarantine Section
• Exporter • Ministry of
agriculture
• Exporter • Clearing agent • Food Quarantine
Office • Customs Office
Direct Costs
USD 10 $730 or $58 (Fumigation 28 Fumigation/ CCIC 700 Inspection 30)
More than USD 300 USD 5
Recommendations – Simplifying Processes for Export of Rice
Process Recommendation Benefits /Reduction of
Docs(No)
Time (Days)
Costs (USD)
2.1) Make advance payment
‐ Introduce e‐banking to facilitate payment‐ Reduce administrative requirements in payment procedures e.g.•Eliminate unnecessary forms (application letter, export letter with bank seal)•Reduce process steps•Eliminate hard copies
2
3.1) Obtain Export License
‐ Eliminate export license altogether‐ Use private banks for collection of fee in addition to MCB(If eliminating the Export License is not a policy option, simplifying the procedure for amending the Export License needs to be considered. At present, amending the License as well as other documents is difficult and takes almost as long as applying for a new Export License despite all necessary documents have already been submitted when obtaining it)
<5 1 75
Recommendations – Simplifying Processes for Export of Rice (contd.)
Process Recommendation Benefits /Reduction of
Docs(No)
Time (Days)
Costs (USD)
3.4) Declare CusDec 2
‐ Introduce e‐banking to facilitate payment‐ Reduce internal process steps within the Customs department (this may require an internal restructuring)‐ Introduce IT in internal processing of exports to enable the simultaneous review/approval of an export document
3.5) Terminal procedure and Customs exam at port
‐ Introduce a port EDI system to provide seamless and instant communication between all actors involved in this process‐ Reduce administrative requirements in terminal and Customs procedure e.g.•Eliminate unnecessary forms by making them available in the EDI system (sealed case files, shipping instructions). For Export License see 3.1.•Reduce internal process steps within Customs department •Combine terminal Customs and port Customs into one unit (reduce organizational and administrative redundancy)•Apply risk management and reduce physical inspections of cargo. Where necessary, carry out joint inspections
Recommendations – Simplifying Processes for Import of Palm Oil
Process Recommendation Benefits /Reduction of
Docs(No)
Time (Days)
Costs (USD)
2.1) Prepare Import
Recommendation application
‐ Eliminate this process (see process 2.2) 4 2
2.2) Obtain Import Recommendation
‐ Eliminate this process as it is a pre‐test. Instead, the Government should publish quality, health, and other requirements for palm oil imports. These requirements should be tested once the actual palm oil shipment arrives in Yangon (see process 2.9). Ensuring that the oil meets all specifications set by the Government should be left to the private sector. However, this requires high levels of transparency on how the public sector tests the requirements, e.g. what tests, what methodology, etc. will be employed
If eliminating this process is not a policy option, the certification process should be decentralized. To date, it is still necessary to bring the documents to Nay Pyi Taw whereas most importers are in Yangon. Making the same services available in Yangon as in Nay Pyi Taw will save time and costs for travel and arranging logistics.
7 4 47
2.3) Obtain Import License
‐ Eliminate this processIf eliminating this process is not a policy option, the alteration of
the Import License process must be simplified (see process 2.5)
6 3 >135
Recommendations – Export (South and Southeast Asia)
Country Processes RecommendationsN
epal
–Ex
port
of
Card
amom
High transport cost due to road condition and syndicate system
•Enforce Competition Promotion and Market Protection Act effectively
Burden of levy of export fee by DDC (local authorities)
•Remove export fee in conformity with the policy of making export tax free
Customs related offices are scattered •Locate all Customs related offices within Customs premises
Customs do not accept electronic copies of documents except Customs Declaration Form
• Accept electronic copies of all documents by the Customs•Develop system of electronic submission of documents
Mya
nmar
–Ex
port
of
Rice
Make advance payment ‐ Introduce e‐banking to facilitate payment‐ Reduce administrative requirements in payment procedures e.g.• Eliminate unnecessary forms (application letter,
export letter with bank seal)• Reduce process steps• Eliminate hard copies
Arrange pre‐inspection •Eliminate this process step unless buyer requests a tested sample
Recommendations – Export (2) South and Southeast Asia
Country Processes RecommendationsCa
mbo
dia-
Expo
rtof
Mai
ze/C
assa
va
Apply for Phytosanitary Certificate Reduce activity 2.2 apply for PhytosanitaryCertificate from 5‐day to 3‐day.
Apply for Certificate of Origin (COO) Reduce activity 2.7 apply for Certificate of Origin from 2‐day to 1‐day.
All container goes through rigorous security check and scanning at the Port of entry.
Customs should use risks based assessment coupled with exporter and freight forwarder profile for selective scanning. Waive mandatory scanning for export.
Lao
PDR
–Ex
port
of
Mai
ze
Issuance of Certificate of origin (COO) can be processed after or simultaneously with the phytosanitaryand fumigation certification process.
The process of application and issuance of COO should be initiated simultaneously with the application for Phytosanitary and/or fumigation certification.
Submission of documents in processes. Automation of overall export system is very essential. It will reduce the time taken to travel from one place to another for submission of documents.
Bang
lade
sh-
Expo
rt o
f Ju
te B
ags Obtaining SAPTA certificate Submission of Export Registration Certificate
(ERC) should be removed.Obtaining Phytosanitary certificate Submission of Certificate of Origin (COO) should
be droppedObtaining both COO and SAPTA certificates
One of them should be dropped as both serves the same purpose (showing country of origin)
Recommendations – Import (1) South and Southeast Asia
Country Processes RecommendationsN
epal
–Im
port
of
Anim
al F
eed
Electronic copies of documents except Customs Declaration Form are not accepted by the Customs
Accept electronic copies of all documents by the CustomsDevelop electronic submission system of documents
Customs related offices are scattered In selected surveyed Customs points, related offices particularly Plant Quarantine Office and Food Quarantine Offices were found to be located outside of the Customs area. If these offices are located within Customs premises it can save time and document.
Lao
PDR
–Im
port
of A
nim
al F
eed
Inspection of the importer's site by VCFD, VCTD and other concerns
The accompanying by the Vientiane Capital Trade Division during the site visit should be dropped and the brief of importer/farm's site visit by VCLFD should be shared instead for acknowledgement; in this way, the site visit will be shorter and efficient
Inspection of all the consignments by Customs and Quarantine officers at the border checkpoint are conducted separately.
It can be organized at one time. The report of inspection can be simplified into one single set of reports that will consist of the following main finding: customs declaration, goods inspection, certification of products in terms of quarantine rule and technical procedures
Recommendations – Import (2) South and Southeast Asia
Country Processes RecommendationsBa
ngla
desh
-Im
port
of
Whe
atIssuance of QuarantineCertificate
Currently a copy of the IRC is required is obtaining a quarantine certificate. This is redundant information in issuing quarantine certificate and hence needs to be removed.
Opening Letter of Credit (L/C)
Currently hard copy of the L/C details and IRC are required in opening L/C. The process can be simplified if scanned copies of the details are accepted by the banks.
BPA Study Reports 2013-14, available at:http://unnext.unescap.org/tools/business_process.asp
Rice Export Policy: Enhancing trade facilitation, reducing informal fees and eliminating check points
Measure 1: “MEF/General Department of Customs and Excise (GDCE), MAFF and MoC/General Department of CAMCONTROL and relevant agencies shall: develop
a specific strategy to identify and streamline export processing procedures including inspection, documentation requirements, fees and time required to process export applications; define clear and publicly transparent division of
responsibilities among export regulating ministries/agencies; consider milled rice export as a top priority in order to reduce to a minimum informal payments and time required to export by extending “special treatment” similar to the garment
sector.”
TF Measures by Cambodia
Measure 2: Implement a single-stop service for export processing:
MEF/GDCE, MAFF and MoC/ CAMCONTROL and relevant agencies
shall set up a Single Stop Service for export processing and issuing
certificates for SPS, fumigation, grading and quality, quantity and weight,
and customs declaration.
Measures by Cambodia (Contd.)
Publication
“Facilitating Agricultural Trade in Asia and the
Pacific”-
Overview, TF issues, Good practices
Available at:
http://www.unescap.org/publications/detail.asp?id=1480
THANK YOU!
salehin@un.org
unnext.unescap.org www.satnetasia.org