Reforming Trade Facilitation: Experience of Pakistan

Presentationfor Trade Logistics Advisory Program

World Bank, Washington DC

Dr. Manzoor AhmadAmbassadorPakistan Mission to WTO

manzoor.ahmad@wto-pakistan.orgMay 2008

2

Evolution of reforms• Need for reform

• Outsourcing of Customs functions

• Early initiatives

• Express Lane Facility

• Electronic Assessment System

• Risk Indicated Selective Examination

3

Overall reform process• Simplification of tax laws

• Simplification of tariff

• Review of procedural notifications

• Introduction of self-assessment for all taxes

• Customs Administrative Reforms (CARE)

• Pakistan Customs Computerized System (PACCS)

4

PACCS Salient Features• Self-assessment

• Filing of Declaration over the web 24/7

• Checking through PACCS Processing and Risk Management System

• One electronic declaration replaced 26 clearance steps, 34 signatures and 62 verifications

• Four components:– TARIP (Tariff & Integrated Policy)– INTRA (Integrated Regulatory Authorities)– ECHO (Enhanced Cargo Handling & Port Optimization)– ACCESS (Automated Customs Clearance System)

5

Process Flow of Clearance Authorization

Filing of Declaration

Declaration Accepted

Payment of Taxes

More Information

OK to ClearPACCS Processing

Declaration NOT Accepted

First Review

Second Review

Relevant Committee or Appeal Procedure

Clearance Authorized

6

Comparison of clearance time

12.5%

31.8%

26.1%

25.3%

4.3%

<1 Day <2 Days <4 Days <6 Days Day 7 & later

Pre-PACCS

7

Comparison of clearance time between

70%

14%

3%5%

1%

7%

Less than 5 Min Less than 30 Min Less than 1 HrLess than 12 Hr Less than 24 Hr Over 24 Hr

Post-PACCS

Comparison of clearance time

8

Challenges• Resentment by users of old system

• Adjustment by regulatory authorities

• Continuity of the system

9

Overcoming challenges

• Pareto Principle (80:20 Rule)– Bringing on board 20% traders with 80% share in trade,

4 shipping lines, 1 container terminal

• Successful results

• Dedicated team

• International endorsement

10

Key players

• A small team of Customs experts supported by top management

• Karachi International Container Terminal

• American President Lines

• Software developers

11

What could have been done better

• More clarity about the roll out programme

• Better communication with stake-holders

12

Lessons learnt

• Outsourcing of customs not cost effective

• Piecemeal reforms only yield piecemeal results

• Continuity at top level

• Need for a dedicated team

• Financial incentives

• Firm up business process and then make corresponding legal changes

• Need for changes in regulatory framework