Paperless trade facilitation for SMEs. Intro to... · 2015-02-25 · Business/Political Process -...

Paperless trade facilitation for SMEs

Mark GOHPrepared for UNNExT workshop on paperless trade facilitation for SMEs

2-3 Feb 2015, Bangkok, UN Conference Centre

Paperless trade facilitation1

Agenda

• Overview

– Key issues in TF in Asia

– SMEs and their challenges

• Priority bottlenecks

• ICT as the response

• ICT applications

– Pros

– Cons

2Paperless trade facilitation

Issues in TF

• What would the world be like without TF?– Cost, time, cross/ mutual recognition of products,

services, cash-to-cash cycle times

• How should policy look at these issues– Deal with them directly

– Let the business community deal with it (MNCs)

– Adopt PPP approach

• Are they important to warrant attention– Economic development, GDP, …

Paperless trade facilitation 3

Duval’s presentation (2012) …


18.75

4.75/23.5= 20% preparing for physical transport; 80% - preparing for trade - cf Pareto’s Law


18.75

4.75/23.5= 20% physical transport; 80% - preparing for trade - cf Pareto’s Law

1. Time non value added,

2. time is cost and loss in cash conversion,

3. cost translates to lost competitiveness

Trade Facilitation (TF) in Asia and the Pacific

• On average, it still takes 30 days to move goods from factory to deck-of-ship at the nearest seaport

– South Asia: 30 days, 6 days

– South-East Asia: 20 days, 4 days

– Developed economies: 10 days, 2 days?

Improvements in TF could bring $250 billion in additional trade for Asia and the Pacific

So where is the paper? – look at key International Paper Forms

• Key International paper forms– Negotiable Bill of Lading– Insurance Certificate– Consular Invoice– Import/Export Licences– Letter of Credit– Cargo Declarations– Certificates of Origin, Phytosanitary

UNeDOCs recommends a single data modelling approach for:

• Paper documents (>70% paper)• Electronic documents which are simply equivalent to paper

documents• Structured electronic documents UN/EDIFACT, Cargoimp, VDA,

XML etc.• Process driven mini messages, e.g. Web/Service Orientated

eTransactions

UNeDocs: Holistic Information Framework for Single Window

GOODS

PAYMENT

WTO’s perspective of Trade Transaction

S BINFORMATION

Is it really that simple???



GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

Ctry A Ctry B

Ctry C

Ctry D


GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

GOODS

PAYMENT

S BINFORMATION

Ctry A Ctry B

Ctry C

Ctry D

High degree of convolution, challenge in recognition – harmonized system, Customs open hand in interpretation, longer than desired delays at borders, opportunities for informal facilitation, affects cashflow

Arrival Notice

Letter of

Instruction

Invoice, PO

Importer’s

Bank

Ocean Carrier

Customs House

Broker

Line of Credit

Proforma Invoice

Shipping & funding detail

Cargo

Status

Vessel Booking Request

Cargo

Status

Shipping & Funding Detail

Exporter’s

Bank

Importer Exporter

Vessel Booking Confirmation

Bill of Lading

Rated Bill of Lading

Dock Receipt

Freight Forwarder /

NVOCC

Purchase Order

LC

Confirmation

AES

Dock receipt

Pick-up & Delivery Order

Vessel Manifest

Dock receipt

Release/Approval

Demurrage

guarantee &

payment

Inland

Carrier

Manifest

Pick-up &

Delivery Order

Importer Notice

Converted Vessel

ManifestCustoms (Export)

Port

Customs ( Import )

Original B/L,

Invoice, PO,

Packing List

Inland

Carrier

Marine

Insurance

Company

Fund Transfer

Confirmed Line of Credit

Release/Hold

Notice

Purchase Exportation Importation

Import

Terminal

Operator

Proforma Invoice

Export Declaration

Export Declaration

Bill of lading, Documentation

Import

Docs

Export

Terminal

Operator

• 20 actors;

• > 200 data elements;

• Manual procedures;

• Multiple data

systems;

• > 30 documents or

messages.

Data exchangein International Trade

Qn: Where should policy intervene?


Who are the stakeholders in TF?• Many different ministries and executive agencies

–Ministry of Transport, Ministry of Finance, Ministry of Trade, Ministry of Health, –Customs, Bureau of Standards, Veterinary services, Laboratories

• Private sector–Commercial banks–Freight forwarders, Importers-exporters–Customs Brokers– Shippers (MNCs & SMEs)


INTERNATIONAL TRADE TRANSACTION PROCESS

Commercial

Procedures

• Establish

Contract

• Order Goods

• Advise On

Delivery

• Request Payment

Transport

Procedures

• Establish Transport

Contract

• Collect,Transport

and Deliver Goods

• Provide Waybills,

Goods Receipts

Status reports

Regulatory

Procudures

• Obtain Import/Export

Licences etc

• Provide Customs

Declarations

• Provide Cargo

Declaration

• Apply Trade Security

Procedures

• Clear Goods for

Export/Import

Financial

Procedures

• Provide Credit

Rating

• Provide Insurance

• Provide Credit

• Execute Payment

• Issue Statements

INVOLVES

Prepare For

ExportExport Transport Import

SHIPBUY PAY

Prepare For

Import

Qn: steps in each block, cost involved, expertise needed, transaction security especially $Paperless trade facilitation 15

• We want to address the what, where, how,

and why, when(?) of TF for SMEs


What should be objective of TF from policy makers’ perspective


What should be objective of TF from policy makers’ perspective

• Nurture trade environment, regional or

global that is

– predictable (in terms cost and time at the

borders),

– secure (no concerns for shippers on transport

and claims)

– cost efficient (open book, completely

transparent and visible to users)


How to achieve trade facilitation

• Simplification, Standardisation & Systemisation (Harmonization) of trade documents, procedures, practices

• Improving cross border logistics services

• Improving infrastructure (transport: intermodal & connectivity)

• Qn: how does each one speak to the SME??


TRADE FACILITATION

Steps to remove all

unnecessary elements

and duplications in

formalities, processes

and procedures

Simplification Systemisation

Align national

procedures, operations &

documentation with

international practices,

conventions & standards.

Standardisation

Process to develop

internationally agreed

formats for practices &

procedures, documents

& information.


TRADE FACILITATION

Steps to remove all

unnecessary elements

and duplications in

formalities, processes

and procedures

Simplification Systemisation

Align national

procedures, operations &

documentation with

international practices,

conventions & standards.

Standardisation

Process to develop

internationally agreed

formats for practices &

procedures, documents

& information.

Too many steps in

process, not enough

manpower, time

consuming, lacking

language and

technical knowledge

Not well informed of

national procedures,

lacks access to platform

to update and operate

seamlessly

No knowledge of good

provider to provide cost

effective solution, lack

of capability & capacity

building (expertise &

tech) – 5M’s

SME


Rec:19Mode of Transport

Rec:16UN/Locode ISO Country Code

Rec: 17Payment

Terms

Rec:9Currency Code

Rec:20 Units of Measurement

Rec: 28Means of Transport

Commodity Code

Rec: 21Package CodesPaperless trade facilitation 22

Look at framework for implementation


Focus of Trade Facilitation Provisions based on TAs

(Bin and Misovicova, 2008)

Process Analysis

and

Simplification

National Data

Harmonization

Cross Border

Data Exchange

Single Window

Business/Political Process - Collaboration Between Trader and

Government (UN/CEFACT Rec. 4, Rec. 18), UN/CEFACT International

Supply Chain Reference model, Unified Modeling Methodology

(UMM), Global Facilitation Partnership for Trade and Transport (GFP)

Audit Methodology

UN Layout Key, Master Document,

UNTDED, TF Toolkit and Forms Repository

UNTDED, Core Component

Library, UN LOCODE and code

lists, UNeDocs, Rec 34

UNeDocs + WCO DM

= CBRDM

Rec 33,

34,35

Document Simplification

and Standardization

Step by Step ImplementationBased on International Standards


Where do we begin

• Advanced stages (E-docs, Automatedprocessing, Pre-arrival processing)

• IATA e-freight case

• Take a phased approach

• Clearly identify issues with SMEs that are predominantly involved in export market


Concerns of SMEs

• Understanding technical regulations & standards

• Fees and protocol for using platform

• Assurance of security in trade (payment) and transit (T&L)

• Assurance of predictability - SMEs want predictability as it reduces need for inventory

• Transparency in release and clearance of goods, of laws and regulations

• Assurance in ICT and eCommerce


Bottlenecks


Priority bottlenecks

Bottleneck Priority to SME Good practice

1 Processing/ clearance delays at BCPs *** Bangladesh 72 hrs(1999) -> 3 hrs(2009)

2 Lack of transit and transport agreement *** Green lane

3 Compliance with SPS * Philippines

4 Technical barriers to trade ** Thailand

5 Weak logistics systems ** Thailand

6 Poor infrastructure ** Laos

7 High admin fees, storage & handling costs *** Singapore

8 Limited IT usage *** Korea

9 Lack of accreditation facilities * Singapore

10 Excessive documentation *** IATA (efreight)

11 Lack of cooperation and coordination among trade supporting organisations

*** Virtual 1-stop shop


Other SME TF Bottlenecks...

• Limited information about overseas markets and marketing consumers goods

• Additional market entry barriers

• Lack of attention behind and between borders

• Absence of comprehensive Aid for Trade Agenda

• Barriers to the international markets of goods and procedures at and around the borders

• Skilled human resources and technology

• Cost of trading remains high-prevents potential exporters competing in the global and regional markets


Trade Facilitation Bottlenecks

• Among the 39 Measures some of the provisions have partially been addressed but some provisions are very difficult to implement eg Detention, Test Procedures, Pre arrival processing, Establish and publication of average release time, Border agency cooperation, Use of international standards, Single window, Customs cooperation - these need more time.

• Issues of Advance Ruling, Risk management are similarly important but require time


Summary

Imperatives for successful TF framework:

strong political will;

clear strategic plan;

close co-operation with business community;

well-funded and long-term technical assistanceprogram based on partnership & trust


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