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Digital connectivity will enhance trade processes across Asean

The Business Times by SANCHITA BASU DAS

AS AN outward looking and trade-dependent region, Asean depends on efficient movement of goods across borders to strengthen the economic integration among member economies and to link itself to the rest of the world. To that end, Asean has devoted attention to reforming and modernising the customs procedures of its member countries.

In 2005, it established the Asean Single Window (ASW), for trade facilitation, that simultaneously required 10 National Single Windows (NSW) in each of the Asean member economies. The objective was to allow traders a single submission of import and export data generally needed by national regulators via an electronic system, instead of submitting paper documents to multiple government agencies.

The logic for adopting the ASW is simple. Border clearance is not the purview of one but multiple government entities in each Asean country. Although the primary responsibility of border clearance of goods lies with the customs agency, the latter is not always the cause of delay or lack of efficiency. The Logistics Performance Index published by the World Bank, as well as the Enabling Trade Index published by the World Economic Forum, have suggested that professionals have often given higher rating to customs agencies compared to other border management entities or processes for most of the Asean countries. Moreover, a number of Asean customs agencies are guided by international standards as prescribed by the World Trade Organisation and World Customs Organisation. Hence it could be the other border management agencies in the Asean nations that need to become efficient in trade procedures.

The ASW and NSW help to modernise the entire chain of border management agencies - including agriculture, health, police, environment, defence and quarantine - that are responsible for the clearance of goods. In Asean countries, on average, around 20-30 government entities are involved in the entire process. And it is hugely inefficient and time-consuming to operate entirely on a paper-based system. As such, achieving tangible gains from smooth border procedures requires a holistic and comprehensive approach that can streamline processes and documentation, encourage information sharing and enhance cooperation across agencies.

Although the logic of ASW and NSW is simple, implementation is a complex process. It requires cooperation across multiple government bodies that may lack knowledge and willingness to undertake the reform. In some Asean countries, for instance, it was found that the team responsible for implementation is trained in technical matters of NSW, but not so much in matters of Asean integration, such as on the Asean Economic Community (AEC).

THE CHALLENGE OF RE-ORGANISING

In any case, re-organising government departments to offer a "one-stop facility" is challenging as not all government agencies may be easily agreeable to transfer functions to a new body (or a platform). Bureaucrats may feel unhappy as their functions get reduced, and worry over personal matters such as job relocation or the need for new job skills. Also, there are many contextual factors, such as political transition or readiness of existing infrastructure, that impede smooth implementation of single window in a country.

For now, ASW has been operational with five Asean members - Singapore, Malaysia, Thailand, Indonesia and Vietnam - exchanging information on Certificate of Origin Form D. The latter is issued by a national government testifying that the goods have met the regional trade rules to benefit from lower tariffs among Asean nations. Efforts are underway in the other Asean members to join the ASW. Going forward, discussion is ongoing to expand the function of ASW to include additional trade documents for electronic sharing. These include Asean Customs Declaration Document and Sanitary and Phyto-sanitary Certificates.

ASW offers considerable benefits for businesses and governments in the Asean economies. First, by eliminating paper-based transaction, it introduces more transparency and predictability in business supply chains. Second, an electronic gateway such as ASW reduces time and transaction costs by streamlining duplicative and time-consuming administrative process. According to a 2012 USAID survey, firms had estimated savings of some US$60 per consignment - or 8 per cent over the current system - from the use of ASW. Third, ASW enables small and medium-sized enterprises (SMEs) to avail themselves to new opportunities under the AEC and the emerging digital economy. The system offers cost-effective ways to undertake import and export, thereby helping SMEs to globalise their business operation in the broader region.

Thus, with the launch of ASW in 2018, Asean offers a comprehensive solution for trade-dependent economies such as Singapore, Vietnam, Malaysia and Thailand. It brings cost-savings for businesses and governments that, over time, will raise the competitiveness of the economies. Finally, establishing ASW demonstrates the region's ability to adopt technology to enhance trade connectivity in the region, which is in line with the core objective of Singapore's chairmanship of Asean in 2018 - the vision of an innovative and digitally connected region for a resilient future.

  • The writer is lead researcher for Economic Affairs at the ASEAN Studies Centre of ISEAS - Yusof Ishak Institute