Luận văn thạc sĩ Quản lý công: Impact of implementation of e-customs procedure on customs authorities and export-import enterprises

May Objective: This essay offers the results from evaluation and analysis of the current status of the implementation of E-customs procedure; the positiveaspects and shortcomings of the

——-x,tÄ5«

Nguyen Truong Son & Bui Tuan Phong

MPPM-Uppsala - Intake 1

IMPACT OF IMPLEMENTATION OF

E-CUSTOMS PROCEDURE ON E-CUSTOMS

AUTHORITIES AND EXPORT-IMPORT

ENTERPRISES

Supervisor: Prof Sven Jungerhem

Local Supervisor: Dr Huyen Nguyen Thi Ngoc

Hanoi, May 2011

ABSTRACT Title of the thesis:

Impact of implementation of E-customs procedure on customs authorities and

export-import enterprises

Level: Final assignment for Master Program in Public Management.

Author: Son Nguyen Truong

Phong Bui Tuan Supervisors:

Uppsala supervisor: Prof Sven Jungerhem

Local supervisor: Dr Huyen Nguyen Thi Ngoc

Date when the thesis is presented: Tentative 17-19 May

Objective: This essay offers the results from evaluation and analysis of the

current status of the implementation of E-customs procedure; the positiveaspects and shortcomings of the implementation of E-customs procedure in

Vietnam, its impacts on customs authorities and import-export enterprises

applying E-customs procedure

Methodology:

In this essay Two books: Handbook on impact evaluation - Quantitative methods and practices and Handbook on Planning, Monitoring and Evaluating for Development Results have been used to make theoretical framework for

analyzing impact of implementation of E-customs

This essay was based on books, documents, theory and models of

electronic clearance of some countries, as well as data collected directly from

the General Department of Customs, Provincial and Municipal Departments

of Customs applying E-customs procedure; the magazines of: Financial

Informatics, Research on Customs, Customs Press and web pages.

Through two surveys of local customs departments implemented

E-customs procedure and some import-export enterprises

+ Survey I: To interview 6 people in local Customs Departments that have

been implemented E-customs procedure.

+ Survey II: To interview and give questions to 50 enterprises (of which

30 enterprises participating in E-customs procedure and 20 enterprises

performing traditional customs procedure)

From the theoretical model and actual data collected through methods of

sociological survey, this essay has used statistical methods, methods of

analysis, comparison and summarization in a systematic, scientific and

practical way based on the data collected to for the study

Results and Conclusion:

This essay is almost mentioned E-Customs procedures, roles and basiccharacteristics of electronic Customs procedures; The impact of E-Customs

procedures on Customs and import-export business; and also answered the

research questions: What is Customs procedures? What is the role of

E-Customs procedures? What is the advantages of E-E-Customs procedures

compared to former Customs? What is the benefits of implementing the

electronic Customs procedures to Customs and import-export business? What

inadequacies, difficulties and problems for businesses and Customs is when

implementing the electronic Customs procedures? What is the positive and

negative effects in the implementation of electronic Customs procedures for

both Customs authorities and business?

Limitations and proposed next steps

The analysis of Impact of implementation of E-customs procedure on

customs authorities and export-import enterprises also raised deeply research

on E-Customs which deployed in Vietnam in the following project such as:

"Which solutions is to implement effectively E-customs procedures in

globalization?”

Or “ The role of E-Customs procedures in Promoting commercial

development ”

Contribution of the thesis:

The study will play a part to give a suggestion to managers, leaders, government to think of management policy and some recommendations for enterprises to get the best benefits brought from E-customs procedure.

Key words: E-customs procedure,

TABLE OF CONTENTS

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¬— «<« 3CHAPTER 1: INTRODUCTION AND OVERVIEW 222cne -

HG SCOPE ANd đệtf[đTÔaiOfiS:¿ : c c22-c2c c0 ccsCcecsee II

CHAPTER 2: THEORETICAL FRAMEWORK FOR ANALYZING

IMPACT OF IMPLEMENTATION OF E-CUSTOMS PROCEDURE ON

CUSTOMS AUTHORITIES AND EXPORT-IMPORT ENTERPRISES 13

2.1 Definition and characteristics of E-customs procedurce - -: 13 2.1.1 Definition of E-customs procedure cccccccecceseseseeseseeeeseseeeeseveesveens 13 2.1.2 Characteristics of E-customs procedUFe ¿s5 s+ 5: sssczszccscs sec: I4 Bek 8 UOUONŠ-DÍ | -UUSEOIS PIOCOOULC o.c:csesccecsseseseaavensiscsvesecsesnosscstatltavectssins 16

eR en PI NN {cố aR peaelDageeataelpetscartdsvpseexiclenceses ore 16

"- ((dQ Ỉ (dao c 17

2.3 Conditions for the implementation and development of E-customs

192.3.1 For Customs Department implementing E-customs procedure 19

2.3.2 For Customs Sub-Department implementing E-customs procedure 19

2.3.3 For Data and Information Technology Centers under Customs

Department implementing E-customs procedure -. ‹-::-: 20

LH ằ—Š-———<<.Ss B 21

2.4 The basic differences between traditional customs and E-customs 2]

2.5 Existences, inadequacies, problems in E-customs procedures 22

ae a Relating to program software, equipment, network -. .22

2.5.2 The Customs Department :cccccseeseereeeeeseseeeeeteeteeneeeee K.< 24

E16 10L ((QÔÔ ae asS=<<ŸễằĂằŸằẽẰeằŸ{ẽẰŸẽẽ Ÿs<S 26

a 1, EetViees SUppH€fS: i 622 27

CHAPTER 3: ANALYSIS OF THE PILOT PROCESS OF E- CUSTOMS

PROCEDURE - IMPACT OF IMPLEMENTING E-CUSTOMS

PROCEDURE ON CUSTOMS AUTHORITIES AND NTERPRISES 29

3.1 E-customs implementation impacting customs authorities 32

3.1.1 Positive impact -cscsteeesereerhrrrrrrrrrrrerrrrrrrdrrdtrdrrrrrrre

KKK

APEC: Asia-Pacific Economic Cooperation

ASEAN: Association of Southeast Asia Nations

C/O: Certificate of origin

CFR: Cost and Frieght

CIF: Cost, Insurance and Frieght

ECUS: E-customs sofware

EU: European Union

FOB: Free on board

HS: Harmonize system

IT: Information technology

Kyoto: International Convention on the simplification and

harmonization of customs procedures ( Kyoto convention)

NAFTA: North American Free Trade Agreement

VAN: Value added Network

VPN: Vitual private Network

WAN: Wide area Network

WCO: World Customs Orginization

WTO: World Trade Orginization

EE ee 34

3.2 E-customs implementation impacting export-import enterprises 35

EE EE À 35

` AaaC ÀẲĂÝš.Ằ 37

CHAPTER 4: SURVEY RESULT ANALYSIS TO ENTERPRISES IN

HAI PHONG PARTICIPATING IN E-CUSTOMS PROCEDURE - SOME

SOLUTIONS TO IMPROVEMENT OF E-CUSTOMS PROCEDURE

4.1 Comments on the implementation of E-customs procedure at E-Customs

384.1.1 Comparison between E-Customs procedures and traditional Customs

EE 1 2 ee aR 38

4.1.2 The specific benefits achieved by enterprises when participating in

E-Ergo ona sri Lp deseo cendncis¥ ino dubs dea lal >oeccoescecdbe¥eieale 39

4.1.3 The difficulties enterprises face when participating in E-customs

‹ ?9

4.1.4 The difficulties enterprises face at customs office when participating in

I ee ee oe 40

4.1.5 The difficulties given to enterprises at Customs Departments when

participating in E-Customs procedure -: -:-:-: 4]

4.2 What about E-customs done in haiphong Sub-Department 06 41

4.3 What about ECUS for declaration c2 1222 222strrrserse 4]

EES) 200 | men

4.3.2 The difficulties that enterprises face when using ECUS 42

4.4 Contents need improving and amending Ee

4.5 Confirmation to participate E-customs procedure OF noI -:-:: : 44

4.6 Solutions to improvement of E-customs proc€dUF© -:-: :-:-: : 44

CHAPTER 5: CONCLUTION LIST OF RESOURCES 5Ú

n - -:-‹ -. - 52

APPENDIX 1: PEOPLE IN VOLVED - 55

APPENDIX 2: ENTERPRISES INTERVIED FOR THEIR OPINIONS OI

APPENDIX 3: OPINION SURVEY FORM ON

E-CUSIOMS-PROCEDURE OF PROVINCIAL AND MUNICIPAL CUSTOMS :

DEPARTMENT - - - - - -ssnthhhhhtth "s7 2.

APPENDIX 4: OPINION SURVEY FORM ON E-CUSTOMS

PROCEDURE OF NTERPRISES -:

KKK

APEC: Asia-Pacific Economic Cooperation

ASEAN: Association of Southeast Asia Nations

C/O: Certificate of origin

CFR: Cost and Frieght

CIF: Cost, Insurance and Frieght

ECUS: E-customs sofware

EU: European Union

FOB: Free on board

HS: Harmonize system

IT: Information technology

Kyoto: International Convention on the simplification and

harmonization of customs procedures ( Kyoto convention)

NAFTA: North American Free Trade Agreement

VAN: Value added Network

VPN: Vitual private Network

WAN: Wide area Network

WCO: World Customs Orginization

WTO: World Trade Orginization

CHAPTER 11.Introduction

1.1 Introduction

Nowadays, globalization and international economic integration is

becoming one of the main trends of modern international economic relations

Accordingly, the world trade has increased rapidly: if the world's export rate reached 69.7 billion dollar only in 1950, then it reached 5460 billion in 1999!

and nearly 20 billion billion dollar at present With the apprearance of global and local institutions such as WTO, EU, APEC, NAFTA, ASEAN The

world today is living in the strong process of globalization In such strong

trend of globalization and international economic integration as today, many

opportunities as well as great challenges have been created for developing

countries in general and Vietnam in particular In this context, it is neceassry

for countries wishing to participate in international economic integration

effectively to make an entire and comprehensive innovation of institutions,

mode, management methods Since becoming a member of the World Trade

Organization (WTO), Vietnam has had to make international commitments, in

which Vietnam Customs is one of the branches has to implement internationalcommitments such as International Acts Vietnam has signed on, the program

of harmonization of customs procedure under Kyoto Convention, especially

Protocol on facilitation for ASEAN’s goods From the above reasons,

Vietnam customs is required also to enhance modernization reforms in its

operation, to do research and apply modern management methods in order to

create favorable conditions for trade and promote the country's economic development, but well to ensure management requirements and customs

procedure.

| ' Globalization and Vietnam’s international economic integration, PŠ

| ? WTO integration- opportunities, challenges and our actions Date 07 11/2006, p2

Experiences of customs mordernization on some countries, Chapter 2,3

However, implementation of E-customs procedure on the basis of limitedfacilities, in the context of Vietnam's economy reached a new level compared

to other developing countries in Southeast Asia: Vietnam's public

administration in general and customs procedure in particular are in the period

of reforming; the extent of application of information technology in the

management of customs operations is not synchronized: qualification of

customs officials does not meet requirements; most of import and export

enterprises of small and medium scale may not have a sound perception about

the utility of E-customs procedure, not make a necessary investment in

machinery, IT equipment and, software, networking for transferring data to

and receiving it from customs agency

There have been some scientific researches which refered to aspects of Vietnam customs of Vietnam in the process of international economic integration, reform and customs modernization, such as:

a) Le Van Toi, Vietnam Customs in the process of regional and international economic integration, a PhD thesis in political economics.

presented in 2005 at the National Political Academy Ho Chi Minh The thesis

refers to practical problems, reason and reality of Cu stoms o perations in

Vietnam in the process of regional and international economic integration under perspective of political economy.

b) Nguyen Ngoc Tuc, Further reform and modernization of Vietnam Customs

to meet requirements of international economic integration, a PhD thesis in

economics, presented in 2007 at Hanoi Foreign Trade University [he thesis

describes the scientific basis for the continuation of reform and modenization

of customs procedure as well as the objective need and content of further

reform and modernization: refers to the actual situation of customs reform and modernization, and give directions and solutions to further reform and modernization of customs in Vietnam to meet requirements of international

This essay selected the book: Handbook on impact evaluation

-Quantitative methods and practices of the author: Shahidur R Khandker,

Gayatri B Koolwal, Hussain A Samad and the book: Handbook on

Planning, Monitoring and Evaluating for Development Results - United

Nations Development Programme (2009) to study the impact of

implementation of e-customs procedure

-This essay was based on books, documents theory and models of electronic clearance of some countries, as well as data collected from the

General Department of Customs, Provincial and Municipal Departments of

Customs applying E-customs procedure: the magazines of: Financial

Informatics, Research on Customs, Customs Press and web pages.

- Through two surveys of local customs departments implemented

F-customs procedure and some import-export enterprises

E Survey I: To interview 6 people in local Customs Departments that have

been implemented F-customs procedure

Survey II: To interview and give questions to 50 enterprises (of which

30 enterprises participating in E-customs procedure and 20 enterprises

performing traditional customs procedure)

From the theoretical model and actual data collected through methods of

sociological survey, this essay has used statistical methods, methods of analysis, comparison and summarization in a systematic, scientific and practical way based on the data collected to for the study,

* Handbook on impact evaluation - Quantitative methods and practices

“Handbook on Planning, Monitoring and Evaluating for Development Results

economic integration However, this thesis studies from economic angle, so it

does not discuss issues of customs innovation

c) Nguyen Cong Binh, Research on proposal of E-Customs management

model This topic decribes from the general research on management of

E-customs, the role of information systems in E-customs management: give recommendations and steps to build a model of E-customs, focus on researching application of information technology in organizational

management and management of customs operations and other related

works.

Through an overview of these topics, it shows that: these studies have mentioned E:-customs procedure in the process of international economic

integration, in reforms for customs modernization However, to assess the role

and impact of E-customs procedure in Vietnam on customs authorities and export-import enterprises, there has not been any one Therefore, we selected topic: "Impact of implementation of E-customs procedure in Vietnam on customs authorities and export-import enterprises" to analyze an overview of

[ customs procedure being used in Vietnam: benefits from the application of

the procedure for both customs authorities and enterprises: inadequacies and problems in implementation of E-customs procedure: the study will play a part to give a suggetion to managers, leaders, government and export-import enterprises.

1.2 Purpose and quesions:

Summarize general knowledge about E-customs procedure: roles and

conditions for building up and development of E-customs procedure: Study

and evaluate the current status of E-customs procedure being implemented in

customs authorities: legal basis, conditions for implementation,

implementation process, the positive aspects of E-customs procedure

compared with the traditional one under perspective of management: Stud)

and evaluate the current status of E-customs procedure being implemented in

export-import enterprises: benefits gained and difficulties arising, the impact

of the implementation of E-customs on customs activities and enterprises ofimport and export; Identify, select and offer solutions to development of E-

customs procedure in both customs authorities and import-export enterprises.

Thus, the questions for this research topic include:

a) What is E-customs procedure? The role of E-customs procedure?

Advantages of E-customs procedure compared to traditional customsprocedure?

b) The benefits from the implementation of E-customs procedure for customs authorities and import / export enterprises?

c) The inadequacies, difficulties and problems enterprises and customs

authorities have to face in the implementation of E-customs procedure?

d) The positive and negative effects in the implementation of F-customsfor both customs authorities and enterprises?

1.3 Scientific and practical significance of the research:

This essay offers the results from evaluation and analysis of the current status

of the implementation of E-customs procedure: the positive aspects andshortcomings of the implementation of E-customs procedure in Vietnam its

impacts on customs authorities and import-export enterprises applying

F-customs procedure.

The study is also a useful source of reference for learners students who

study E-customs procedure in particular and customs procedure in general.

This essay also provides useful comments and positive contribution for

policy makers, central ministry agencies to the completion of policies, to manage and control macroeconomy, to build and improve rules of F-customs

procedure in Vietnam in this context of globalization and international

integration,

1.4 Method

This essay selected the book: Handbook on impact evaluation

-Quantitative methods and practices of the author: Shahidur R Khandker.Gayatri B Koolwal, Hussain A Samad” and the book: Handbook onPlanning, Monitoring and Evaluating for Development Results - UnitedNations Development Programme (2009) to study the impact ofimplementation of e-customs procedure

-This essay was based on books, documents theory and models of

electronic clearance of some countries, as well as data collected from the

General Department of Customs, Provincial and Municipal Departments of

Customs applying E-customs procedure: the magazines of: Financial Informatics, Research on Customs, Customs Press and web pages.

- Through two surveys of local customs departments implemented

F-customs procedure and some import-export enterprises

+ Survey I: To interview 6 people in local Customs Departments that havebeen implemented E-customs procedure

+ Survey II: To interview and give questions to 50 enterprises (of which

30 enterprises participating in E-customs procedure and 20 enterprises

performing traditional customs procedure)

From the theoretical model and actual data collected through methods of

sociological survey, this essay has used statistical methods, methods of

analysis, comparison and summarization in a systematic, scientific and

practical way based on the data collected to for the study.

| * Handbook on impact evaluation - Quantitative methods and practices

°Handbook on Planning, Monitoring and Evaluating for Development Results

1.5 Material

A variety of sources have been used in order to answer the researchquestion of this essay When trying to find out the possible sources ofVietnams customs’s reforming and mordernization surroundings, thedatabase Experiences of customs mordernization on some countries has beenuseful A selection of books and articles regarding Vietnam reforming of

National administrative and Vietnam customs’ reform and mordernization

have been equally useful

Handbook on impact evaluation - Quantitative methods and practices Handbook on Planning, Monitoring and Evaluating for Development Results

are two books which have been used to make theoretical framwork foranalyzing impact of implementation of E-customs

Other reports to concern summing up 5 years ( 2005-2010) implementing

E-customs procedure and report to concern summing up 10 years (

2001-2010) of reforming National administrative in Vietnam have however, alsobeen useful The regulations of Vietnam customs and how to do the customsprocedures such as: Vietnam customs law, E- transacuions Law, Law on

Export Tax and Import Tax and others circulars, dicitions promulgated by Vietnam National assembly and govement are useful in making E-customs

procedure process The information extracted from the website: wro.com

weo.com, customs.gov.vn are supplemented good ideas on customs reform

and mordernization.

1.6 Scope and demarcations

Phe following analysis of the impact of implementing F-customs

procedure on customs authorities and import-export enterprises is devided

into four sections or four chapters:

Chapter 2: Theoretical framework for analyzing impact o! implementation ol

E-customs procedure on customs authorities and export-import enterprises

mplementat zi - Some

‘recommendations for policy makers and managers of customs authorities in

order to successfully implement E-customs procedure in Vietnam; Some

recommendations for enterprises to get the best benefits brought from

E-customs procedure.

Chapter 5: Conclusion Recommendations for further study

LÝ 4.“

CHAPTER 2THEORETICAL FRAMEWORK FOR ANALYZING IMPACT OF

IMPLEMENTATION OF E-CUSTOMS PROCEDURE

ON CUSTOMS AUTHORITIES AND EXPORT-IMPORT

ENTERPRISES

2.1 Definition and characteristics of E-customs procedure:

2.1.1 Definition of E-customs procedure:

E-customs procedure is a customs procedure in which the customs

declaration, receipt, handling customs declaration information and making are done through a software program of electronic customs

decision-declaration ECUS this is a tool that helps customs authorities and enterprises

implement process of F-customs procedure The business only need to install

this software on their computer, then fill in accordaing to customs rules such

as customs declarations, value declaration, certificate of origin, bills of lading.

license ete , and send all the information on the electronic declarations and

other electronic customs documents to Sub-Department of E-Customs then

electronic data processing system will automatically receive and sendnotification of guidelines for customs procedure back to the business the

enterprises will receive this information from customs authorities such as: the declaration has been accepted or not, number of declaration, mode of customs

clearance, tax notices etc After receiving this information, the business

will take next steps in accordance with its procedure

’ Circular No 222/2009/TT-BTC dated 25/11/2009 ited by the Ministry

Finance guiding E-customs procedures as model, chapter Í

MÀ VAN Data Center

Sy”

Doanh nghiép

Doanh nghiép

Figure 2: Principal of E-customs connection

2.1.2 Characteristics of E-customs procedures:

a) Customs procedures are made by electronic means through an

electronic data processing system of customs authority:

b) E-customs papers ensure the integrity with a standard format and legal value as customs dossiers.

c) The customs declarant will base on his her computer system to createinformation for customs declaration and make customs declarationtransmission by electronic means to the customs authority through an

organization for transferring and receiving electronic vouchers, in which he/she can declare on his/her own, do self-assessment and self-payment of

taxes and other revenues; apply method of monthly payment for customs fees

The đeclarant shall take responsibility for the content of their customs

declaration.

đ) To participate in E-customs procedures, it is obligatory for enterprises

to make registration and receive admission from customs authority to

participate in E-customs procedures, then issued a password for access to the

system, connect network computers with Customs or using the services of

agents to clear E-customs procedures.

¢) The customs authority will implement customs procedures on the

basis of E-customs papers sent to, then handle and classify kinds of goods, and make a decision on forms of inspection through an automatic system of

electronic data processing on the basis of analysis information processing,with three forms:

- Accept customs clearance on the basis of customs declaration (green

flow), the declarant him.herself prints the declaration, with his/her signatureand seal, bring it to Border Customs Supervisors for clearance of goods :

- Check paper documents of customs dossier before clearance (yellowflow), the declarant will present the declaration printed with other documents

of the dossier at the request of the customs authorities:

- Check paper documents and actual status of goods before clearance

(red flow), the declarant comes to present the declaration printed with other

documents at the request of the customs authorities to produce the goods lor

the Border Customs Sub-Departement for their decision on clerance based

according to electronic dossier declared by the business enterprises: then

decide the customs inspection based on results from analysis of information

from the database of customs authority and other sources of information,

f) The post-clearance inspection made by the F-Customs

Sub-Department on the basis of analyzing and processing Information from the

database, paper documents of customs dossic! and other information of other

i : ndividi “USI 1S

professional bodies of the agency, organizauion ndividuals and customs of

other countries Synthetic sources’.

2.2 Process of E-customs procedure

2.2.1 For customs officials:

Step 1: Preliminary examination, and registration for E-customs declaration

includes the following tasks:

- Examine the conditions of declaration registration

- Examine name, unit of measures, codes of goods

- Makes sure the adequacy of all criteria on the E-customs declaration

If the information declared are sufficient and appropriate the registration for E-customs declaration is allowed, to update the examination results into the

system for issue of registration number and classification of declaration.

Where the information declared is not compliant with regulations the customs official will check through a system instructing the declarant to

adjust accordingly or refuse their registration with sending a reason of "Notice

of ] customs declaration refusal" to the enterprise.

Step 2: examination of customs papers includes the following:

- Examine customs dossiers, :xamine taxable valuation (if any )

- If the declaration is satisfied to the customs regulation, to decide “customs

clearance” by doing on the system or to print "Note of customs dossiers”

- In case of physical inspection of goods to update what has examized to

system then transfer the customs dossiers to step 3 for performance

Step 3: Physical inspections of goods shall be conducted by customs officers

to determine the accuracy and sufficiency of descriptions of goods In order to

determine the customs valuation When inspection results are in accordance

with the customs regulation, the customs officer are pemitted to decide ~

customs clearance” or make a proposal to chief customs to determine

the Ministry of Finance guiding

E-Š Cireular No 222/2009/TT-BTC dated 25/11/2009

customs procedures as model, p3

3% 66 £

Release goods Transport goods into the owner's storage” In case of

requirement to re-confirm customs valuation, the E-customs declaration is

2.2.2 For customs declarants

Step 1: The declarants including: The owner of import and export goods: An

agent authorized by the owner and customs agency will make information for

the E-customs declaration, value declarations on the system of E-customs

declaration in accordance with the criteria and standard format prescribed and

be responsible for the contents of the declaration

Step 2: Send the E-customs declaration to customs authority

Step 3: Receive feedback of the customs authority and follow instructions.

including:

+ Get "Notice of E- customs declaration refusal" and made the

amendment, supplement for the E-customs declaration under guidance of

customs authority Resubmit the customs authority after amendmenting and

customs supervision area or transport goods into the owner's storage

: Decision No 2396/QD-TCHQ dated 9/12/2009 issued by the Customs Oenerc

on promulgating the process of customs procedures for export port goods

implementing

E-customs procedures, p6,7,

| !# Decision No 2396/QD- TCI 1Q dated 9/12/2009 issued by the ( ms General Director

on promulgating the process of customs procedures for export import good

| implementing

E- customs procedures, p 8.9

Step 2 : Send the information to customs

Send “Notice of refusal of E-customs

ed 7” declarat =

Step 3: Amend Step 2:

re-and supple Send amendments re-and supplements examine in

following details

feedback from customs authority Green flow for clear declaration

Step 4 : Print the

- Orrelease goods out of customs zone

- Or transport goods into owner's storage

2.3 Conditions for the implementation and development of E-customs

procedure:

2.3.1 For Customs Department implementing E-customs procedure:

Firstly, the Customs Authority should make a set of criteria of risk

management for implementation of risk management techniques and

enterprises classification It is required to have a data management center to

use system of data collection, management and analysis to serve customs

activities, make sure a good infrastructure of information technology for

implementing E- customs clearance!'

The Customs should be equipped with mechanical systems, modern equipment for customs inspection and supervision, such as container

scanners, electronic scales, surveillance camera systems, infrastructure, ete

as well as soonest to found Customs information collection unit to prevent

someones from smuggling and committing tax fraud

Customs agencies including sub-department, local departments and the

Units under general customs department are strictly required to follow the

regulations on management of operating and using l customs data processing

system To ensure that the system is managed and operated continuously 24hours a day as prescribed by the General Department of Customs In case of

problem, promptly inform subjects to the system operators and to enterprises participating in E-customs procedures then to be permited to operate system

standby PG

2.3.2 For Customs Sub-Department implementing E-customs procedure:

_

To carry out daily works by customs officials as follow: Checking.

receving and transfering data to the Data and Information [echnology

Center - Customs Department: to download updated data from the Data and

"Report on summing up 5 years to implement E-customs procedure ( 2005- 010) p12.

| '2 Circular No 222/2009/TT-BTC dated 25/11/2009 of the Ministry of Finance guiding

F-customs procedures as model, pl4

the Information Technology Center including: list of enterprires which are

coercive not to do customs procedures, List of enterprires which are violated

customs regulation, list of goods restrictly to be exported or imported: tariff

classification, list of goods subject to tax before customs clearance

The system operator in Customs Sub-Department to do the works as follow:

To make the decentralization list of staff sujected to chief customs to bear staff's usernames and to do technical works to ensure that the system

Operating continuosly.

To make a report each 10-day period and send to the Customs

Department where implemented and the General Department of Customs The

report consists of how E-customs procedure has been implemented and

carried, what is the violation of customs legislation, how the process of customs has been done, how much goods have been cleared by customs

E-officers and the last what are your opinions to implement E-customs

To carry out daily works by customs officials as follow: Checking, receving and transfering data to the Data and Information Technology Center — under

general Customs Department: to download updated data including: list of

enterprires which are coercive not to do customs procedures, List of

enterprires which are violated customs regulation, list of goods restrictly to be

exported or imported: tariff classification, list of goods subject to tax before

customs clearance

2 3.4 For Enterprises:

a) To equip with computers to be connected internet: ADSL, Leased Line :

Minimum PC CPU: Pentum 4 RAM: 256 MB HDD: 1GB Free: operating

system from Windows XP or higher

b) To download free ECUS software to be run on their computers

€) To ensure that the staff is learned how to use ECUS and understand

E-customs procedure

d) To keep customs papers, books, vouchers and other documents relating to

export and import goods which have been cleared within 5 years, from the

date of registration of customs declarations: produce documents provide

information and relevant documents when the customs department requires

as prescribed (including in paper form and electronic form).

¢) Arrange staff to study short-term training courses on customs procedures,

customs agents in Vietnam Customs School.

2.4 The basic differences between traditional customs and E-customs

procedures :

The basic differences between traditional customs

and E-customs procedures

Traditional

E-customs procedures

customs

Declared {Required to fill in) Request to declarate customs

Information | fixed forms ‘Information by using ECUS

Electronic data file includes information

J indicators declaration and electronic

‘ `” Collect vouchers supporting documents Law accepts

dossiers electronic customs value as normal if the

records meet certain conditions

Customs declarant

Method of IDeclarant can send intormation§ via directly submit Jectrot formatio

receiving ba iad network to electronic — information

declaration systems of customs authorities

declaration

customs olficers

customs office ` tet " |[ransforming and receiving message by

internet The declarants follow what!

| Message says.

Method of

feedback

The customs officers

directly guide thedeclarants how to do

the customs

procedures.

2.5.1 Relating to software programs, infrastructure equipment,

transmission network:

The Customs Department:

Firstly, many software programs have not been designed installed so

electronic declaration system should only work in low automatic processing

level, many stages are still required manual intervention (selected

classification for declaration, owing to insufficient database), not meet the

requirements to take procedures by regulations The lack of functions

includes:

a) License reconciliation; Automatic warning about the goods of

high-risk: Information on tax grace: Self-check and respond to any unreasonable:

[wo-wav exchange of information between customs and enterprises:

Self-coded list of import export goods to distinguish, select tomatically:

Integrated name of classification customs officials for enter] or C( fe

when taking procedures; Automatically notify enterprises the lots ol

i í - ee ye ‘nts: Updated results of the

shipments close to tax payment, fees, documen (

1€TI _analysis and classification and violations handling: Repair adjust

to every detail of commodities:

b) Process the late payment or no payment; Directly print receipts: Delete

information of requiring assessment in case of errors or mistakes; Monitor the

debt documents from customs records: Monitor declarations, tax valuation:

Recognize handling operations of post-clearance inspection process risk

management ; Till the present, there is no software of 02 Post-clearance

inspection team and Collection, information processing risk management &

Customs Control.

Secondly, many software (functional) programs have been designed,installed but incomplete insufficiency, causing difficulty in handling

procedures, such as:

a) Not supervise the case which many assessment requires on a good: No

parts to record the test results on the correct declaration: No part for guiding customs procedures for commodites be classified on blue: Risk management

function is less appropriate and complete than the risk management program

which is applying in traditional crafi line, causing unfavorable problems for goods taking e-customs procedures; Not updated report certificates records of

administrative violations in the form of printed: Not fully update the ageney

who signed C/O; Characters for the declaration of export declarations on the

declaration and the bill of lading is too narrow: Output section of tables.figures to serve the statistical reports may not have many utilities:

b) Difficult to handle and verify on the system in the case of

commodities in accordance with the regulations are settled to bring about

temporary storage, awaiting for the results of assessment and inspection form

the factory; There are no set criteria for the whole industry for risk model applied to e-customs clearance: Information from tax accounting program 559

KT risk management web has not vel been integrated into the electronic

declaration svstem so checking data declarations, information on observance

legislation of the enterprises remains to be done by manual

Thirdly, the system has not yet been integrated, leads to the fact that an

officer has to use multiple programs at once in the process of customs

procedures, meanwhile the local network can not solve the problem of focus

treatment as well as operational data at the scale of the provinces, cities

customs, speed shared applications on the local network is usually slow.

Links, application sharing between the local network, connection are at a low

speed, transmission quality is not stable in many places affect to the data processing which needs continuity and focus making it difficult to connect.

exchange data with enterprises

Fourthly, facility and equipment to ensure the operation of the system

are not fully synchronized: WAN operating system is not stable because no

backup system and backup data to the concerned departments so, when themain transmission has problem, the system is deactivated: When operation,the system often has warn status; integration between the application softwarehas regularly been repeated problems, operation not connect to server and

enter the management software, overcoming is not absolute: When

enterprises suggest to cancel the declaration then customs officials do not

accept Enterprises can declare other declarations, because of the fact that

there is no warning software on the Ecus and import-export data program.

2.5.2 The Enterprises:

Firstly many enterprises where offices, computers in areas declared

Postal city may not already implement online transmission, they have to use

dial up at low speed, while the software program is not complete lead to

transmission declarations and receiving information time not yet fast when declaring, enterprises have to wail to receive information, to go to work again Many cases to obtain feedback for the 01 customs declarations and enterprises

have to focus and coordinate to implement for 3 - 5 hours, alter classification,

to wait for printing documents, takes a lot of time.

Mlecondly, when enterprise declares section of mandator without a tax

code, they are unable to declare, There is no guide for mandator enterprises:

Some cases, enterprises do not receive a notice of customs fees on the

network, in order to determine the exact amount of fees to be paid.

Thirdly, as regulations, Enterprises can declare before the ships arrive,but on the time of declaring, Enterprises do not know about name of the portwhich the ships will arrive, so they can not declare name oft the Sub-gate

Customs therefore, they can not declare:

Fourthly the criteria on the e-customs declaration are inadequate,

inappropriate with the practice, include: can not declare when payment bycombined method, can not declare the sales commodities, price-cutting,

compensation, discounts commodities; Can not declare name, address of the

exporter by short declaration section: Item "number of packages" is not

designed a full range of packaging: Item weight may not identify the type of

Weight; there is no part for confirming temporarily leasing commodity.

commodity inspected at store: Can not declare the number of container, lead

number of export commodity, Have to make a sub-declaration if the shipment

in many containers

Fifthly the goods before being assessed, analyzed and classified (PTPL)

are not subject to the declared value declaration, but alter being assessed,

PTPL, they are to be declare value, however, the software not allow to do so, ECUS software does not allow to declare value declaration methods 3 Š 6.

ECUS software may not be fully integrated with electronic declaration

software that makes difficult for enterprises to handle: On export commodity declaration, name of port, port of loading, discharging -nterprises declare on

Ecus software, however, in economic declaration is is impossible to

implement; it is unable if enterprise want to correct the number of container

on electronic declaration.

enterprises do not really believe in e-customs declaration

by the fact that the network has not really sure, often has problems, the

software has many inadequate and incomplete problems so declare time.

receive feedback, clearance take a lot of time: Some enterprises are affected

negatively by the information from previous declarant, there is comparison worried about the customs clearance delays (especially where clearance point

has no computer networking), worry about the system's security is not high,lose information easily therefore they do not want to change the way todeclare This is one of the reasons why many enterprises have been certifiedeligible to participate in electronic clearance but not participating in thedeclaration, many enterprises after some shipments taking e-customs

procedures return traditional one.

Seventhly, many enterprises hesitate to innovate, re-arrange staff.

computer equipments to participate in e-customs: Some of them do not want

to take e-customs because they have already rent a unit to make service, they

do not want to change

Eighthly, Enterprises are not required by legal basis to take electronicdeclaration, should there is a situation “like then do, no like than not do”.Most participants of e-customs procedures are now small and medium

enterprises so electronic declaration may not imperative for them, they still take “dual” apply both e-customs declaration and paper record declaration-

Need to have mechanisms, additional regulations to encourage enterprises to

participate in e-customs procedures.

2.5.3 Services Suppliers: (VAN/ Customs are currently using software of

Thai Son computer software Co., Ltd -a component company of FPT,

Firstly there is still frequent status that Enterprises declare date,

computers of customs show that the declarations have been numbered but

computers of enterprises notify transmission errors: When enterprises declare

again, the system accepts lo eive another number of the declaration or informs

an error connection from VAN, when enterprises log in the web of VAN

http:://ws VAN.com.vn., it also notifies an error though enterprises can log ininternet Many times, network to VAN often has problems, handling part ofVan can only guide enterprises to handle by phone Customs and Enterprises

can not self-repair, enterprises turn to take manual procedures.

Thirdly, until now, there is no specific allocation of responsibilities between

VAN service providers, Enterprises and Customs in data transmission of

electronic customs declaration, so it should not be binding legal liability of

VAN when arising problems or disputes.

2.5.4 Relating to mechanism, policies and professional techniques:

Firstly, System of state management policies on customs innovatesslowly, not already keep pace with the requirements of economic socialdevelopment and international integration System for customs procedures isinadequate, not synchronized, some documents issued to solve situation, donot measured problems arising in the implementation process, especially there

are some documents guiding Customs Law and guiding implementation

which are low implemented: contents of some documents relating to customs

activities also contradictory, overlapping, some documents have not yet been

built and promulgated according to plan: review and assessment the reality of

customs legislation system and internal laws of the commitments.

international standards is slow

Secondly Although the electronic transaction laws have provisions on

; © d Etarations, instead, apply digital signatures in

! „Ẳ=: ;f to customs offices.

Thirdly, risk management system of customs department has not yet

built a full assessment criteria, not update new information resulting the rate

on classification of declarations into yellow, red classification quite high.

enterprises turn to take traditional customs procedures.

* Ẫ CHAPTER 3

_ ANALYSIS OF THE PILOT PROCESS OF E- CUSTOMS

_ PROCEDURE - IMPACT OF IMPLEMENTING E-CUSTOMS

PROCEDURE ON CUSTOMS AUTHORITIES AND ENTERPRISES

After more than five years of pilot deploy of E-Customs model from twoCustoms Departments with a large goods flows as Hai Phong city and Ho ChiMinh city, Customs operations have been gradually reformed in accordancewith standards of modern Customs in the region and worldwide, changingfrom manual Customs procedures into E-Customs procedures: The pilot apply

of E-Customs procedures was planned by Customs as per itinerary, both

carrying out and improving to suit the situation Thus during the first stage, [:-Customs procedures shall be carried out as per following criterions:

Firstly, the applied subjects are enterprises selected on the basis of wellcomplying with Customs law with large import-export turnover voluntarilyparticipating in and being accepted by Customs office

Secondly, import and export type pilot-applied with E-Customs

procedures to 3/11 of types are export and import goods as per sale andpurchase contract; import and export goods is in processing contract with

foreign traders or processed in foreign countries: import and export goods is

in the form of importing raw materials for manufacturing export products and

a management system of import and export goods by gate transter:

Phirdly, Customs clearance model is an independent model of

E-Customs Department without any connection with other E-Customs

Sub-Departments.

Fourthly, electronicization content includes:

a) Declare and receive information via electronic means: The whole process

of declarations, receipt and feedback of Customs declaration shall be carried

out through the added value transmission services supplier in the transaction

electronicization and its value as a declaration on paper, other documents

are in electronicization via a form of converting paper documents into

electronic information and make declaration to Customs office (in accordance with the Law on electronic transactions).

c) Handle information of Customs declaration automatically: Have checkedlegally in conformity with declared information: Have checked and warned

the policy of goods to 47/63 of goods managed under each major announced

by the Ministries and branches, standardized according to HS code: llowever

most of standardized these just stand at 4-digit HS level, even some goods of

2-digit HS: the remain of 16/63 of items of goods have not been standardized

by Ministries and branches: Have checked and compared the information

declared on I:-Customs declaration forms with the documents of E-Customs

dosier such as Certificate of Origin - C/O, licenses, Commercial Invoice :

Have checked and compared declared information with requirements of each Customs management system (such as processing, importing for export

production)

Fifth, applying modern management method: the management method is applied base on risk management technique to assess compliance and goods

classification as per risk management criterion and compliance record of

enterprise instead of controlling each import and export transactions included as: Apply criteria of risk management and compliance record of enterprise in

checking classification to serve goods clearance: Have built up a compliance

record to enterprises participating in F-Customs procedures and applied to the

system; Apply criteria of risk management and compliance record of enterprises in determining specific inspection requirements for each regime of

` 13

Customs management à

Total enterprises participating in

I Customs declaration

Export-Import turnover (USD

million) 462.16 | 837.62 492.44

The staff incharge of F-customs to be | a © Be a

compared with total | 5,04% 5.45% 5.88%

Percentage of E-Customs ey i

Declarations to be compared with 1.71% | 2.53% 6.38%

Percentage of Turnover achieved via |

[:-Customs to be compared with 3.652 4.54% 10.95%

total

* Limitation in the pilot deploys process of E-Custom procedure:

Firstly, E-custom declaration model is built up and operated independently in

a Sub-Department without total-connecting with the other custom

management program of data processing entire system, should have a

restriction of Customs exchange between sub-departments applying

l Customs procedures and those W hich do not yet.

Secondly, The automatically level of E-Customs data processing system has

not fully performed all stages in the process of making clearance decision, it

is necessary to be participated of Customs officials in the control of

commodity policy, tax ramification, tax reimbursement

lhirdly, E-Customs procedures, however, has brought much economic

Report on summing up 5 years (0 implement E-customs procedure ( 2005-2010)

whereas those under management of other sections such as Licenses of

Ministries and Departments, Certificate of Origin Payment Note to Treasury

(tax payment vouchers); Quality checking registration (animal and plant

quarantine, food safety) are not made electronicization leading to electronic

records is partially performed only resulting incapacity of expressing

F-Customs procedure’s true naturce '”

3.1 Impact of E-Customs implementation on Customs authorities

3.1.1 Positive impact:

Firstly, a model of E-Customs procedures system has been built up with

smooth operation, which confirms a new management method actually

pulling into practice bringing about the initial effects during the work of

administrative reform of the Customs in particular and State administration in

general;

Secondly it helps Customs authorities change from control of each

consignment into management of all information during import and export

operation of enterprise: from transaction management lo business

management, carrying out risk management, Customs declaration and

information on E-Customs declaration which basically complies with the standards of Customs declaration and standard data set of the World Customs

Organization (WCO Data Set 2.0) from paper-handling to computer

processor helping strengthen anti-smuggling trade fraud and minimize tax

loss:

Thirdly, it brings about economic benefit to both Customs and enterprises by

manpower and expenses when implementing Customs

saving time,

procedures by electronic methods (clearance time for goods in aspect ol

‘Report on summing up 3 years to implement E-custonis =

Fourthly, the Customs declaration has been completely electronicization:

other documents of Customs dossier is in electronicization on the changing basis from paper documents to electronic ones:

Fifthly, E-Customs procedures for three types of procedures and one regime

of Customs management (import-export goods under purchase contract,

processed goods, goods imported for export production and goods to gate

transfer) have well operated in the pilot process, and ready for expansion.

Sixthly, it helps increase working productivity: with /-Customs procedures, a

manpower can carry out at the same time multiple steps in prolessional

process, a staff can simultaneously perform Customs procedure for many

consignments in different places:

Seventhly, it helps increase management efficiency: initially convert Customs

management method from manual to modern, from transaction management

to enterprise management with applying risk management: from manual

handling on paper to computer processor, creates a modern and civilized

working style

Eighth, it helps increase prestige of Customs as a pioneer leading in reforming

administrative procedures and applying information technology: improve

image of Customs officials from the view of enterprises due to a limit of

direct contact between the two subjects:

Ninthly, it helps create a new recognition in interior Customs on new

methods affirm the superiority of E-Customs procedures which is the

indispensable trend of Customs: and Customs officials are required to better

themselves to fit new situation.

Tenthly, it meets guidance viewpoint of the Government and integration

requirements: Step by step reform Customs operations in line with the

“modern Customs in the region and worldwide: transfer from

1 Customs procedure to E-Customs one, build up a model of E-Customs

6 ASEAN countries, facilitate commercial activities: integrate apply of

information technology to further increase the Customs control and

management.

In addition, the expansion of E-Customs procedures helps contribute to the

overall evaluation of the current status of administrative procedures; detect

shortcomings, thereby make settlement plans, complete system of

administrative procedures in a simple and convenient way for individuals,

organizations and enterprises; create a fundamental reform of administrative

procedures to ensure uniformity, simplicity publicity and obviousness of administrative procedures: enhance State management efficiency and promote

social economic development: contribute to the fight against corruption and

wastelulness.

3.1.2 Negative impact:

Firstly, E-Customs procedure is a breakthrough in the apply of informationtechnology, reform of Customs procedures consistent with internationalcommitments, agreements and treaties with the participation of Vietnam

Therefore the number of civil servants including those holding leadership positions who are not basically trained with an insufficient knowledge about

information technology and international integration have not strongly supported or participated in I Customs procedures.

Secondly due to demands on implementation of b-Customs procedures.

Customs officials are required to have knowledge about foreign trade law,

foreign languages and computing thus Customs authorities should spend a

fixed fund for instant training and Custom officials-retraining

Thirdly the Customs should spend a great amount of expenditure investing

computing equipments and information technology such as computers.

container scanners; Customs surveillance cameras and paying for their own

| ns Officials who are unstable for ideological stance and do not

_ S8 themselves hard may collude with the Customs declarants to

perform untruthful declaration about the name and quantity of goods for tax fraud.

3.2 Impact of E-Customs implementation on import-export enterprises:

3.2.1 Positive impact:

Firstly, the enterprise can declare Customs form at any location with acomputer installing software of E-Customs procedures, internet connectionand immediate Customs clearance to shipments exempted documents

inspection and goods actual inspection It can use E-Customs declaration from

system of the enterprise, sign and seal by the business to receive goods and do

goods transport documents on ways to shipments exempted from records

inspection and exempted from goods actual inspection.

Secondly, enterprises can make the Customs declaration at any ime and

Customs receive declaration during working hours, have priority to order to

check the shipment must inspect in detail records or goods actual inspection.

Customs agency provide information about the process of handling Customs documents through E-Customs data processing system Customs

L-agency supports training, provides software of E-Customs declaration, direct

and fee consultancy Chosen to pay fees for Customs procedures of each

Customs declaration or monthly fee.

Thirdly, the liquidity record to contracts of processing and importing raw

materials to simple export production, enterprise does not have to give

electronic documents filed at Customs as in formal Customs procedure Information between Customs system and enterprise is managed syne on

computers to facilitate for further research, seeking information Businesses

can register to carry out b-Customs procedures at any Customs departments and in nationwide Reduce time and costs of Customs procedures and arrange