BANKING ACADEMY OF VIETNAM FACULTY OF INTERNATIONAL BUSINESS GRADUATION THESIS TOPIC: COMMERCIAL FRAUD IN THE IMPORTATION OF VIETNAM, REAL SITUATION AND SOLUTIONS Student : Bùi Bích Ng
The rationale of thesis
In today's world, international integration is a significant trend that influences global relations and drives economic growth in various countries Vietnam is actively engaging in this process, having officially joined the World Trade Organization (WTO) in January 2007 Currently, Vietnam is a proactive member of key international and regional organizations, including the United Nations (UN), WTO, Association of Southeast Asian Nations (ASEAN), and Asia-Pacific Economic Cooperation (APEC) According to the Vietnamese National Institute for Finance, by 2020, Vietnam has made substantial progress in its economic integration efforts.
30 strategic partners and comprehensive strategic partners; has diplomatic relations with 189/193 countries and also form economic relations with 160 countries and 70 territories
The expansion of our country's external relations has led to significant achievements across various sectors, optimizing the use of national resources and fostering opportunities for technology transfer and investment This has enhanced production capacity and laid the groundwork for comprehensive national development, according to Trinh Minh Anh, Chief of Office at the National Steering Committee on International Integration in Economy.
Vietnam is experiencing the benefits of globalization, with the General Statistics Office reporting a trade surplus exceeding 20 billion USD in the first 10 months of 2020 This growth presents numerous opportunities for Vietnamese enterprises, bolstered by the country's participation in several new-generation free trade agreements.
In 2022, despite the far-reaching consequences of Covid-19 pandemic and conflict negatively affecting the world, Vietnam has overcome the difficulties and maintain
2 the positive economic growth Vietnam’s economy experienced growth of 8.02% in
In 2022, Vietnam achieved an impressive economic performance, recording the highest growth rate from 2011 to 2022, surpassing the government's target of 6-6.5% The country set a new trade turnover record of over 730 billion USD, resulting in a trade surplus of 11 billion USD, more than three times higher than in 2021 Additionally, Vietnam attracted 27.7 billion USD in foreign direct investment, with disbursement reaching nearly 22.4 billion USD, marking a 13.5% increase year-on-year and the highest level in five years The consumer price index rose by 3.15% year-on-year, aligning with the National Assembly's target A key factor in these achievements has been Vietnam's participation in several free trade agreements (FTAs).
Despite the significant advantages of international trade for Vietnam, it also presents opportunities for criminal activities that undermine sustainable economic development A major concern is the rise in commercial fraud, particularly following the stabilization of the Covid-19 pandemic, which has seen a resurgence in smuggling and trade fraud Many businesses exploit the government's favorable policies post-pandemic to engage in illicit activities Smuggling, counterfeiting, and commercial fraud have become increasingly sophisticated, manifesting in various forms such as importing goods via express delivery, misdeclaring import details to benefit from preferential rates, and falsely declaring the nature and value of goods In 2022, the National Steering Committee reported nearly 140,000 cases of smuggling and commercial fraud, highlighting the growing complexity of these issues in border areas and the domestic market.
Commercial fraud is posing a serious threat to individuals, businesses and society: it results in the loss of Government finance, damage the reputation of Vietnam
3 towards international regions and also pose a serious threat to the national economy Consequently, strong measures are necessary to tackle this problem effectively
Realizing that this is an urgent problem in Vietnam, I would like to choose the topic
Commercial fraud in Vietnam's importation sector poses significant challenges, necessitating a thorough examination of its current state and underlying causes This article aims to analyze the prevalent forms of commercial fraud, identify contributing factors, and propose actionable solutions and recommendations to mitigate these issues effectively in the near future.
Literature review
Commercial fraud is a complex and pressing issue that affects not only Vietnam but also many other nations As a result, numerous studies have been conducted to analyze and tackle this pervasive problem.
The concept of "commercial fraud" in the Customs field is widely recognized in Vietnam, yet lacks a clear legal definition Researchers such as Le Thi Thuan (2002) and Nguyen Thi Dieu Linh (2021) often reference the World Customs Organization (WCO) definition, which describes commercial fraud as offenses against statutory provisions enforced by Customs, aimed at evading duties, prohibitions, or obtaining unjust financial advantages Additionally, "commercial fraud" is frequently associated with "smuggling," complicating the distinction between the two, as noted by both Thuan and Linh, due to the ambiguous boundaries in Vietnamese regulations The WCO categorizes smuggling as a particularly dangerous form of commercial fraud.
David Stasavage and Cecile Daubree (1998) identify four types of commercial fraud: under-declaration of goods' true value, misclassification of tariff categories, underpayment of import taxes despite correct declarations, and tax evasion where assessed taxes go unpaid Additionally, smuggling involves importing goods without Customs knowledge According to Andreas Buehn, Stephan Eichler (2011), and Volker Nitsch (2017), trade misinvoicing is categorized into four types: import underinvoicing, import overinvoicing, export underinvoicing, and export overinvoicing, all reflecting misdeclaration in cross-border trade In Vietnam, Nguyen Thi Dieu Linh (2021) expands on this by classifying commercial fraud into 16 types per WCO guidelines, encompassing misinvoicing, misvaluation, falsification of licenses, and smuggling.
Commercial fraud is a global issue that significantly impacts individuals, businesses, and governments, resulting in severe economic consequences It leads to government financial losses, price instability, scarcity of goods, a decline in domestic production motivation, and a reduction in legal imports Additionally, commercial fraud can facilitate other crimes, including money laundering and corruption Adugna Lemi's 2018 research, “Trade Mis-invoicing and Capital Flight from Ethiopia,” highlights the extent of trade mis-invoicing and its economic ramifications for Ethiopia By analyzing commodity group-level trade flows and disaggregated CIF-FOB ratios, the study reveals that trade mis-invoicing cost Ethiopia between $6-36 billion in trade with advanced countries and $15-78 billion with emerging partners like China and India from 2008 to 2016.
A study by Tehseen Ahmed Qureshi and Zafar Mahmood (2016) highlights the significant impact of trade misinvoicing on Pakistan's government revenue, estimating a gross revenue loss of approximately US$21.2 billion This includes a net revenue loss of around US$11 billion, primarily due to evasion of customs duties and export withholding tax Annually, this net revenue loss represents nearly 11.2 percent of the total revenue generated from customs tariffs, underscoring the critical issue of trade misinvoicing in the country.
Commercial fraud remains a complex and significant issue, prompting extensive research in the field Numerous studies have been conducted to assess the overall landscape of commercial fraud, highlighting its prevalence and impact on businesses.
“Gian lận thương mại quốc tế - Một số giải pháp phòng chống trong thời gian tới”
A 2002 study by authors from Thuongmai University identified prevalent fraud techniques that can circumvent the Customs department in Vietnam, highlighting the challenges faced by Customs in combating commercial fraud and proposing effective solutions Ngo Thanh Thuy's 2019 thesis, “Smuggling and Trade Fraud in Import and Export,” examined international cases of smuggling, analyzing causes and recommending preventive measures Additional research includes Nguyen Thuy Anh's 2017 study on enhancing anti-fraud efforts in Ninh Binh, Nguyen Thi Thanh Loan's 2019 analysis of factors affecting anti-smuggling operations in Dong Thap, Le Thi Van Anh's 2018 investigation into tobacco smuggling at the Vietnam-Cambodia border, and Vuong Thi's 2020 research on commercial fraud in Central Vietnam's border areas, each providing insights and solutions to address these issues.
Thanh”, These researches have examined the real cases of commercial fraud in particular products in different provinces in Vietnam
In their study "Uncovering Smuggling: Worldwide Evidence for Four Types of Trade Misinvoicing," Andreas Buehn and Stephan Eichler (2011) analyzed data from 86 countries between 1980 and 2005, revealing that tax evasion significantly drives trade misinvoicing Complementarily, Praveen Tiwari, Javaid Akhter, and Saumen Chattopadhyay's research on India from 2000 to 2018 identified key commodities involved in misinvoicing, highlighting how tariff rates influence import practices—overinvoicing in high-tariff goods and underinvoicing in low-tariff items Additionally, Antonio Andreoni and Luca Tasciotti's work, "Lost in Trade," proposes a red-flag system aimed at addressing trade misinvoicing and tax evasion in Tanzania.
A 2019 study offers new longitudinal insights into the extent of trade misinvoicing, highlighting both underreporting and overreporting, particularly in Tanzania The econometric analysis reveals that trade underreporting is significantly influenced by the tariff rates imposed by importing countries, indicating a positive correlation between higher tariffs and the magnitude of discrepancies between declared import and export values.
Recognizing that commercial fraud poses a significant challenge with far-reaching effects on national development, the author aims to conduct an in-depth study of this issue from 2017 to 2023 This period has seen the emergence of increasingly sophisticated fraud techniques, largely driven by the Covid-19 pandemic and the rapid growth of e-commerce.
Research purposes
The purpose of this research is to answer the following questions:
- Synthesize the theoretical basis of international commercial fraud through import activities in Vietnam
- Analyze the real situation, causes, and techniques used to trade frauds in the importation of Vietnam
- Propose policy recommendation to prevent commercial fraud in the importation of Vietnam
Research subject and scope
The research subject is the commercial fraud in the importation of Vietnam and common fraud techniques used to deceive the Customs department and other relevant authorities
The research scope will focus on the real situation of commercial fraud in the importation of Vietnam during the period from 2018 to 2023.
Research methodologies
The research methods are applied in this thesis include:
The author conducts desk research to gather and summarize information on commercial fraud from public libraries and websites This analysis aims to synthesize existing knowledge and provide a comprehensive theoretical foundation, alongside an assessment of the current state of this pressing issue.
This article presents a comprehensive analysis of commercial fraud in Vietnam, utilizing descriptive statistics derived from official documents and international organizations By examining the current state of commercial fraud, the author aims to draw meaningful conclusions that will inform effective solutions and recommendations for addressing this issue.
Thesis structure
There are 3 main chapters in the thesis:
- Chapter 1: Theoretical basis of commercial fraud
- Chapter 2: Real situation of commercial fraud in the importation of Vietnam
- Chapter 3: Solutions and recommendations against commercial fraud in the importation of Vietnam
THEORETICAL OF COMMERCIAL FRAUD
Theory of commercial fraud
1.1.1.1 Definition of commerce and international commerce
Commerce has been a fundamental aspect of human interaction since the dawn of civilization, evolving from simple bartering to the establishment of currencies This progression has refined the trading process, making it more structured and efficient over time.
In today's world, the term "commerce" is prevalent globally As defined by the Vietnamese Commerce Law of 2005, commercial activities encompass profit-driven endeavors such as the buying and selling of goods, service provision, investment, commercial promotion, and other profit-oriented activities.
According to UNCITRAL Model Law of International Commercial Arbitration,
The term 'commerce' should encompass a broad range of commercial relationships, both contractual and non-contractual This includes various transactions such as trade for goods or services, distribution agreements, commercial representation, factoring, leasing, construction, consulting, engineering, licensing, investment, financing, banking, insurance, exploitation agreements, joint ventures, and other forms of business cooperation, as well as the transportation of goods or passengers across different modes of transport including air, sea, rail, and road.
Commerce is a business activity centered around the exchange of value, typically resulting in profit for one party It encompasses not only the sale of goods but also the services offered by companies and organizations that support these commercial exchanges.
International commerce refers to the trade that occurs between companies or governments in different countries, facilitating global economic interactions Despite its significance, a unified definition of international commerce remains elusive Additionally, it is essential to understand the concept of commercial fraud, which undermines the integrity of these international trade practices.
International commerce has experienced significant growth in recent years, playing a crucial role in society by generating profits, enhancing living standards, and creating job opportunities that contribute to economic development However, this surge in global trade and the open economy has also led to challenges, notably the rise of commercial fraud.
Commercial fraud refers to deceptive practices and illegal activities in commerce aimed at securing illicit profits through buying, selling, trading, importing, and exporting goods and services This fraudulent behavior involves participants such as buyers and sellers engaging in the exchange of goods and services.
This thesis examines "Commercial fraud" within the context of customs, specifically referring to customs fraud as defined by the International Convention on Mutual Administrative Assistance for the Prevention, Investigation and Repression of Customs Offences in Nairobi, 1977 According to the convention, customs fraud occurs when an individual deceives customs authorities to evade, either fully or partially, the payment of import or export duties and taxes, or to bypass prohibitions and restrictions set by customs law, thereby obtaining an unlawful advantage.
Commercial fraud, as defined by the World Customs Organization's Working Group on Commercial Fraud (2005), refers to any violation of statutory or regulatory provisions that Customs is tasked with enforcing, carried out with the intent to deceive or gain an unfair advantage.
- Evade, or attempted to evade, payment of duties/levies/taxes on movements of commercial goods; and/or
- Evade, or attempt to evade, any prohibition or restrictions applicable to commercial goods; and/or
- Receive, or attempt to receive, any repayments, subsidies or other disbursements to which there is no proper entitlement; and/or
- Obtain, or attempt to obtain, illicit commercial advantage injurious to principle and practice of legitimate business competition.”
In Vietnam, there is currently no legal document that offers a unified definition of commercial fraud However, based on the World Customs Organization's definition and the actual circumstances in Vietnam, commercial fraud can be understood as deceptive practices aimed at gaining an unfair advantage in trade.
Fraudulent practices in import and export operations exploit legal and regulatory loopholes, allowing individuals to evade Customs inspections and avoid fulfilling governmental obligations This manipulation results in illicit profits at the expense of state authority and compliance.
1.1.2 The difference between smuggling and commercial fraud
Smuggling and commercial fraud are closely linked concepts in the context of illicit trade, both in Vietnam and globally This connection often makes it challenging to clearly differentiate between the two terms.
According to the Customs law of the GSS Customs Union from 2003, smuggling is defined as the illegal conveyance of goods into or out of the country, circumventing customs duties and taxes, or violating existing laws and regulations This includes transporting goods outside designated checkpoints, deviating from authorized import or export routes, improperly loading or unloading vessels and aircraft, failing to declare goods, hiding items in inappropriate locations, and releasing goods from free zones or customs areas without completing necessary customs procedures Additionally, smuggling involves the use of false or counterfeit documents to evade customs obligations.
12 the ban and restrictions; transportation or procurement of the forbidden or limited goods without providing proofs of their lawful import; some other acts.”
The International Convention on Mutual Administrative Assistance for the Prevention, Investigation, and Repression of Customs Offences, held in Nairobi in 1977, defines "smuggling" as a form of Customs fraud involving the clandestine movement of goods across Customs frontiers Essentially, smuggling is categorized as a specific type of Customs fraud.
In Vietnam, smuggling is distinctly defined in Article 188 of the 2015 Criminal Code as the illegal trade of goods, currencies, rare metals, gemstones, relics, antiques, or items of historical and cultural significance across borders or between free trade zones and the domestic market This definition contrasts with the broader concept of "commercial fraud."
Factors enabling the occurrence of commercial fraud criminals
Understanding the reasons behind fraud is essential for effective investigation, detection, and prevention By identifying the motivations for fraudulent behavior, governments and customs authorities can develop and modify policies that effectively reduce its occurrence.
Vietnam boasts extensive land and sea borders, measuring over 4,600 km and 3,400 km, respectively Approximately a quarter of its territory consists of low mountains and hilly regions The country's borders connect with Laos, Cambodia, and China, featuring numerous spontaneous trails These borders are characterized by mountains and rivers, which facilitate the transportation of contraband into Vietnam, complicating efforts to combat commercial fraud.
1.2.2.2 The lack of technical equipment, facilities, Customs force
Recent trends in sophisticated commercial fraud pose significant challenges for Customs departments in identifying illicit activities Instances include shipments declared across multiple Customs departments, where fraudulent actors may cancel a red flow declaration to opt for a yellow or green flow for clearance Additionally, some individuals misdeclare the number of items to evade taxes, either by overstating or understating the actual goods They may falsely declare low-tax items or misrepresent high-tax goods to include banned or counterfeit products Compounding these issues, the technical equipment and facilities available for investigating suspected counterfeit and low-quality goods are limited, hindering Customs officers' ability to detect fraud effectively Furthermore, the inadequacy of staff within Customs creates gaps that fraudsters exploit to execute their schemes successfully.
1.2.1.3 Inadequate legal provisions related to the prevention and combat of smuggling and commercial fraud
Smuggling and commercial fraud are becoming increasingly unpredictable, with new forms of fraud emerging regularly The legal framework, however, remains inadequate, as the development of detailed regulatory documents has not kept pace with these evolving challenges Many existing regulations are too general, allowing fraudsters to exploit loopholes and legitimize their illicit activities Despite improvements in the legal processes, the dissemination and understanding of new policies lag behind, failing to address the rising complexity of fraud cases, particularly since the onset of the Covid-19 pandemic This has led to sophisticated violations in smuggling, counterfeiting, and commercial fraud within cyberspace, directly impacting the management of goods import and export, as well as infringing on the rights of organizations and individuals Unfortunately, these pressing issues are not clearly articulated in current legal documents.
Many legal provisions in this area have not been implemented effectively, resulting in inaccurate and inconsistent application of regulations Additionally, the roles and responsibilities of specific departments outlined in legal documents remain unclear, leading to inconsistencies in work division and a tendency to shift management responsibilities to others.
1.2.1.4 Customs procedures are time-consuming and complicated
The implementation of electronic customs declarations has greatly reduced the time needed for customs clearance; however, specialized inspections for certain imports remain costly due to multiple required fees This complexity creates significant challenges for businesses, leading to procedural overlaps and inefficiencies that can result in substantial losses Consequently, some enterprises resort to unethical practices, such as bribing customs officials or engaging in smuggling and trade fraud, particularly small and medium-sized businesses that struggle to navigate the stringent regulations within their limited resources.
1.2.2.1 The propaganda on the prevention of commercial fraud
The lack of attention towards raising awareness about the prevention and combat of commercial fraud is concerning, particularly among individuals and organizations in border areas who often do not recognize fraud threats or how to respond to them Some even engage in smuggling foreign currency and goods into Vietnam Despite being aware of counterfeit products, many consumers still opt to purchase them due to lower prices, especially for well-known brands The buying and selling of counterfeit items and imitations of global brands has been a persistent issue in Vietnam, with a notable increase in this trend Furthermore, many legitimate businesses fail to understand the detrimental effects that fraud can have on their operations.
Many brands have not prioritized their presence, remaining passive and failing to collaborate with authorities to protect their rights This negligence has significantly complicated efforts to combat smuggling and commercial fraud.
1.2.2.2 Professional qualifications and moral qualities of civil servants in the Customs Department
Concerns have been raised regarding a segment of civil servants within the Customs sector, who are perceived to exhibit a lack of responsibility, professionalism, and compliance with legal standards The training of personnel in this field has not evolved in line with industry advancements, resulting in inadequate preparation that fails to meet quality expectations Additionally, the enforcement of discipline among Customs officials managing business procedures has proven ineffective, with instances of misconduct undermining regulatory compliance Alarmingly, some officers appear to engage in or facilitate illegal activities, such as smuggling and commercial fraud, complicating efforts to combat these crimes This troubling trend not only erodes public trust but also tarnishes the reputation of the Customs authority and the Government as a whole.
1.2.2.3 The extra profit from committing commercial fraud
Most businesses prioritize profit maximization, making cost reduction a key strategy for enhancing profitability To achieve this, companies implement various measures, such as managing inventory levels, fostering supplier relationships, negotiating bulk discounts, minimizing waste, and training staff for efficiency However, some enterprises resort to illegal tactics to gain an unfair advantage In the realm of international commerce, many businesses engage in commercial fraud to lower tax liabilities and exploit preferential trade policies This behavior is often influenced by Vietnam's imposition of import duties aimed at protecting domestic industries and regulating market goods flow.
Importing goods incurs various taxes, including import duty, import VAT, export duty, special sales tax (SST), environment protection tax (EPT), anti-dumping tax, anti-subsidy tax, and safeguard tax This multitude of taxes can lead to substantial financial burdens for enterprises, prompting them to seek strategies to minimize or evade their tax liabilities.
Impact of commercial fraud
1.3.1 Impact of commercial fraud on economy
Commercial fraud poses a significant threat to economic development, particularly through tax evasion and fraudulent goods, which disrupt trade competition When goods are imported, importers are required to pay taxes based on the type and value of the goods, which are then reflected in the sale price However, if businesses evade taxes or pay only a fraction, imported goods can enter the market at lower prices, undermining the competitiveness of domestic products This pressure forces small and medium enterprises to lower their prices, leading to revenue losses that can cause production delays or even bankruptcy Ultimately, this trend weakens the manufacturing sector and obstructs the country's industrialization and modernization efforts.
Commercial fraud significantly impacts State revenue by leading to substantial losses in export and import duties, as well as other taxes Taxes are vital for stabilizing the market, generating revenue for the State budget, and mobilizing capital for national expenditures As a primary source of government income, tax evasion by fraudsters results in budget shortfalls, hindering the government's ability to manage the macroeconomic structure and expand essential services.
22 key production industries through financing activities, allocating resources to security, education and health
1.3.2 Impact of commercial fraud on sociocultural environment
Smuggling and commercial fraud have significant cultural and social repercussions, fostering illicit trade opportunities while undermining legitimate businesses This illegal activity disrupts social order and safety, as it draws a large labor force, including school-age children who abandon their education for higher wages In villages near the Vietnamese border, many individuals abandon their traditional jobs to become carriers of smuggled goods, seeking to sustain their livelihoods.
Smuggling and commercial fraud contribute significantly to moral degradation in Vietnam, undermining traditional customs and business ethics These illicit practices lead to companies profiting through unethical means, while corruption among customs officers and state management agencies exacerbates the issue National departments responsible for combating smuggling and fraud may become compromised by substantial bribes, allowing them to misuse their authority to collude with smugglers and facilitate these crimes This creates intricate networks that are challenging to uncover, further perpetuating the cycle of corruption and fraud.
1.3.3 Impact of commercial fraud on national security as well as social order and safety
Smuggling and commercial fraud severely undermine state management, creating chaos in the domestic market and adversely affecting the livelihoods of many individuals while fostering social evils While perpetrators of these crimes amass wealth through illegal gains, honest businesses struggle with market price imbalances If the government fails to implement stringent measures and adequately punish tax evaders, it risks cultivating a public mentality that disregards the law.
Government, significantly reducing the credibility of the Government and create conflicts in the relationship between the citizens and the State
Another consequence of smuggling and commercial fraud is its harmful effect on sovereignty and national security through implementing "soft borders" or
Vietnam's integration into the global economy has brought benefits like improved technology transfer and increased investment; however, the open-door policy has also led to a rise in smuggling and commercial fraud This influx of foreign goods threatens to overshadow domestic products, undermining their market presence As a result, Vietnam's economic autonomy may diminish, increasing reliance on foreign economies and potentially leading to political dependence.
1.3.4 Impact of commercial fraud on public health
Smuggling poses significant health and safety risks, particularly through counterfeit products that bypass essential consumer compliance and safety tests These counterfeit items, especially in the food and beverage sector, often fail to meet hygiene standards, potentially exposing consumers to harmful ingredients and serious health hazards.
Chapter 1 has summarized theoretical foundations on the concept of commercial fraud in Customs field, analyze the difference between smuggling and commercial fraud as well as provide commercial fraud’s classifications, factors affecting and consequences From the above analytics, the characteristics of commercial frauds will be easily detected in real situation, thereby providing recommendations and solutions to handle and prevent it in the future
REAL SITUATION OF COMMERCIAL FRAUD IN THE
International and domestic regulations on anti-commercial fraud
The Kyoto Convention, officially known as the International Convention on the Simplification and Harmonization of Customs Procedures, serves as the foundational framework for Customs procedures worldwide Drafted and adopted in Kyoto on May 18, 1973, it came into force on September 25, 1974 In 2006, the World Customs Organization updated the convention, enhancing its relevance and effectiveness in modern trade, with the revised version taking effect on February 3, 2007.
3 Vietnam officially joined the RKC on January 8, 2008 and it entered into force on April 8, 2008
The United Nations Convention on the Law of the Sea (UNCLOS), adopted in 1982, establishes a comprehensive legal framework for the governance of the world's oceans and seas, outlining rules for their use and the management of marine resources.
The World Trade Organization (WTO), established on January 1, 1995, aims to promote free, transparent global trade, succeeding the General Agreement on Tariffs and Trade (GATT) of 1947 Its primary role is to assist producers, exporters, and importers in managing and protecting their businesses Customs plays a crucial role in enforcing WTO commitments related to trade facilitation, particularly in combating smuggling and commercial fraud.
Since 1993, Vietnam has signed many agreements on administrative support and information exchange against smuggling as well as international cooperation in the field of Customs
+ Customs cooperation within the framework of ASEAN (Association of South East Asian Nations)
+ Customs cooperation within the framework of APEC (Asia-Pacific Economic Cooperation)
+ Customs cooperation within the framework of ASEM (The Asia-Europe Meeting)
In response to the rise of new fraudulent schemes, the Government, along with the National Steering Committee 389 and relevant State agencies, has consistently updated and introduced new legislation and decrees aimed at combating smuggling and commercial fraud.
Article 188 about the crime of smuggling
Article 189 about the crime of illegally transporting goods and currency across borders
Article 111 prescribes the investigating right of the Border Guard, Customs, Rangers, Coastal Guard and other agencies of police and arm force assigned to conduct a number of investigating activities
This Law outlines the structure and functioning of the Customs service, ensuring state oversight of customs activities related to the export, import, and transit of goods, as well as the transportation of domestic and international businesses and individuals.
Table 2.1 Vietnamese laws that contain provisions on anti - commercial fraud and responsibilities of Customs authority
- Decrees from the Government and relevant State agencies
Establish Customs operation areas and coordinating relationship in the prevention of smuggling and illegal cross-border transportation of goods, and other acts of violating the customs legislation
Establish provisions on functions, duties, authorities and organizational structure of the Customs Departments of provinces, inter-provinces, cities under the jurisdiction of the central Government
Issue provisions on professional activities of Customs control
Provide regulations on penalties for administrative violations and enforce administrative decisions in the field of Customs control
Issue the establishment of National Steering Committee for fighting against smuggling commercial fraud and counterfeit goods
Promulgate the operational regulation of the standing office of the National Steering Committee against smuggling, commercial fraud and counterfeit Goods
Provide detailed regulations and guidelines to apply the Customs Law relating to customs procedures, examination, supervision, and control procedures
Promulgate the regulations on responsibilities and cooperation relationship among State management agencies in the fight against smuggling, commercial fraud and counterfeit goods
Promulgate regulations on responsibilities and cooperative relationship between the National Steering Committee and Steering Committee 389 of ministries, sectors and localities
Table 2.2 Vietnamese decrees and decision in the prevention of smuggling and commercial fraud
Overview of the importation in Vietnam
2.2.1 Import turnover of Vietnam over the period from 2018 to 2023
Source: Ministry of Industry and Trade Figure 2.1 Import turnover of Vietnam in the period 2018 - 2022
Overall, it is clear that Vietnam’s import and export scale increased positively from
In 2022, despite the significant impact of the Covid-19 pandemic, the trade balance showed resilience, achieving a surplus for the fifth consecutive year, albeit a notable decrease to 4.08 billion USD in 2021 Total imports rose to 358.9 billion USD, marking a 7.9% increase, or an additional 26.14 billion USD, compared to the previous year.
In the first quarter of 2023, the total goods import and export turnover amounted to $154.27 billion, reflecting a 13.3% decrease compared to the same period last year Exports fell by 11.9% to $79.17 billion, while imports decreased by 14.7% to $75.10 billion Despite this decline, the trade balance showed a surplus of $4.07 billion.
Source: General Statistics Office Figure 2.2 Export-Import turnover of Vietnam in the first quarter of 2023
In early 2023, the General Statistics Office attributed the decline in Vietnam's total export-import turnover to the sluggish recovery of the global economy and stringent monetary policies in various countries These factors have diminished the consumption demand from key trading partners, resulting in a notable decrease in both imports and exports for Vietnam.
2.2.2 Import structure by types of goods
Figure 2.3 Top import commodities with import value of over 10 billion USD in the
During the 2020-2021 period, Vietnam's imports included six commodity groups exceeding 10 billion USD, such as computers, phones, electronic products, machinery parts, iron and steel scrap, common metals, raw materials for the footwear and textile industries, plastic raw materials, and chemicals Despite the challenges posed by the Covid-19 pandemic, Vietnam's importation maintained steady growth across many commodities Notably, electronic devices emerged as the leading import category, achieving a turnover of 143.17 billion USD in 2021, marking a significant increase of 21.46%.
Source: General Department of Vietnam Customs Figure 2.4 Top import commodities with import value of over 10 billion USD
During the 2021-2022 period, the top import commodities remained consistent, with electronic products leading the way Imports of computers, electronic products, and electronic parts reached $81.88 billion, marking an 8.4% increase (or $6.32 billion) Meanwhile, imports of machines, equipment, tools, and phones, along with their parts, experienced declines of 2.46% ($1.71 billion) and 1.61% ($0.34 billion), respectively Additionally, there was notable growth in the imports of other commodities.
Source: General Statistics Office Figure 2.5 Major supplying markets for the products imported by Vietnam
Vietnam's imports are primarily sourced from three key markets: China, Korea, and ASEAN In 2022, China accounted for the largest trade deficit, totaling $117.87 billion, which represented 32.9% of Vietnam's total import value This figure was nearly double the import value from Korea, the second-largest supplier to Vietnam.
Vietnam's manufacturing industry dominates the country's export turnover; however, the local production of raw materials remains underdeveloped This gap is filled by China, which not only serves as a global supplier of raw materials but also offers logistical advantages due to its shared border with Vietnam, making imports both time-efficient and cost-effective Additionally, products from China, including machinery and spare parts, are significantly cheaper—often costing only one-third of similar items from developed nations, as noted by Associate Professor Dr Nguyen Thuong Lang.
Overview of commercial fraud in the importation of Vietnam in the
Smuggling and commercial fraud remain complex issues, even as the number of fraud cases has significantly decreased over the past three years However, the sophistication of the techniques employed by fraudsters has increased, posing greater challenges for relevant authorities in detection and enforcement.
In 2020, the National Steering Committee 389 reported a total of 185,461 cases of smuggling, commercial fraud, and counterfeit goods detected and handled in Vietnam, marking a 16.3% decrease from 2019 The state budget benefited from a collection of 24.8 trillion VND, reflecting a 15.4% increase compared to the previous year Additionally, there were 2,543 cases prosecuted involving 3,502 individuals, which represented significant increases of 28.3% and 49.46% in the number of cases and individuals, respectively However, in the subsequent year, the figures for smuggling and commercial fraud showed a decline compared to 2020.
2020 By the end of September, there were 100290 fraud cases being uncovered with over 7519 billion VND paid for the State budget and more than 1615 cases were prosecuted
Source: The National Steering Committee 389 Figure 2.6 Smuggling and commercial fraud report in the first 9 months of 2020 and 2021
Despite a decrease in overall fraud cases, criminal prosecutions have risen, indicating a growing number of serious threats to society The Covid-19 pandemic has led to a surge in demand for medical supplies and protective equipment, prompting some individuals to illegally import unverified medicines and test kits To evade detection, these smugglers often mislabel shipments as gifts on customs documents and may split deliveries across multiple locations In the past three months, the Anti-Smuggling and Investigation Department, in collaboration with the Hanoi Customs Department, has uncovered significant quantities of smuggled Covid-19 test kits and treatments, including 1,470 boxes and 78,800 tablets of medicines from India, 180 test kits from China, and 220 boxes of antiviral drugs from Russia.
In 2022, authorities addressed 139,758 cases, marking a 1.17% year-on-year increase Notably, cases involving banned goods decreased by 17.75% to 11,945, while commercial and tax fraud cases rose by 2.36% to 124,121 There was a significant 56.51% increase in cases related to counterfeit goods and intellectual property violations, totaling 3,692 The state's budget collection fell by 29.92% to 12,829 billion VND, and prosecutions dropped dramatically, with 642 cases involving 720 suspects, reflecting decreases of 68.96% and 73.86%, respectively, from 2021 Despite fewer serious prosecutions, the National Steering Committee 389 warns that smuggling, trade fraud, and counterfeit activities may become more active and complex, particularly across national borders, as the COVID-19 pandemic subsides.
In 2022, the Customs Departments of Lang Son, Cao Bang, and Quang Ninh in Vietnam, in collaboration with Nanning Customs in China, successfully apprehended 189 cases of enterprises exploiting customs policies for smuggling activities, resulting in an estimated value of infringing goods exceeding 5,110 billion VND Additionally, nine significant cases were identified during this enforcement effort.
Twenty individuals have been apprehended for illegally transporting narcotics across the border Additionally, the Vietnam-Laos border has become a hotspot for drug trafficking, with drugs being smuggled from Laos into Vietnam's Dien Bien and Son La provinces before being sent to China for consumption.
Illegal trading and transportation of firecrackers, explosives, cigarettes, and wildlife products have surged across the borders of Nghe An, Ha Tinh, Quang Binh, and Quang Tri provinces Along the Vietnam-Cambodia border, smugglers exploit border crossings, canals, rivers, and streams to engage in smuggling, trade fraud, and the illegal transportation of various goods, including drugs, firecrackers, and livestock By employing unemployed individuals living near the border to carry smuggled items, these criminals evade Customs control, making it challenging to apprehend the masterminds behind these operations if detected.
Smuggling and commercial fraud have become increasingly diverse, particularly through maritime and international air routes At seaports, businesses often evade taxes by failing to declare goods or providing false information about their quantity, value, type, and origin This includes the illegal importation of conditional and prohibited goods, as well as items that infringe on intellectual property rights Notably, the transport of banned substances such as drugs, explosives, and cigarettes, alongside the illegal movement of gasoline, oil, coal, minerals, and frozen foods, has seen significant activity in regions like Quang Ninh, Hai Phong, and Ho Chi Minh City Additionally, suspects exploit express delivery and postal services by declaring goods as gifts, further complicating enforcement efforts.
When considering gifts to send to Vietnam, be aware that items like drugs, precursors, wildlife products, high-value items that are easy to conceal, such as foreign currency, cigars, mobile phones, medical supplies, pharmaceuticals, cosmetics, and dietary supplements may be subject to illegal transportation laws.
The rise of e-commerce during the 2021 social isolation measures led to a surge in smuggling and commercial fraud, complicating direct sales and online platforms With a dramatic increase in online shopping by 25% to 30%, many businesses exploited this trend by selling banned, counterfeit, and low-quality goods to evade regulatory scrutiny In 2021, authorities investigated over 3,000 e-commerce cases involving smuggled and unlicensed products, imposing fines exceeding 20 billion VND Additionally, the Ministry of Industry and Trade mandated the removal of nearly 14,000 Covid-19 treatment products that violated regulations In the first half of 2022, 45 cases were inspected, resulting in 42 actions taken and fines totaling over 700 million VND, with infringing goods valued at approximately 1.2 billion VND.
Common commercial fraud typologies in the importation of Vietnam and
2.4.1 Committing commercial fraud by declaring wrong names and HS codes of imported goods
The self-assessment mechanism in customs declarations has become a popular method for fraud in our country, as individuals exploit this system to deceive the Customs department This tax management approach allows customs declarants to self-report, creating opportunities for dishonest practices.
Importers are required to self-declare and self-pay for their goods, assuming full responsibility for the accuracy of their declarations as per the oversight of competent authorities While this system streamlines customs procedures, expedites sales, and maintains cash flow, some businesses exploit it by misdeclaring product names and codes Common tactics include altering high-tax product codes to those with preferential rates or using vague descriptions that obscure accurate classification According to Customs Law, goods may be inspected based on channel classification, with green and yellow channels exempt from physical checks, while only 5% to 10% of goods in the red channel undergo inspection Consequently, many businesses manipulate this system to misclassify goods as low-risk and low-value, facilitating tax evasion and smuggling.
Since early 2021, Da Nang police uncovered a smuggling ring involved in the illegal importation of wildlife products across Vietnam Investigations revealed that the group utilized identity cards from various individuals, including deceased persons, to create "ghost" companies These companies, all registered for import and export, shared common traits: they had fake headquarters, lacked signage, and were not engaged in any legitimate business activities, yet they managed to import goods from African countries through Tien Sa port.
On July 17, 2021, the Customs agency at Da Nang port intercepted a case involving the illegal transportation of wild animals and wildlife products by Nam Thai Cuong Company The agency, after closely monitoring a shipment suspected to contain rhino horn and wildlife bones imported from South Africa, identified the goods falsely declared as wood Upon the shipment's arrival at Tien Sa port, the Investigation Police Department for corruption, smuggling, and economic crimes collaborated to address the situation.
The Police Department in Da Nang City, along with relevant units, conducted a thorough inspection of a container belonging to Nam Thai Cuong Company, located at 180 Ly Nhan Tong, Khue Trung Ward, Cam Le District During this inspection, authorities uncovered a staggering 138,784 kg of rhinoceros parts and 3,108 kg of lion bones, both of which are protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora The estimated total value of these illegal products reached an alarming 300 billion VND.
On June 22, the Da Nang Police Department prosecuted and arrested Nguyen Duc Tai, the owner of Nam Thai Cuong, for a duration of four months Tai, originally from Cam Xuyen district in Ha Tinh province, was residing temporarily in Khue Trung ward.
Da Nang city district is facing legal action for violating regulations on the protection of endangered and rare animals, as outlined in Clause 3, Article 244 of the Criminal Code The investigating agency has identified the suspect as a key player in the smuggling network of rare wildlife products, including rhino horn, ivory, and pangolin scales, trafficked from African countries to Vietnam.
2.4.2 Committing commercial fraud by declaring wrong categories, quantities, weights, quality, value of importing goods
According to Circular No 93/2010/TT-BTC issued by the Ministry of Finance, a prevalent tactic in recent times involves the false declaration of various aspects of imports and exports, including names, categories, quantities, weights, quality, value, origin, headings, and duty rates Businesses may intentionally report multiple items with low tax rates while only importing a single type of product, or vice versa, to evade taxes Each imported product is assigned a unique tax code, yet many companies exploit the self-calculation and self-declaration system by misreporting tax codes to benefit from lower tax rates, thereby decreasing their import tax liabilities Additionally, some businesses collaborate with foreign partners to create invoices and documentation that reflect artificially low prices, further minimizing the import taxes owed to the government.
Fraudulent practices in the misrepresentation of goods often occur among companies that outsource production or import raw materials for export These imported materials, intended for manufacturing and subsequent export, are typically exempt from import and export taxes However, some manufacturers inaccurately report higher loss rates when importing raw materials, allowing them to sell surplus products domestically without paying the corresponding import taxes This deceptive behavior is similarly applied when importing materials for goods intended for export.
Businesses often exploit loopholes in customs regulations by misrepresenting the nature and value of their products They may falsely declare old goods as new, break down fully-assembled products into components, or manipulate product structures and quantities This deceit is particularly prevalent with new products, where complexity can obscure true value Many companies take advantage of outdated pricing information from customs authorities, declaring taxable prices significantly lower than actual transaction prices In fact, investigations have revealed instances where companies reported less than 10% of the actual value for tax purposes.
Even more serious, some may intentionally declare goods applied for very high tax but they contain illegal, counterfeit ones, counterfeit goods or importing products that requires license
In March 2021, the Customs Department in Ho Chi Minh City prosecuted KR Company for evading over 400 million VND in import taxes on Chinese groceries, primarily through undeclared or falsely declared goods The company's import declaration listed 48 types of products, including sports equipment, LED lights, cleaning cloths, belts, hairpins, bags, decorative shelves, and office desks.
During a physical inspection, the Customs department found that only 20 items in the container matched the customs declaration, while the remainder were either incorrectly declared or not declared at all Notably, there were 31 lines of goods, consisting of thousands of household items, that lacked any declaration.
The Ho Chi Minh City Customs Department uncovered that KR Company engaged in illegal import activities by intentionally submitting false declarations, leading to the discovery of 40 products valued at over 934 million VND The total worth of the infringing goods exceeded 1.7 billion VND, resulting in tax evasion amounting to over 408 million VND The company provided incorrect documents, including bills, invoices, and certificates of origin, to facilitate customs clearance.
The Customs Branch of Saigon Port Area 1 has identified irregularities in the customs procedures associated with KR Company’s shipment The company utilized an external service provider, Mr Nguyen Xuan Tuong, who is not an employee, to declare customs via the VNACCS/VCIS system Mr Tuong received KR's account credentials and relevant shipment documents, allowing him to register the declaration on the system, with the company agreeing to pay him in cash post-clearance However, upon physical inspection by Customs, discrepancies were found between the actual imported goods and the declared information, indicating that KR Company engaged in false declarations to facilitate illegal importation into Vietnam.
2.4.3 Committing commercial fraud by declaring wrong origin of goods
Vietnam's entry into the World Trade Organization (WTO) in 2007 solidified its role as a dedicated trade partner on the global stage Since then, the nation has engaged in various Free Trade Agreements (FTAs) and Double Tax Avoidance Agreements, which establish the terms of trade, including tariffs and duties on imports and exports However, concerns have arisen regarding the misuse of Vietnamese origin certifications, where businesses may forge documents to gain preferential treatment for their export goods.
The current situation in the prevention of commercial fraud in Vietnam
2.5.1 Assessing the current situation in the prevention of commercial fraud in Vietnam
Between 2020 and 2022, the number of smuggling and commercial fraud cases showed slight variation, with 185,461 reported incidents in 2020, marking a 16.3% decrease from 2019 The trend continued in 2021, as cases of smuggling and commercial fraud further declined.
In 2022, Vietnam's relevant authorities detected and addressed 139,758 cases of smuggling, trade fraud, and counterfeit goods, marking a 1.17% increase from the previous year Following the COVID-19 pandemic, these illegal activities have become more active and complex, with criminals employing sophisticated tactics, particularly in e-commerce and express delivery services The rise in air transportation of narcotics is particularly alarming, as offenders are increasingly using deceptive methods to conceal drugs within checked baggage and hand luggage Despite these challenges, the efforts of the Steering Committee and provincial police have been effective, leading to significant arrests and prosecutions in the fight against smuggling and commercial fraud.
In recent years, the Market Management Force has successfully enhanced oversight and enforcement against smuggling activities, particularly focusing on the transportation of illegal foreign cigarettes They have effectively managed and inspected the area, addressing illegal exploitation of mineral and forest products, as well as combating counterfeiting and violations of intellectual property rights Their coordinated efforts in supervision, inspection, and handling of business violations have significantly improved compliance and regulatory enforcement.
From December 16, 2022, to March 15, 2023, the General Department of Customs identified and addressed 3,657 violations of the Customs Law, with the value of the infringing goods exceeding 1,004 billion VND During this period, Customs prosecuted 5 cases and referred 18 additional cases to other agencies, contributing over 179 billion VND to the State budget In collaboration with the Police and Border Guard, Customs led efforts against drug trafficking, resulting in the detection and arrest of 38 cases involving 55 individuals, seizing significant quantities of illicit drugs, including 30.4 kg of heroin, 4.5 kg of cannabis, 72.7 kg of ketamine, 11 kg of cocaine, 11.3 kg of methamphetamine, and 221.8 kg of ecstasy.
2.5.2 Limitations and the reasons behind
Besides the achievements, in the past year, the operation of the Steering Committee still has some limitations
2.5.2.1 Propaganda and dissemination of the adverse effect and indicators of smuggling and trade fraud are concentrated mainly in big cities and provinces, but without appropriate measures to reach border residents
The rising number of fraudsters arrested, particularly among residents in border areas, highlights a concerning lack of awareness regarding the severity of abetting criminal activities Criminals exploit this ignorance, using financial incentives to recruit border residents for transporting illegal goods Unfortunately, information about the detrimental effects of commercial fraud and the signs of smuggling remains limited, primarily disseminated through narrow channels.
Border residents often struggle with poor living conditions and lack access to comprehensive medical information, which inadvertently opens doors for traffickers to exploit them The use of ethnic languages in some areas further complicates their ability to access crucial information about smuggling and commercial fraud, making it even harder for them to protect themselves from these threats.
2.5.2.2 The lack of expertise and professional manner in some Customs officers
Many civil servants lack sufficient professional knowledge and a thorough understanding of relevant laws, which hampers their ability to meet job requirements effectively This is particularly evident in complex tasks such as collecting and processing information on customs operations, managing risks, verifying the origin of goods, and determining their value.
As commercial fraud becomes more sophisticated, it is essential for Customs officers to continually update their knowledge and skills to effectively perform their duties Understanding the physical properties of goods, production technology, and the use of technical equipment is crucial for inspecting goods and preventing the rising risk of origin forgery However, many officials still face challenges in foreign languages, information technology, and modern professional skills, often adhering to outdated working methods that do not align with contemporary customs management needs Additionally, there is a shortage of young, qualified personnel, and some Customs officers have been found to assist violators in committing fraud.
This is due to the following reason:
The training and development of human resources in the Customs field face significant challenges, as existing policies for Customs officials have not aligned with the modernization of the sector This misalignment results in passive and incomplete training, hindering the effectiveness of Customs operations.
The application of theoretical knowledge to practical work is hindered by inadequate facilities and teaching conditions Additionally, training programs have not been updated to align with recent decrees, and there is a shortage of qualified teaching staff, with some educators failing to meet current training standards.
The current staff rotation mechanism and position changes within customs are ineffective, as they hinder the development of young officers who possess the necessary qualifications While the intention behind these rotations is to ensure comprehensive training and mitigate issues like bribery, frequent shifts force employees to adapt to new departments before they have gained sufficient expertise in their initial roles This lack of specialized experience can leave them ill-equipped to tackle complex tasks, ultimately undermining operational efficiency.
- The benefits have not really ensured the essential needs of Customs employees, increasing the number of their covering and abetting illegal activities, especially for smuggling and commercial fraud
2.5.2.3 There is no tight coordination between functional forces
Effective commercial fraud prevention requires a collaborative effort among Customs authorities, market management forces, border guards, and police The lack of unified actions among these entities has created significant loopholes that criminals exploit In instances where multiple departments need to coordinate, unclear task assignments result in missed opportunities to address smuggling and fraud Consequently, perpetrators can swiftly eliminate evidence and evade capture, leading to prolonged and ineffective management of these illicit activities.
The irregular and inconsistent exchange of information among Customs Departments, the Anti-smuggling and Investigation Department, and border guards hampers effective coordination in detecting, inspecting, investigating, and verifying violations of Customs law.
The effectiveness of operations has been hindered by a lack of mutual trust among forces, which has negatively impacted the outcomes of arrests and the handling of violations This issue arises from unclear functions and obligations of certain departments as outlined in legal documents, leading to inconsistencies in the division of work.
2.5.2.4 The issue of inspection sites
SOLUTIONS AND RECOMMENDATIONS AGAINST
Orientation in the fight against commercial fraud
International integration significantly influences global relations and fosters economic growth, with Vietnam actively participating in this trend The country has achieved notable progress across various sectors due to enhanced external relations, which have optimized domestic resource utilization and expanded opportunities for trade and investment This integration has bolstered production capacity and established a foundation for overall national development However, alongside these benefits, Vietnam faces a rising tide of smuggling and commercial fraud, characterized by increasingly sophisticated tactics that challenge authorities in their detection and enforcement efforts.
To effectively combat smuggling and commercial fraud, all ministries, branches, and localities must recognize the serious threats posed by these crimes A focused approach is essential, requiring the identification of key issues and the implementation of targeted action strategies to prevent and address these illicit activities.
To effectively combat smuggling and trade fraud, it is crucial to enhance the dissemination of legal policies and actively engage border residents in this effort Encouraging individuals to refrain from supporting smuggling activities and to report any information related to smuggling and trade fraud to authorities is essential Overall, raising public awareness about the serious implications of smuggling and commercial fraud will foster a more informed and vigilant community.
To effectively combat trade fraud and counterfeit goods, it is crucial to actively assess the situation, pinpoint significant and complex issues, and understand operational methods Identifying key routes, areas, fields, and main products associated with these illicit activities will enable timely and informed responses.
51 investigate and provide coordinated strategies to find the mastermind behind, thereby contributing to deterrence and prevention serious cases from happening
Third, direct competent forces to promote the application of science and technology in the fight against smuggling, counterfeiting and banned goods, especially in the field of e-commerce
To combat smuggling and commercial fraud effectively, it is essential to widely publicize the email addresses and hotlines of the relevant authorities responsible for these issues This initiative encourages the public to report any illegal activities they observe, enabling the authorities to swiftly gather information and develop timely prosecution plans against offenders.
To effectively combat the rising trends of smuggling and commercial fraud, it is crucial to analyze recent patterns and predict future developments This proactive approach enables the formulation of strategic plans and prepares for potential challenges Additionally, identifying key localities and routes where these illicit activities are prevalent will allow for the reinforcement of enforcement personnel in those areas.
Enhancing the professionalism and ethical standards of functional forces is essential This involves increasing their awareness and understanding of smuggling and commercial fraud, including the detrimental impacts and common techniques employed by criminals By doing so, these forces can develop more effective strategies to combat and eliminate these criminal activities.
Seventh, prioritize the research, revision, and enhancement of insufficient legal documents to strengthen the legal framework, prevent redundancy, and close loopholes that criminals may exploit for unlawful activities.
Solutions for General Customs Department against Commercial fraud in
3.2.1 Improve the capacity and qualifications of the specialized force against smuggling and trade fraud
To effectively combat smuggling and trade fraud, the role of Customs officers and related departments is crucial It is imperative to provide adequate training, enhance awareness, and elevate the professionalism of staff members to strengthen these efforts.
To enhance expertise in the Customs field, it is essential to create long-term training programs featuring detailed and systematic roadmaps These programs should focus on critical areas including goods classification, risk management, customs control operations, interrogation techniques, transport inspections, post-clearance audits, comprehension of commercial documents, identification of counterfeit documents, tax collection and administration, and anti-smuggling strategies.
To enhance customs clearance efficiency, it is essential to design region-specific training methods that integrate theoretical knowledge with hands-on experience at customs sites This approach should emphasize practical problem-solving skills through training activities that utilize real customs documents, ensuring that participants are well-prepared for the challenges they may encounter in their roles.
To enhance the effectiveness of the Customs sector, it is crucial to implement a focused working regime and a well-structured rotation plan Staff specialization plays a vital role in ensuring smooth operations; however, frequent position changes can lead to confusion among Customs officials Without thorough research and careful planning, these transitions may hinder officials' ability to adapt to new roles, ultimately impacting the effectiveness of efforts to combat smuggling and commercial fraud.
To enhance the performance of Customs officers, an incentive regime should be established that rewards those who demonstrate exceptional study results, innovation, and the ability to apply advanced knowledge in practice This encouragement can take various forms, including a bonus system, early salary increases, promotions to leadership roles, and financial support.
To enhance the effectiveness of civil service, it is essential to strengthen ideological and political education, improve moral standards, and foster a sense of organization and discipline Increasing inspections and examinations of compliance with regulations and professional processes is crucial for identifying and addressing violations among civil servants Furthermore, strict adherence to anti-corruption regulations is necessary to mitigate negative impacts on efforts to combat smuggling and commercial fraud.
3.2.2 Promote coordination among relevant agencies in the prevention of smuggling and trade fraud
In the fight against smuggling, counterfeit goods, and commercial fraud, functional forces are tasked with organizing and coordinating activities to ensure consistency and synchronization in management and oversight, in accordance with legal provisions.
To enhance coordination among state agencies, it is crucial to establish measures that clearly define the roles and responsibilities of each department This approach will enable effective collaboration to combat smuggling and commercial fraud.
The Customs Department must develop comprehensive work and management plans tailored to specific areas and actions, which will be collaboratively discussed with relevant agencies Additionally, it should coordinate with other state entities to implement administrative, economic, educational, and promotional strategies aimed at combating smuggling, counterfeit goods, and commercial fraud This includes the detection, collection, exchange, and dissemination of vital information and documents.
The article emphasizes the importance of reviewing regulations for coordination among functional forces to effectively combat smuggling, trade fraud, and counterfeit goods It identifies the primary agency responsible for leading these strategies, while other agencies are tasked with coordinating efforts and adhering to the directives of the lead agency, as outlined by law in their respective localities and areas of action.
- Propose financial support policies to ensure working conditions, enough communication, means of patrolling, inspection and control for functional agencies to prevent and combat smuggling and trade fraud
Effective coordination in combating smuggling, commercial fraud, and counterfeit goods must adhere to legal standards while promoting mutual support among functional forces It is essential to eliminate any loopholes or overlaps in their operations Furthermore, the exchange of information regarding criminal activities and the implementation of professional measures must prioritize confidentiality to enhance prevention and enforcement efforts.
3.2.3 Invest in upgrading equipment and supporting facilities for anti-smuggling and commercial fraud activities
Smuggling and commercial fraud are escalating in scale, employing sophisticated and reckless tactics To effectively combat these illicit activities, it is essential to invest in advanced machinery and equipment that can enhance detection and prevention efforts.
To enhance the efficiency of administrative procedures for imported and exported goods, it is essential to develop a centralized information technology system that supports the National Single Window mechanism This system will facilitate the centralized processing of administrative tasks across various ministries and branches, while also enabling seamless information exchange and collaboration between Customs authorities and other relevant entities.
To enhance customs inspection, supervision, and control, it is essential to upgrade to modern equipment and integrate advanced information technology systems By implementing online technologies, we can significantly reduce the need for civil servant intervention during the inspection and supervision processes.
To enhance the effectiveness of smuggling prevention and combat trade fraud, it is essential to assess the efficiency and quality of existing equipment Upgrading to modern machinery tailored to meet specific regional requirements will significantly improve operational capabilities.
- Strengthen the system of cameras, scanners (goods, people), and a number of other machines suitable to the characteristics of each route
- Educate Customs officers on how to use modern equipment for goods inspection
Recommendations against Commercial fraud in the importation of
3.3.1 Recommendations for individuals and businesses
Individuals play a crucial role in collaborating with functional agencies to inspect, examine, and control quality management This cooperation is essential in combating smuggling and commercial fraud, enabling the timely detection and prevention of smuggling activities, as well as the transportation, production, and sale of counterfeit and substandard goods.
- Not abet acts of smuggling and fraudulent trade, actively denounce acts of smuggling and commercial fraud so that the authorities can promptly handle them
The production, trading, storage, and distribution of counterfeit and substandard goods pose significant threats to consumers and the economy Authorities are actively engaged in inspecting and controlling these illicit activities, focusing on quality management and combating smuggling and commercial fraud Efforts are being made to address and penalize those who facilitate or conceal these crimes, including tax evasion and violations related to measurement and quality assurance It is crucial to uphold the law to protect the integrity of the market at both local and national levels.
Businesses and individuals are playing a crucial role in combating smuggling and trade fraud by actively engaging in discussions about state management They contribute valuable insights on developing and refining legal documents that protect consumer rights Additionally, they propose effective solutions aimed at enhancing the overall efficiency of anti-smuggling and commercial fraud initiatives.
Businesses and individuals diligently adhere to state guidelines, policies, and laws governing business operations, including import and export activities They actively engage in combating smuggling, commercial fraud, and counterfeit goods, while also safeguarding the legitimate rights of both businesses and consumers.
3.3.2 Recommendations for General Customs department
- Need to be active and firmly grasp the situation of importing, transporting, producing, trading, storing, distributing and circulating goods
Customs control forces and specialized units are actively implementing coordinated professional measures, conducting thorough investigations, and devising strategic plans to prevent, control, and combat smuggling and commercial fraud in border regions and maritime areas.
- Coordinate with press agencies and media to propagate and mobilize people not to participate in and abet smuggling activities on border lines and sea areas
- Strengthen the establishment of inspection teams on a large scale, not only in key areas but also in bordering areas with little traffic, especially at night time
- Take strong measures to handle individuals and organizations engaged in smuggling, commercial fraud and counterfeiting products
To enhance the fight against smuggling and commercial fraud in the petroleum sector, it is crucial to strictly and effectively implement the directives from the Government, the National Steering Committee 389, the Ministry of Public Security, and local Steering Committees This includes strengthening inspection, examination, and quality management processes.
To effectively combat smuggling and commercial fraud, it is essential to implement synchronized professional measures that assess the current landscape and identify emerging fraudulent tactics in the import, transportation, production, trading, storage, distribution, and circulation of goods This includes enhancing inspections and controls at border lines, critical inland areas, and maritime zones to ensure the timely detection and prevention of criminal activities.
Ensure the thorough reception and processing of crime reports and prosecution recommendations, while accelerating the investigation and resolution of cases involving smuggling, commercial fraud, and the production and sale of counterfeit and substandard goods Maintain close collaboration with the People’s Procuracy to enhance effectiveness in these efforts.
To effectively deter criminal activities, it is essential for the People's Courts at all levels to promptly and rigorously prosecute and adjudicate cases This approach not only serves to educate and warn individuals with criminal intentions but also enhances the public's awareness and encourages self-prevention measures.
To enhance quality management and oversight, it is essential to strengthen inspections and examinations to identify existing challenges This process will facilitate the proposal of necessary amendments and supplements to legal provisions aimed at effectively addressing smuggling, commercial fraud, and the illegal transportation, production, and trading of goods.
Enhancing the quality and effectiveness of legal education dissemination is crucial for fostering a sense of responsibility among residents to safeguard national security It is essential to encourage community participation in identifying and reporting criminal activities, while also discouraging involvement in smuggling and commercial fraud By mobilizing the public, we can create a more vigilant society that actively combats crime and promotes lawful behavior.
To effectively combat smuggling, commercial fraud, and tax evasion, it is essential to take stringent actions against groups and individuals who provide cover, support, or protection for criminals Additionally, it is important to promptly recognize and reward individuals who demonstrate exceptional contributions to preventing and addressing these illicit activities.
As Vietnam faces a complex and unpredictable landscape of smuggling and commercial fraud, it is crucial to implement effective solutions to combat these illegal activities Chapter 3 outlines strategic orientations and actionable recommendations aimed at preventing smuggling and trade fraud, targeting not only Customs authorities but also individuals, businesses, and the government.
Commercial fraud is a significant and complex issue not only in Vietnam but also globally, posing serious threats to individuals, businesses, and society at large It undermines government finances, damages Vietnam's international reputation, and creates an uneven playing field that benefits dishonest traders over legitimate ones Therefore, decisive measures are essential to effectively combat this problem.
Between 2018 and 2022, thesis research highlighted the challenges in preventing commercial fraud, revealing practical cases and analyzing existing policies and strategies for crime detection and resolution Despite the commendable efforts of the Customs Department and government measures in combating smuggling and commercial fraud in Vietnam, notable limitations persist Consequently, it is crucial for state management agencies, individuals, and businesses to collaborate in developing effective solutions to safeguard the nation from the detrimental impacts of smuggling and commercial fraud.