International Customs Day: Pakistan Single Window: Customs bolstering recovery, renewal and resilience for the sustainable supply chain

TEXT: The sustainability of international supply chain is in focus during the ongoing coronavirus pandemic to keep international trade flows open for ensuring access to essential supplies including food and medicines while limiting pandemic’s negative impact on economy. As Pakistan Customs joins the Customs fraternity worldwide in celebrating the 38th International Customs Day on the theme of “Customs bolstering Recovery, Renewal and Resilience for a sustainable supply chain”, it is cognizant of its pivotal role in the overall supply chain sustainability. While providing 24/7 operational support at the ports, international airports and land border crossings, Pakistan Customs has been coming up with ICT based interventions that are designed to enhance workplace collaboration, minimize physical interactions between difference actors and reduce customs clearance costs & time for businesses. The Pakistan Single Window program is one such initiative.

As a signatory to the WTO’s Trade Facilitation Agreement (2015), Pakistan has notified the establishment of a ‘National Single Window’ as a ‘Category C’ commitment with an implementation timeline of five years with effect from 22nd February 2017 and has initiated the development of the SW at an accelerated pace with Pakistan Customs as the designated ‘Lead Agency’. The PSW will allow parties involved in trade and transport to lodge standardized information and documents with a single-entry point to fulfill all import, export, and transit-related regulatory requirements.

After putting in place a robust and inclusive implementation mechanism PSW is being indigenously developed by Pakistan Customs as a comprehensive electronic trade platform connecting Customs, trade regulators, traders, transporters, freight forwarders, logistic operators, port operators, shipping lines, airlines and road traffic, commercial banks and other stakeholders associated with international trade. Under PSW program, the processes related to cross border trade are not just automated but they are being simplified to reduce redundancy and are integrated to improve controls. PSW is aiming at ensuring seamless exchange of information amongst all stakeholders connected to the system in a transparent manner and provide real time updates and access to information to all stakeholders including traders.

From February 2021 onwards, the PSW will start phased roll out of a suite of services. This would include a unified registration system for economic operators, products and entities while integrating registration requirements of customs and other trade regulators into a single form through electronic portal. Similarly, it will enable filing of integrated declaration form eliminating the need for filling out multiple forms for various purposes. It will provide electronic issuance of licenses, permits, certificates and other documents by trade regulators and Customs. The back-end processes related to these LPCOs are also being automated. The PSW will adopt integrated risk management system and introduce joint inspection mechanism. It will offer electronic lab management and an integrated tariff management system at 12 digits. The PSW platform will be further complemented by a cross border trade information portal, a re-modelled customs management system (WeBOC), a robust port community system covering the sea, air, and land port communities, e-commerce, and electronic payment system offering single payment experience for all services. PSW will be integrated with other databases like NADRA, SECP, and FBR etc for electronic validations and verifications. It will have the capability for electronic data interchange with internal and external stakeholders.

The success of the PSW system is predicated on an efficient and effective governance and operating system that is self-sustaining, transparent and innovative and fosters a positive work environment and is responsive to the stakeholders’ needs. Keeping this in view, FBR has created the PSW Company under Section 42 of the Companies Act, 2017 which will act as the operating entity for the PSW. A high-level Governing Council will provide management oversight and supervision to the PSW. The Pakistan Single Window Bill [2020] provides the legal framework for the PSW system and its governing and operating framework. It has been approved by the government and is expected to be enacted this year.

Even before its roll out, the PSW is resulting in major reform and transformation of trade related business processes. For instance, the State Bank of Pakistan has agreed to replace the consignment based Import and Export forms with electronic banker’s profiles enabling real time exchange of information between Customs and the banking system for foreign exchange regulation. Trade regulators such as the Animal Quarantine Department, Department of Plant Protection, and the Federal Seed Certification &Registration Department, and Drug Regulatory Authority of Pakistan have approved major re-engineered processes and related documentary requirements for eliminating redundant information and eventual digitalization under the PSW system. Pakistan Customs has also allowed major changes to allow pre-arrival declaration filing and processing without upfront payment of duty and taxes. All participating trade regulators will be developing risk rules to enable machine enabled risk profiling and mitigation of import/- export transactions and consignments. Under the PSW initiative, trade related regulatory laws, rules, and procedures are being reviewed for aligning them with international best practices.

While overhauling the entire regime of external trade management in Pakistan, the successful implementation of PSW program is aimed at reducing costs, time and complication for stakeholders while enhancing controls in cross border trade. It will substantially reduce paper based documentation and physical visits for undertaking imports, exports and transit trade. The transparency and predictability with lesser room for interpretation would improve governance and reduced corruption. The PSW initiative will have immediate impact on the competitiveness of Pakistan. Reducing import transactions costs and time to align with regional averages of South Asia ($507 and 123 hours) could potentially save $350 million per year and approximately 140 hours per transaction while reducing export transactions costs and time to align with regional averages ($377 and 86 hours) could potentially save $80 million per year and approximately 45 hours per transaction. These are all savings that will pass on directly to traders allowing them to invest more on their businesses and/or to recover from the ravaging effect of the pandemic. However, perhaps more significantly, the successful implementation of the PSW will trigger and accelerate the digital transformation of Pakistan’s international trade sector to bring it at par with the more advanced economies in Asia and Europe and contribute to the strengthening, sustainability, resilience, and integration of Pakistan’s international supply chain to the global value chains.

Aftab Haider, WB Lead Customs Expert

Copyright Business Recorder, 2021