Paperless trade facilitation for SMEs
Mark GOHPrepared for UNNExT workshop on paperless trade facilitation for SMEs
2-3 Feb 2015, Bangkok, UN Conference Centre
Paperless trade facilitation1
Agenda
• Overview
– Key issues in TF in Asia
– SMEs and their challenges
• Priority bottlenecks
• ICT as the response
• ICT applications
– Pros
– Cons
2Paperless trade facilitation
Issues in TF
• What would the world be like without TF?– Cost, time, cross/ mutual recognition of products,
services, cash-to-cash cycle times
• How should policy look at these issues– Deal with them directly
– Let the business community deal with it (MNCs)
– Adopt PPP approach
• Are they important to warrant attention– Economic development, GDP, …
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Duval’s presentation (2012) …
18.75
4.75/23.5= 20% preparing for physical transport; 80% - preparing for trade - cf Pareto’s Law
Duval’s presentation (2012) …
18.75
4.75/23.5= 20% physical transport; 80% - preparing for trade - cf Pareto’s Law
1. Time non value added,
2. time is cost and loss in cash conversion,
3. cost translates to lost competitiveness
Trade Facilitation (TF) in Asia and the Pacific
• On average, it still takes 30 days to move goods from factory to deck-of-ship at the nearest seaport
– South Asia: 30 days, 6 days
– South-East Asia: 20 days, 4 days
– Developed economies: 10 days, 2 days?
Improvements in TF could bring $250 billion in additional trade for Asia and the Pacific
So where is the paper? – look at key International Paper Forms
• Key International paper forms– Negotiable Bill of Lading– Insurance Certificate– Consular Invoice– Import/Export Licences– Letter of Credit– Cargo Declarations– Certificates of Origin, Phytosanitary
UNeDOCs recommends a single data modelling approach for:
• Paper documents (>70% paper)• Electronic documents which are simply equivalent to paper
documents• Structured electronic documents UN/EDIFACT, Cargoimp, VDA,
XML etc.• Process driven mini messages, e.g. Web/Service Orientated
eTransactions
UNeDocs: Holistic Information Framework for Single Window
GOODS
PAYMENT
WTO’s perspective of Trade Transaction
S BINFORMATION
Is it really that simple???
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GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
Ctry A Ctry B
Ctry C
Ctry D
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GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
GOODS
PAYMENT
S BINFORMATION
Ctry A Ctry B
Ctry C
Ctry D
High degree of convolution, challenge in recognition – harmonized system, Customs open hand in interpretation, longer than desired delays at borders, opportunities for informal facilitation, affects cashflow
Arrival Notice
Letter of
Instruction
Invoice, PO
Importer’s
Bank
Ocean Carrier
Customs House
Broker
Line of Credit
Proforma Invoice
Shipping & funding detail
Cargo
Status
Vessel Booking Request
Cargo
Status
Shipping & Funding Detail
Exporter’s
Bank
Importer Exporter
Vessel Booking Confirmation
Bill of Lading
Rated Bill of Lading
Dock Receipt
Freight Forwarder /
NVOCC
Purchase Order
LC
Confirmation
AES
Dock receipt
Pick-up & Delivery Order
Vessel Manifest
Dock receipt
Release/Approval
Demurrage
guarantee &
payment
Inland
Carrier
Manifest
Pick-up &
Delivery Order
Importer Notice
Converted Vessel
ManifestCustoms (Export)
Port
Customs ( Import )
Original B/L,
Invoice, PO,
Packing List
Inland
Carrier
Marine
Insurance
Company
Fund Transfer
Confirmed Line of Credit
Release/Hold
Notice
Purchase Exportation Importation
Import
Terminal
Operator
Proforma Invoice
Export Declaration
Export Declaration
Bill of lading, Documentation
Import
Docs
Export
Terminal
Operator
• 20 actors;
• > 200 data elements;
• Manual procedures;
• Multiple data
systems;
• > 30 documents or
messages.
Data exchangein International Trade
Qn: Where should policy intervene?
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Who are the stakeholders in TF?• Many different ministries and executive agencies
–Ministry of Transport, Ministry of Finance, Ministry of Trade, Ministry of Health, –Customs, Bureau of Standards, Veterinary services, Laboratories
• Private sector–Commercial banks–Freight forwarders, Importers-exporters–Customs Brokers– Shippers (MNCs & SMEs)
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INTERNATIONAL TRADE TRANSACTION PROCESS
Commercial
Procedures
• Establish
Contract
• Order Goods
• Advise On
Delivery
• Request Payment
Transport
Procedures
• Establish Transport
Contract
• Collect,Transport
and Deliver Goods
• Provide Waybills,
Goods Receipts
Status reports
Regulatory
Procudures
• Obtain Import/Export
Licences etc
• Provide Customs
Declarations
• Provide Cargo
Declaration
• Apply Trade Security
Procedures
• Clear Goods for
Export/Import
Financial
Procedures
• Provide Credit
Rating
• Provide Insurance
• Provide Credit
• Execute Payment
• Issue Statements
INVOLVES
Prepare For
ExportExport Transport Import
SHIPBUY PAY
Prepare For
Import
Qn: steps in each block, cost involved, expertise needed, transaction security especially $Paperless trade facilitation 15
• We want to address the what, where, how,
and why, when(?) of TF for SMEs
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What should be objective of TF from policy makers’ perspective
• Nurture trade environment, regional or
global that is
– predictable (in terms cost and time at the
borders),
– secure (no concerns for shippers on transport
and claims)
– cost efficient (open book, completely
transparent and visible to users)
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How to achieve trade facilitation
• Simplification, Standardisation & Systemisation (Harmonization) of trade documents, procedures, practices
• Improving cross border logistics services
• Improving infrastructure (transport: intermodal & connectivity)
• Qn: how does each one speak to the SME??
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TRADE FACILITATION
Steps to remove all
unnecessary elements
and duplications in
formalities, processes
and procedures
Simplification Systemisation
Align national
procedures, operations &
documentation with
international practices,
conventions & standards.
Standardisation
Process to develop
internationally agreed
formats for practices &
procedures, documents
& information.
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TRADE FACILITATION
Steps to remove all
unnecessary elements
and duplications in
formalities, processes
and procedures
Simplification Systemisation
Align national
procedures, operations &
documentation with
international practices,
conventions & standards.
Standardisation
Process to develop
internationally agreed
formats for practices &
procedures, documents
& information.
Too many steps in
process, not enough
manpower, time
consuming, lacking
language and
technical knowledge
Not well informed of
national procedures,
lacks access to platform
to update and operate
seamlessly
No knowledge of good
provider to provide cost
effective solution, lack
of capability & capacity
building (expertise &
tech) – 5M’s
SME
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Rec:19Mode of Transport
Rec:16UN/Locode ISO Country Code
Rec: 17Payment
Terms
Rec:9Currency Code
Rec:20 Units of Measurement
Rec: 28Means of Transport
Commodity Code
Rec: 21Package CodesPaperless trade facilitation 22
Process Analysis
and
Simplification
National Data
Harmonization
Cross Border
Data Exchange
Single Window
Business/Political Process - Collaboration Between Trader and
Government (UN/CEFACT Rec. 4, Rec. 18), UN/CEFACT International
Supply Chain Reference model, Unified Modeling Methodology
(UMM), Global Facilitation Partnership for Trade and Transport (GFP)
Audit Methodology
UN Layout Key, Master Document,
UNTDED, TF Toolkit and Forms Repository
UNTDED, Core Component
Library, UN LOCODE and code
lists, UNeDocs, Rec 34
UNeDocs + WCO DM
= CBRDM
Rec 33,
34,35
Document Simplification
and Standardization
Step by Step ImplementationBased on International Standards
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Where do we begin
• Advanced stages (E-docs, Automatedprocessing, Pre-arrival processing)
• IATA e-freight case
• Take a phased approach
• Clearly identify issues with SMEs that are predominantly involved in export market
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Concerns of SMEs
• Understanding technical regulations & standards
• Fees and protocol for using platform
• Assurance of security in trade (payment) and transit (T&L)
• Assurance of predictability - SMEs want predictability as it reduces need for inventory
• Transparency in release and clearance of goods, of laws and regulations
• Assurance in ICT and eCommerce
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Priority bottlenecks
Bottleneck Priority to SME Good practice
1 Processing/ clearance delays at BCPs *** Bangladesh 72 hrs(1999) -> 3 hrs(2009)
2 Lack of transit and transport agreement *** Green lane
3 Compliance with SPS * Philippines
4 Technical barriers to trade ** Thailand
5 Weak logistics systems ** Thailand
6 Poor infrastructure ** Laos
7 High admin fees, storage & handling costs *** Singapore
8 Limited IT usage *** Korea
9 Lack of accreditation facilities * Singapore
10 Excessive documentation *** IATA (efreight)
11 Lack of cooperation and coordination among trade supporting organisations
*** Virtual 1-stop shop
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Other SME TF Bottlenecks...
• Limited information about overseas markets and marketing consumers goods
• Additional market entry barriers
• Lack of attention behind and between borders
• Absence of comprehensive Aid for Trade Agenda
• Barriers to the international markets of goods and procedures at and around the borders
• Skilled human resources and technology
• Cost of trading remains high-prevents potential exporters competing in the global and regional markets
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Trade Facilitation Bottlenecks
• Among the 39 Measures some of the provisions have partially been addressed but some provisions are very difficult to implement eg Detention, Test Procedures, Pre arrival processing, Establish and publication of average release time, Border agency cooperation, Use of international standards, Single window, Customs cooperation - these need more time.
• Issues of Advance Ruling, Risk management are similarly important but require time
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