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CHALLENGES OF THE CHALLENGES OF THE MONGOLIAN CUSTOMS: MONGOLIAN CUSTOMS:
SUPPLY CHAIN SUPPLY CHAIN SECURITY AND RISK SECURITY AND RISK
MANAGEMENTMANAGEMENT
Asia-Pacific Trade Facilitation Forum 25-26 November 2009, Bangkok, Thailand
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ContentsContents
1.1. Trade FacilitationTrade Facilitation –– Main Objective of the Mongolian Main Objective of the Mongolian CustomsCustoms
2. 2. Work Progress towards Trade Facilitation:Work Progress towards Trade Facilitation:-- ITIT, , Customs Automated Information System;Customs Automated Information System;-- Risk ManagementRisk Management
3. 3. Challenges faced by the Mongolian Customs:Challenges faced by the Mongolian Customs:-- SEWSEW;;-- Coordinated Border ManagementCoordinated Border Management;;-- Supply Chain SecuritySupply Chain Security
4. 4. ConclusionConclusion
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1. 1. Trade FacilitationTrade Facilitation –– Main Objective of theMain Objective of theMongolian CustomsMongolian Customs
Trade is an engine of economic growthTrade is an engine of economic growthRole of customs: shift from traditional revenueRole of customs: shift from traditional revenue--focused focused
customscustomsCustoms top management political willCustoms top management political willChange Management Change Management –– Commitment from customs Commitment from customs
officers officers –– Change minds and attitudesChange minds and attitudesBusiness process reBusiness process re--engineering, implementation of engineering, implementation of
customs new technique and working methodscustoms new technique and working methodsExample: Example: NOWNOW -- Post Clearance Audit (powerful tool for TF) is used Post Clearance Audit (powerful tool for TF) is used mainly for revenue generationmainly for revenue generationTO BE TO BE –– Risk Management doubled with PCA Risk Management doubled with PCA –– efficient customs efficient customs control technique aimed at TF control technique aimed at TF
Customs main principleCustoms main principle-- Informed Compliance:Informed Compliance:Tell the traders what they are doing wrong!Tell the traders what they are doing wrong!
Customs2Business: Customs2Business: Association of Cashmere Exporters, etc. Association of Cashmere Exporters, etc.
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Total turnover of foreign trade, 2004-2008, mln.USD
869.
7
1 06
4.9
1 54
2.8
1 94
9.1
2 53
9.3
1 02
1.1
1 18
4.4
1 48
5.6
2 17
0.1
3 61
5.8
1 890.82 249.2
3 028.4
4 119.3
6 155.1
0.0
3 500.0
7 000.0
2004 2005 2006 2007 2008
export import Total
FOREIGN TRADE OF MONGOLIAFOREIGN TRADE OF MONGOLIA
Worldwide Worldwide -- average /per year/ average /per year/ ::importimport –– 11 11 %%ExportExport--12 12 %%GDPGDP –– 3 3 %%
The increase of foreign The increase of foreign trade turnovertrade turnover::
During During 20012001--2008 : 2008 : Total turnover increasedTotal turnover increased5 5 timestimes; ; ImportImport increase increase –– 5.75.7times,times, average average 71.2 71.2 % a % a yearyear; ;
ExportExport ––-- 4.3 4.3 times,times,53.8 53.8 % a year% a year;;
GDPGDP 55--6 6 %%
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2. 2. Work Progress towards Trade FacilitationWork Progress towards Trade Facilitation
2.2.1.1. IT systemIT system::
Mongolian CustomsMongolian Customs’’ information and communication information and communication technology development divided into three stages:technology development divided into three stages:
19931993--20022002
20022002--20102010
20102010
ASYCUDAASYCUDA
GAMAS GAMAS –– system was developed system was developed by Mongolian IT experts in 2002, by Mongolian IT experts in 2002,
replaced ASYCUDAreplaced ASYCUDA
CAIS CAIS -- ADB Customs Reform and ADB Customs Reform and Modernization Project 2007Modernization Project 2007--20102010
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Enterprise Architecture view of Enterprise Architecture view of Customs Integrated Information System Customs Integrated Information System
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Mongolian Customs after implementation of CAISMongolian Customs after implementation of CAIS
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2.2. Introduction of 2.2. Introduction of ““Risk Management Risk Management ””((20022002--2002008)8)
1.1. No legal environment to introduce the Risk Management; No legal environment to introduce the Risk Management; 2. 2. No strategic policy and comprehensive long/shortNo strategic policy and comprehensive long/short--term action plan to term action plan to introduce introduce ““Risk ManagementRisk Management”” was developed ; was developed ; 3. Frequent change of RM staff at the headquarters, no trained a3. Frequent change of RM staff at the headquarters, no trained and nd assigned staff at frontline; assigned staff at frontline; 44. . Lack of theoretical and practical experience of Risk Management Lack of theoretical and practical experience of Risk Management staff;staff;55.. No risk indicators and profiles are determined, technical and nNo risk indicators and profiles are determined, technical and network etwork difficulties while using RM module of GAMAS, etc.difficulties while using RM module of GAMAS, etc.
-- Negative side: Implementation failed Negative side: Implementation failed -- No professional approach, no No professional approach, no sense of ownership, no commitment sense of ownership, no commitment -- Positive result: started to talk, had trainings, Positive result: started to talk, had trainings, ““RMRM”” notion became notion became familiar to customs officers familiar to customs officers
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2.2 Introduction of 2.2 Introduction of ““Risk Management Risk Management ””(Since (Since 20092009))
The Mongolian Customs set clear objectives to start deThe Mongolian Customs set clear objectives to start de--facto facto implementation of RM from 2009implementation of RM from 2009.. RM requires time, intellectual RM requires time, intellectual investment, highly skilled and motivated staff and is one of investment, highly skilled and motivated staff and is one of important Customs techniques. RM is compared to conductor of important Customs techniques. RM is compared to conductor of the orchestra.the orchestra.
1. 1. Legal environment established by new Customs LawLegal environment established by new Customs Law2. 2. Strategic plan and policy developedStrategic plan and policy developed33.. Best practices and experience are being studied and actions Best practices and experience are being studied and actions
to be takento be taken44. . Capacity building: Foreign and local trainings conducted Capacity building: Foreign and local trainings conducted 6. 6. USAID funded Consultancy ServicesUSAID funded Consultancy Services
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2.2 Obstacles and ways forward 2.2 Obstacles and ways forward in introduction of in introduction of ““Risk Management Risk Management ””
1. Majority of customs officers do not have in1. Majority of customs officers do not have in--depth knowledge depth knowledge of entire RM concept (resistance, etc.);of entire RM concept (resistance, etc.);2. RM regarded as 2. RM regarded as ““their businesstheir business”” (of RM assigned staff only);(of RM assigned staff only);3. Lack of 3. Lack of PCPC’’ss and other equipment for RM staff (on siteand other equipment for RM staff (on site-- 1 1 computer for 4 officers); lack of funds to have access to APIS;computer for 4 officers); lack of funds to have access to APIS;4. Insufficient knowledge of business community and other law 4. Insufficient knowledge of business community and other law enforcement agencies (Antienforcement agencies (Anti--Corruption Agency, Police, etc.).Corruption Agency, Police, etc.).
What we need?What we need?1. Constant training activities for customs officers1. Constant training activities for customs officers2. 2. Public Awareness CampaignPublic Awareness Campaign33.. RM Forum under the RM Forum under the auspiciesauspicies of the President of Mongoliaof the President of Mongolia
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3. 3. Challenges facedChallenges faced by the Mongolian Customsby the Mongolian Customs
3.1. 3.1. The Mongolian Customs: to act as a leading government The Mongolian Customs: to act as a leading government agency to establish Single Electronic Windowagency to establish Single Electronic Window--SEWSEW
FROM TO
TERMINAL
CUSTOMS
WHARFINGER
CUSTOMS BROKER
CARRIER
HAULIER
TERMINAL AUTHORITY
CONSIGNEELINE AGENT
OGA
TERMINAL
CARRIERCUSTOMS
HAULIER
TERMINAL AUTHORITY
CONSIGNEE
CONSIGNOROGA
LINE AGENT
CONSIGNOR
CUSTOMS BROKER
WHARFINGER
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3.2. 3.2. Coordinated Border ManagementCoordinated Border Management
Customs role has changed since 9/11 attack: protection of societCustoms role has changed since 9/11 attack: protection of society, y, thus border security became important goal of Customs thus border security became important goal of Customs
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33.3. .3. Supply Chain SecuritySupply Chain Security
BeforeBorderBorder BorderBorder
Now
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3.3. 3.3. Supply Chain SecuritySupply Chain Security
Efficient tool for trade facilitation;Efficient tool for trade facilitation;Customs of single country is not capable to execute efficient anCustoms of single country is not capable to execute efficient and d
speedy control;speedy control;Close cooperation of Customs authorities of neighboring countrieClose cooperation of Customs authorities of neighboring countries s
is essentialis essential;;To start from hazardous and perishable goods.To start from hazardous and perishable goods.
Mongolia Mongolia –– PRC CooperationPRC Cooperation:: Joint Customs ControlJoint Customs Control1. 1. Three Working Group meetingsThree Working Group meetings;;1.1. Unified Cargo ManifestUnified Cargo Manifest;;2.2. Pilot testing (official inauguration on December 15, 2009) Pilot testing (official inauguration on December 15, 2009) ––ADB ADB
acted as a facilitator;acted as a facilitator;3.3. To spread on other border pointsTo spread on other border points--modality corresponding to the modality corresponding to the
specifics of each crossing point;specifics of each crossing point;MongoliaMongolia--PRC Cooperation: Supply Chain SecurityPRC Cooperation: Supply Chain Security--
Control over chemicalsControl over chemicals1.1. Green Customs Forum Green Customs Forum –– Korea, Korea, JejuJeju IslandIsland2.2. EuroEuro--Asian Economic Forum Asian Economic Forum –– PRCPRC3.3. Diplomatic channels Diplomatic channels
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Transportation of chemical products
16
0
10
20
30
40
50
60
China Russian Other
53
40
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Last 5 year /percent/
Last 5 year /percent/
Customs clearance of imported chemicals in last 5 yearsCustoms clearance of imported chemicals in last 5 years(by country of origin)(by country of origin)
Statistic shows Statistic shows that 158748.4that 158748.4
tons of tons of chemicals chemicals
importedimported to to MongoliaMongolia from from
ChinaChina in the last in the last 5 years5 years..
Supply Chain Security Supply Chain Security
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3.4. Other Customs related TF factors3.4. Other Customs related TF factors
Customs BrokersCustoms Brokers’’ InstitutionInstitution1.1. Customs Brokers traditionally have to be Customs Brokers traditionally have to be ““eyes and earseyes and ears”” of of the Customs; the Customs; 2. Customs Brokers Institution 2. Customs Brokers Institution –– key player in entire trade key player in entire trade process, thus in TF.process, thus in TF.The Mongolian Customs started the process of reforming this The Mongolian Customs started the process of reforming this institution to meet international standards (obliged to settle institution to meet international standards (obliged to settle the the customs duties, to keep export/import supporting documents, customs duties, to keep export/import supporting documents, etc.)etc.)Once duly performed, the Customs Brokers can assist a lot Once duly performed, the Customs Brokers can assist a lot towards trade facilitation.towards trade facilitation.
Introduction of Introduction of ““Self AssessmentSelf Assessment”” in customs valuation in customs valuation
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4. Conclusion4. Conclusion
BeforeBefore:: AfterAfter::
Priority Priority -- revenue collectionrevenue collection
100% physical examination100% physical examination
Multiple control agencies at Multiple control agencies at the borderthe border
Bottlenecks at the borderBottlenecks at the border
Priority Priority -- social security social security and trade facilitationand trade facilitation
Shift on RM and wide use of Shift on RM and wide use of PCA as a trade facilitation PCA as a trade facilitation techniquetechnique
Coordinated border Coordinated border management management
Joint Customs Control Joint Customs Control ––Supply Chain SecuritySupply Chain Security
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MONGOLIA:MONGOLIA:-- from from ““LANDLOCKEDLANDLOCKED”” to to ““LANDBRIDGELANDBRIDGE”” countrycountry
-- Increased competitivenessIncreased competitiveness
D.OYUNCHIMEGDeputy Director General
Customs General Administration of Mongolia email: [email protected]
Tel: +976-11-350056Fax: +976-11-350060
