Results of Customs Reform Showcased in Ha Noi

09 Oct 2000

Ha Noi - The General Department of Customs (GDC) and the United Nations Development Programme (UNDP) organized a workshop this week (4 October 2000), to inform the international donor community of the achievements of the UNDP-funded project Strengthening the Capacity of Viet Nam Customs (VIE/97/059). The workshop also proposed further customs reform, which would require continued support from the broader international community as well as the private sector.

In the opening speech, Mr Maurice Dewulf, the Deputy Resident Representative of UNDP, stressed the important role of the Customs Department in trade facilitation and international integration œ critical topics in the Governmentÿs development agenda. He emphasized that "the efficiency and effectiveness of the Customs administration is critical to the enhancement of the trade and business environment and ultimately to the economic competitiveness of the country".

The UNDP project has been implemented over the past one year, with three main objectives: prepare a comprehensive customs reform strategy; support the implementation of Viet Nam's international commitments in the customs area; and to develop an automation strategy as an integral part of the comprehensive customs reform strategy. The project has received strong support from the World Customs Organisation (WCO) œ a specialized international organisation with 153 member Customs administrations worldwide.

Recently, Viet Nam Customs has taken a number of measures to align its procedures with international best practices and improve the efficiency and transparency of its operation. In August, it announced the introduction of a new valuation method based on the WTO rules, to be applied on goods originating from ASEAN countries from January 2001. It also started piloting simplified clearance procedures in the Linh Trung Export Processing Zone, and a trial of electronic systems for Customs declarations in Dong Nai province.

Adoption of these new procedures and methods required considerable changes in mindset within Viet Nam Customs, as well as in their understanding of their own role and their working relations with the business community. The workshop highlighted the issue of shifting from a situation of absolute control œ through 100 per cent physical examination of cargoes, to selective physical inspection based on risk assessment.

One hundred per cent control (physical examination) was previously justified as a way to fulfil responsibilities of the Customs administration in protecting revenues, preventing smuggling and enforcing various other regulations to protect social welfare, the environment, and intellectual property rights. However, as the volume of trade soared in the past decade, Viet Nam Customs has been forced to look for an alternative solution that is more conducive to facilitating trade activities.

The accelerated release of cargoes by a risk-based control system also constitutes a core of all bilateral and multilateral trade agreements Viet Nam has signed, such as AFTA and the US œ Viet Nam Trade Agreement, and of the requirements for Viet Nam's entry into the World Trade Organization (WTO). This practice is accepted worldwide and recommended by international organizations, such as UN Agencies, the WCO and International Chamber of Commerce (ICC) and other international business organizations. However, in Viet Nam, there were still fears for possible negative impacts resulting from the adoption of the new practice, such as the loss of revenue.

The UNDP project facilitated the change process by helping customs officials learn about other countries' experiences in implementing similar reform, and clarifying what would be needed for a successful transformation in various areas. This included adjusting the legal framework, restructuring the organization, training customs officials, public information and education campaigns, and the automation of procedures.

While already significant, a shift from 100 per cent control to a risk-based control is just a small piece of the comprehensive customs reform strategy. Carrying out all these necessary measures will require substantial costs. In the workshop, the project's Senior Technical Advisor, Mr Alan Hall, stressed the need for greater international support to be given to Viet Nam Customs. Mr Hall estimated that the overall costs of carrying out customs reform in the coming five years would be about US$35 million, while the benefits of the customs reforms, mainly through reducing transaction costs for traders and time savings, would be far greater than the costs of the reform. UNDP and GDC agreed to work together to further explore the possibility of mobilizing financial support to customs reform from both donor countries and the private sector.

Contact Information

UNDP Public Information Unit at (04) 942 1495