July 19, 2019 05:19

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Customs guarantee: Facilitate to promote international trade

14:35 | 09/04/2019

VCN- Customs guarantee for import and export goods is one of the solutions to facilitate trade and quick clearance which has been applied in many countries. In Vietnam, the Customs guarantee mechanism has been researched to implement soon. The Customs Newspaper interviewed Deputy Director General of Vietnam Customs, Mai Xuan Thanh, about the mechanism’s benefits.

customs guarantee facilitate to promote international trade Customs guarantee – one more lever for trade facilitation
customs guarantee facilitate to promote international trade

The General Department of Vietnam Customs has assigned by the Government and Ministry of Finance to study and develop Scheme on pilot implementation of Customs guarantee mechanism. Could you tell me about this mechanism?

For Customs clearance, besides required documents and dossiers, enterprises must fulfill all compulsory obligations related to goods such as: taxes, fees, other charges and compliance with fines for violations and measures to overcome consequences.

Due to market demand or production and business activities, many businesses are not eligible but desire to be cleared, then they will complete the next procedures. This is a practical requirement of enterprises that needs solutions to remove. Customs guarantee is the method of financial guarantee commitment that the Customs requires for enterprises when they have not completed Customs procedures but want to implement Customs release and clearance.

Customs guarantee mechanisms have been deployed in many places such as the US and the EU, this mechanism has been expanded and developed to aid trade and promote related services as well as specialized trade operations such as bonded warehouses, foreign trade zones or free trade zonesand manufacturing and processing facilities.

How will the Customs guarantee mechanism benefit concerned parties, especially in the context of the Government’s reform and international economic integration?

The Customs guarantee mechanism will provide a control mechanism to reduce Customs clearance time and enhance compliance. Therefore, it will bring many benefits for concerned parties.

For import and export enterprises, the mechanism will shorten Customs release and clearance time and cost, quickly bring goods into production, providing more options of tax guarantee units, contributing to enhancing the law compliance of enterprises. Particularly, when goods are quickly brought to the storage, it will ensure the quality and reduce storage costs at border gates. Goods are cleared fast, they will be quickly put into production or circulation in the market, the capital can be quickly recovered for continuous operation, and the enterprise will be not subject to contract penalties for delayed delivery.

For the Customs authorities, the Customs guarantee mechanism will support them in enhancing their management capacity, ensuring revenue and preventing trade fraud and Customs offences.

For specialised management agencies, the Customs guarantee mechanism does not reduce or abolish requirements on specialised management and inspection for import and export goods, this is a support tool to control enterprises’ compliance with regulations on specialised inspection through insurance organizations.

For insurance organisations, the mechanism will supplement a new business method to improve business efficiency and develop the insurance market in Vietnam.

Also according to the Global Alliance for Trade Facilitation (GATF) in the US, the mechanism will reduce administrative costs by 0.1-0.5%, and Customs clearance costs from 0.5-0.8% of shipment value, enhance competitiveness and promote export growth of about 1%.

Why is Vietnam deploying the mechanism now?

WithVietnam's economy increasingly integrating with the world economy, many bilateral or multilateral Free Trade Agreements (FTAs) have been signed, requiring management agencies to strengthen the reform and modernisation and improve the business environment of Vietnam in order to support and create conditions for Vietnamese enterprises to expand their markets and approach regional and global markets.

The Government has asked ministries, sectors and units to simplify and electronicize procedures, shorten the time and cost of conducting cross-border trade transactions. The goal by 2020 is that the business environment and competitiveness will reach the average level of ASEAN 3, in which the clearance time for cross-border goods is less than 36 hours for export goods and 41 hours for import goods.

To achieve this goal, Vietnam needs to reform, innovate and apply appropriate management methods to facilitate trade, quick customs clearance, including application of the Customs guarantee of developed countries such as the US, Canada, and South Korea, which will help Vietnam gradually access to these countries and have a business environment and competitiveness capacity in the top three countries in Southeast Asia.

The Prime Minister issued Decision 1254/QD-TTg dated September 26, 2018 and assigned the Ministry of Finance to develop a pilot scheme to implement the Customs guarantee mechanism for some import/export goods subject to specialized inspection.

How will the Customs guarantee mechanism be deployed in Vietnam?

The General Department of Vietnam Customs has worked with ministries, sectors and units to research the mechanism’ feasibility via surveying the Customs guarantee model in the US and studying the experiences of countries, and participating working sessions and seminars held by GATF.

To ensure the legal basis and progress for the implementation and application the mechanism, the General Department of Vietnam Customs will ask the Ministry of Finance to report to the Government to develop a scheme enclosing a resolution on piloting the mechanism for import and export goods to submit to the National Assembly for approval. On that basis, the Ministry of Finance will develop legal documents to submit to the Government for detailed regulations on implementation and not develop the scheme.

This is a completely new management model that has a significant impact on insurance business activities, customs procedures and the management of ministries and sectors. Therefore, to avoid much impact on the business and production activities of enterprises, the customs procedures and management policies of the ministries and branches, the implementation is expected to be divided into three phases. First it will be piloted and then be implemented on an evaluation basis before being officially applied. However, it is necessary to review and amend a number of legal documents for the implementation.

Currently, the General Department of Customs is continuing to study and receive consultations and experience of implementing this model in the US and some countries, and comments from ministries and sectors, associations and enterprises in Vietnam to soon complete and apply this mechanism.

By Ngoc Linh/Ngoc Loan