MESSAGES
This year’s International Customs Day theme, “Customs Engaging Traditional and New Partners for Purpose,” resonates deeply with the evolving dynamics of global trade. In an era marked by rapid technological advancements and unprecedented connectivity, the customs community must adeptly navigate the intricate balance between tradition and innovation. Our commitment to excellence demands that we forge alliances not only with our long-standing partners but also with emerging stakeholders who embody the spirit of progress.
Customs Administrations worldwide are facing multifaceted challenges, ranging from the relentless pace of digital transformation, emerging cross-border threats and complexities in geopolitical shifts. In this backdrop, our ability to engage both traditional and new partners become paramount. We must leverage the rich tapestry of our customs heritage while embracing cutting-edge solutions that align with the demands of the 21st century.
The Federal Board of Revenue, Pakistan, remains steadfast in its dedication to facilitating trade, safeguarding national interests, and fostering collaboration with all stakeholders. As we celebrate World Customs Day, let us reaffirm our commitment to building bridges that span the continuum of tradition and innovation. The recent plan to restructure Federal Board of Revenue is a visible example as to our commitment in transformation and willingness to change for the betterment of Pakistan. The proposed model which proposes to create an independent and autonomous customs organization, is an acknowledgement that Customs Service remains the pre-eminent guardian of our economic frontiers. Through synergy and shared purpose, we have to create a landscape that is not only resilient but also responsive to the ever-changing dynamics of businesses, and as well as global trade.
I extend my sincere gratitude to the customs fraternity, trade partners, and the citizens of Pakistan for their unwavering support. Together, let us embark on this journey of collaboration and progress, ensuring that our customs practices align harmoniously with the aspirations of our great nation.
The Karachi Customs Agents Association (KCAA) extends warm greetings to the global Customs community on the occasion of International Customs Day, celebrated worldwide on January 26, 2024. As proud representatives of the most proactive and genuine body of Customs Agents in Karachi, we commemorate 59 years of dedicated service to the Customs Agent community, contributing efforts to address trade-related issues and challenges at various forums.
International Customs Day honors the relentless dedication of customs officials and agencies who work tirelessly to ensure effective global trade management. These officials play a crucial role in facilitating the smooth operation of trade across international borders, placing people at the heart of the transformative process. The Customs authority’s responsibility encompasses tariff collection and oversight of the import and export of goods, from industrial raw materials to consumer products. This day holds immense significance as an opportunity to express gratitude to customs officials for their unwavering commitment to secure administration.
Moreover, International Customs Day emphasizes the importance of staying informed about customs laws and regulations. It also celebrates international trade across borders, contributing to economic prosperity. In the current global trade landscape, collaboration and coordination among governments and trade bodies are essential. This necessitates the sharing and enhancement of knowledge within the customs community.
The theme for this year, “Customs Engaging Traditional and New Partners with Purpose,” underscores the need for new responsibilities that require skills, knowledge, and connectivity. Pakistan Customs, as an active member of the international Customs family, collaborates with customs organizations worldwide under the World Customs Organization’s auspices. This collaboration supports the lawful flow of goods, services, people, technologies, capital, culture, and ideas, contributing to modernization and the economic development of the country.
Pakistan Customs plays a pivotal role in economic development through targeted controls and the facilitation of legitimate trade. Their commitment to liberalization and rationalization of trade regimes aligns with government initiatives to enhance trade with international partners. Ongoing restructuring and automation of Customs procedures, in line with international best practices, are key steps toward integrating Pakistan’s economy with the global economy.
In this dynamic environment, the role of customs agents is crucial in assisting the government in achieving a balance between trade facilitation and regulatory control. The Karachi Customs Agents Association and its members consistently prove to be at the forefront, working alongside customs to maintain this delicate equilibrium. We express our gratitude to Pakistan Customs for including us in the International Customs Day celebration and extend our best wishes to them on this significant occasion.
I am delighted to extend my warm greetings to the esteemed officials of Pakistan Customs on the occasion of the 72nd Anniversary of the World Customs Organization (WCO). It brings us immense pride that Pakistan Customs is playing a pivotal role in the progressive development of our nation through efficient targeted controls and the facilitation of lawful trade.
This year, as the WCO celebrates its anniversary, the theme “Customs Engaging Traditional and New Partners with Purpose” resonates with the global Customs community. It emphasizes united efforts, innovative technologies, and collaboration with stakeholders in preparing for the future. Pakistan Customs, being at the forefront of progressive initiatives, is amongst the few organizations in our country that pioneered the design and automation of clearance and audit systems. A cornerstone of Pakistan Customs’ reform strategy is the careful reassessment of its role and objectives, aligning operational ethos with international standards. Simplification of business processes and automation of cargo clearance procedures at all national ports are the fundamental planks of this strategy.
The Pakistan Single Window initiative, spearheaded by Pakistan Customs, is a monumental step toward reducing the time and cost of doing business. Through the Pakistan Single Window (PSW), the country recently joined the Pan-Asian E-commerce Alliance (PAA), an International Association that brings together customs and trade service providers to promote secure, trusted, and reliable IT infrastructure and facilities for efficient global trade and logistics services. This strategic collaboration underlines Pakistan’s commitment to embracing modern technologies for seamless international trade. Moreover, Pakistan has notably improved its implementation of the World Trade Organization (WTO)’s Trade Facilitation Agreement (TFA) through concerted efforts, and the PSW is increasingly being recognized as an emerging success story in the national and international trade community. Its implementation is pivotal in unlocking Pakistan’s potential to become a hub for international trade and transit, fostering transparency and live tracking of goods and cargo.
As representatives of the Karachi Customs Agents Association, one of the largest and most proactive Associations in Pakistan, with over 3000 members contributing significantly to the collection of budget targets set by the Federal Government for FBR, we express our gratitude and well wishes to Pakistan Customs and the World Customs Organization on World Customs Day. May this celebration mark another year of success and collaboration in advancing our customs practices for a brighter future.
ARTICLES
Pakistan Custom’s integrated management with new partners: Opportunities and Challenges
Customs is a specialized and professional organization across the globe its dimension and working has evolved gradually in a sophisticated way from manual working to fully automated end to end systems. There was time when Customs implementing national legislations and statutes in isolation without being in direct contact with concerned stakeholder or relevant authority. That’s not in vogue anymore. Customs has to be in contact with all stake holders both governmental as well private entities/organizations both local as well as international hence the challenge was met with automation as technology reduced the distances and increased interface contact with each other as day to day routine.
Modern customs essentially need to have institutional and professional foundations to meet the growing challenges of trade facilitation and control of flow of illicit trade I e smuggling from across the borders. To achieve these objectives both in short and long term sustained Political Commitment at the highest levels is a key element in the success of customs modernization. The government need to make customs modernization program in consistent governmental policies, priorities, and decisions and that the evolving regulatory environment does not conflict with customs modernization objectives.
Still at some places customs is assigned the main role of revenue collection and less attention is paid to other aspects of customs’ mandate such as border protection, security, and trade facilitation. The coordination in this regard with all other relevant ministries such as the Interior, Industry, Public Health, Agriculture, Transport, Public Safety/Homeland Security etc on the priorities for customs is a gigantic task which has been resolved by customs administrations with the development of electronic single- window solutions where ever required .
Modern customs administrations need to align programs to national fiscal, economic, social protection, and security objectives. Regarding Coordinated Border Management the Cooperation of government agencies, LEAs international, and private- sector collaboration are fundamental to effective border management. Effective relationships with key national regulatory authorities who also have an interest in the border (for example, public health, safety, veterinary, phyto-sanitary, intellectual property, technical standards, environment protection) are critical to deliver efficient and effective services. This is also crucial for matters relating to national security and other related matters. Smuggling through borders is also a bigger challenge to tackle with. In order to address all these issues all OGAs are to be brought to one single electronics platform to be created, established and managed by customs for beeter border control and management.
A modern customs administration to achieve government`s strategic objectives requires a clear policy, legal, and regulatory framework aligned with national legislation; bilateral, regional, and multilateral agreements; and international standards, such as the WCO Revised Kyoto Convention on the Simplification and Harmonization of Customs Procedures and the WTO TFA. This framework should be supported by transparent and predictable customs procedures. In that context, customs administrations worldwide are developing risk management, single- window, advance rulings, authorized economic operators (AEOs), and post- clearance audit programs for their countries to achieve both long-term and short term objectives of the organizations.
In order to achieve these objectives the Customs officials need to have specific knowledge, skills, and behaviors. The customs profession has unique and varied roles, only some of which include customs inspector, customs service officer, import and supply chain security specialist, post- control/clearance auditor, risk targeting officer, intelligence officer, and customs investigator. Senior management is required to address this issue by ensuring recruitment of qualified work force and their proper trainings both before and during job to make them effective and efficient in discharge of their duties in line with both national and international requirements.
Pakistan Customs when analyzed with reference to above theoretical frame work and international best practices has achieved a reasonably well progress in some areas and still a lot more to be done in few areas to stand shoulder to shoulder with other world customs administrations. It started its journey from manual clearances to initially partial computerization and thereafter indigenously developed, web-based computerized clearance system (WeBOC) , providing end to end automated customs clearance of import and export goods. The system was developed jointly by the Pakistan Customs and PRAL. Presently WEBOC has over 45,000 registered users i.e. businesses, government departments (Anti-Narcotic Force, Engineering Development Board, State Bank of Pakistan, Ministry of Climate Change, Railways, Income Tax Department, Provincial Motor Registering Authorities, Commercial Banks etc).
Presently, both import as well as exports consignments are cleared through AI based Risk Management System under WeBOC where more than 48% of import and more than 69% of export consignments are cleared immediately through Green Channel ( without any intervention), rest are cleared under yellow and red channels depending upon system driven risk profiling with no manual intervention. It is completely paper less system with online manifest filing and online payments modules, working on 24/7 basis, operations based on home developed Risk Management system (RMS) (Green, yellow and Red Channels ),ensures Transparency (No surprises for trade, Less interaction with the Customs), All customs processes performed online by customs staff, Communication with the custodians of goods/port authorities through EDI, Online communication with traders and clearing agents, Importer’s representative / clearing agent presence not required, Assessment based on examination reports and images, First-in, First-out (FIFO) based assessment scheme, Online adjudication process, Stricter controls and checks (complete log of all activities) and Less demurrages, less clearing/handling charges.
Its modules include Goods Declaration, Warehousing and module to handle Break-bulk, modules to handle Commercial Transit cargo for Afghanistan, Manufacturing Bonds, Reverse Transit and Clearances from Border Customs Stations. Examination of goods reduced from 100% to 30%.
The new additions to the existing WeBOC system are modules for Anti-Smuggling, E-Auction at sea ports, TIR automation as per international requirements and Carnet de passage which are great value addition towards fully automated computerized clearances.
In line with international commitments Pakistan has ratified the WTO`s Agreement of Trade Facilitation in the year 2015 and therefore under its article 10.4 committed to the establishment of trade related National Single Window (NSW). Pakistan Customs was entrusted as the lead agency which took the challenge with utmost care and responsibility. Pakistan Single Window (PSW) is the logical corollary to fulfill this international commitment. PSW is an integrated digital platform that allows parties involved to trade by lodging standardized information and documents with a single entry point to fulfill all import, export and transit related regulatory requirements. Its main aim is to reduce time and cost of doing business by digitalizing Pakistan`s cross border trade and eliminating paper based manual process. Due to online connectivity with NADRA,PTA and FBR it has done away with 22 documents required for KYC of traders which is now done in an automated environment , so for 53,064 traders are registered at this platform and the number is increasing rapidly. 1.5 Million documents issued by various banks for EIF and EEF per year have been seamlessly replaced with automated issuance of these documents and the trader is no more required to visit bank for this purpose. The registration process with PSW can be done in just 30 minutes. There are more than 74 OGAs registered with PSW. Information requirement of Many OGAs have been simplified and harmonized. Payments of dues of all OGAs have been made possible with online banking transaction as a result both cost and time of doing business has been reduced significantly. Due to these efforts Pakistan has managed to improve its place by 31 spots on the Trading across Border Index as the ranking jumped from 142nd to 111th, a major achievement towards ensuring ease of doing business.
When it comes to anti smuggling Pakistan Customs has also fared well especially during last year. Possible national crises of shortage of essential commodities like sugar, wheat, wheat flour and urea was averted due to strict anti smuggling drive in bordering provinces of Baluchistan and KPK. Other Law Enforcement Agencies (LEAs) were taken on board and joint check posts were established with all required logistical and human resource. Resultantly both inward and outward smuggling was checked effectively with stoppage/reduction in flow of illegal trade of goods and contrabands across the borders. This directly resulted in significant increase in legal trade in the country especially in bordering provinces hence there has great increase in revenue collection at customs station in these provinces.
In addition to above and to meet the challenges of modern times legal and administrative structures have been built by creating separate formations to deal with issues relating to Intellectual property Rights(IPR), Marine, National Nuclear Detection Architecture, IOCO and Post Clearance Audit (PCA) etc to meet future challenges. Customs Academy of Pakistan (CAP) has transformed itself to a world class training facility where training programs are conducted for fresh recruits both officers and officials and refresher courses for the already available work force.
Despite above progress in various fields Customs faces numerous challenges of developing further Risk Management system, fully automated system for auctions, Law & prosecution, development of robust PCA, shortage of required human resources, trainings both local and international for available human resource, budgetary constraints, shortage of investment in IT both hardware & soft wares etc.
Pakistan customs has always risen to the clarion call of the occasion and met the challenges whenever confronted with and is fully capable of doing so in future also to carry the mettle further with its new and traditional partners to play its due role amongst the customs fraternity across the globe.
References: (i) Institutional and Professional Foundations of Modern Customs Administration by János Nagy and Hubert Duchesneau at IMF
(ii) www.fbr.gov.pk (iii) www.psw.gov.pk (iv) www.weboc.gov.pk
Pakistan Customs- Confluence of Tradition and Innovation
World Customs Organization (WCO) , an international organization created in 1953 to promote cooperation among 185 member states has chosen theme of “Customs Engaging Traditional and New Partners with Purpose” for International Customs Day (ICD) being celebrated on 26th January 2024. Pakistan, being an active member of WCO since 1955, through its national customs administration Pakistan Customs is also celebrating ICD across Pakistan. This years’ WCO ICD theme “Customs Engaging Traditional and New Partners with Purpose” is reflective of importance of various partners involved in Customs procedures and processes.
Pakistan Customs, under Federal Board of Revenue (FBR), is an important national institution which is tasked with responsibilities of implementing fiscal, public safety, environmental and national security policies associated with entry and exist of goods through national borders. Pakistan Customs not only collects duties and taxes on imports and exports of goods but also implements various national policy regulations pertaining to national, public and environmental safety.
Pakistan Customs in performance of its national tasks partners with multiple national regulators to implement their policies, provides services to multitude of users of Customs services and also seeks services from number of service providers in discharge of its functions. Overall purpose of this partnership is to meet these national policy goals.
This years’ ICD 2024 theme aptly requires Pakistan Customs to reflect upon its relations with traditional partners as well as to explore need for new partners in ever evolving needs of trade and industry, national and international obligations concerning trade. Pakistan Customs needs to review its performance as to how far this association has helped Pakistan achieve it key economic goals of revenue collection, reducing cost of doing business and protecting society from harmful impacts of imports of contraband goods and smuggling.
It is worthwhile here to mention few important traditional partners from private and public sector. Private sector partners are represented by the business community mainly importers, and exporters, banks and Insurance companies, clearing and forwarding agents, shipping lines and their agents, private port operators, stevedores, ship chandlers, auctioneers, bidders, transporters, private and public bonded warehouses, lawyers, courier and logistic companies including bonded cariiers, airport service providers, customs consultants etc. Leading Public sector port operators are Karachi Port Trust, Port Qasim Authority, Gwadar Port Authority, Civil Aviation Authority, Pakistan Railways and National Logistics Cell (NLC). Important Public sectors partners and regulators with which Pakistan Customs works together include Ministry of Finance (Fiscal Policies ), Ministry of Commerce (Tariffs, Import and Export Policies ), Ministry of National Food Security (Department of Plant Protection, Department of Animal Quarantine), Ministry of Narcotics Control ( Anti-Narcotics Force), Pakistan Nuclear Regulatory Authority, Pakistan Telecommunication Authority, Ministry of Foreign Affairs, Ministry of Health ( Drug Regulatory Authority of Pakistan or DRAP) Intellectual Property Organization of Pakistan, Ministry of Interior (Civilian Law Enforcement Agencies, Immigration and Passports etc), Ministry of Industry ( Engineering Development Board ), Ministry of Climate Change, Motor Registration Authorities of Provinces, Provincial Departments of Antiquities, Trade Development Authority of Pakistan, State Bank of Pakistan, National Bank of Pakistan, Inland Revenue Service, Auditor General of Pakistan.
One of the important public private partner Pakistan Customs has worked along for many years is PRAL (Pakistan Revenue Automation Limited) which has a far-reaching impact on working of Pakistan Customs. It helped Pakistan Customs in achieving digitization and automation goals. Current automated Customs Clearance System called WeBOC ( Web Based One Customs ), which is home grown information technology solution, is joint achievement of PRAL and Pakistan Customs.
Given the complex nature of business transactions and need for efficient customs processes Pakistan Customs is not oblivious of engaging new partner to further improve its services. It is committed to engage all stakeholders on single platform envisaged under Pakistan Single Window (PSW). PSW shall provide a digitized platform to all partners and stakeholders to communicate with Pakistan Customs’ automated clearance system digitally in a secured environment. Introduction of these steps has improved the Pakistan’s ranking in World Bank’s Ease of Doing Business.
By engaging Pakistan Telecommunication Authority under the scheme of DIRBS (Device Information Registration and Blocking System ) a safe and efficient system of mobile registration system has been put into place ensuring realization of duty and taxes and prevent misuse of mobile devices in anti-state activities.
Pakistan Customs through its Customs Intelligence Wing cooperates and coordinates with international partners to combat trade-based money laundering and terrorist financing in addition to its traditional role of control international smuggling of goods especially high value items and narcotics.
Pakistan Customs is also partnering with Strategi National Partners to control import and export of nuclear substances to make Pakistan and rest of the world safe and secure from dangers of radioactivity. Pakistan Customs is partnering with Ministry of Climate Change and the Provincial Departments for tackling Environment and Climate issues associated with entry and exist of substances and materials which hazardous to the environment.
Pakistan Customs on the International level is cooperating with national customs organizations of several countries (China, Iran, CASs- Central Asian States) for mutual sharing of information through EDIs to combat the menace of under/over invoicing.
Pakistan Customs is going through continuous process of upgradation of its information technology spectrum to ensure seamless and efficient services to its partners and had never shied away from meeting new challenges. Pakistan Customs has steered Pakistan from many challenges. One example is successful and uninterrupted provisions of customs services during COVID 19 no matter that Pakistan Customs lost many lives, in all ranks and files , in the line of duty. Pakistan Customs’ anti-smuggling forces operate all over Pakistan and work in extreme conditions with limited resources and support to control the menace of smuggling.
Pakistan Customs plays a pivotal role in industrialization and promotion of exports in Pakistan. Leading initiatives towards this end are introduction of single unified Export Facilitation Scheme 2021, implementation of Advance Ruling System and roll out of Authorized Economic Operators (AEOs). On the front of Automated Clearance System, concepts of Clearance in the Sea and Air had been introduced and Customs is also moving towards Automated Entry and Exist System. These initiatives will definitely improve ease of doing business by reducing cost of doing business and ultimately lead to increase in Foreign Direct Investment (FDI) in Pakistan.
Current years’ ICD 2024 theme rightly echoes and reminds Pakistan Customs to review, reinforce and revitalize relations with traditional partners and to look for new partners with purpose to achieve fiscal, social, economic, environmental, and strategic national policy goals.
Customs Engaging Traditional and New Partners with Purpose: The role of Pakistan Customs
The World Customs Organization (WCO) has set the tone for the year 2024 by dedicating its yearly theme ‘Customs Engaging Traditional and New Partners with Purpose’ to purposeful partnerships. The initiative underscores the transformative nature of global commerce and the imperative for customs authorities worldwide to adapt and collaborate. The theme draws attention to the evolving landscape of customs operations in a globalized world, emphasizing the importance of collaboration with both traditional and emerging partners. Against this international backdrop, the role of Pakistan Customs becomes vital, navigating the challenges and opportunities posed by long-established and new partners.
The WCO’s theme for 2024 reflects a profound acknowledgment of the transformational forces influencing customs operations globally. Traditionally, customs administrations have been crucial in facilitating the clearance of international cargo, enforcing laws/regulations and collecting revenues. There is no gainsaying the fact that traditional partners, often established through historical trade relationships, remain integral to the customs ecosystem. These partners bring extensive experience rooted in conventional frameworks which facilitate smoother cross-border transactions.
However, the contemporary global trade environment demands a more robust and all-embracing approach. The inclusion of ‘New Partners’ signifies the recognition of non-traditional stakeholders, such as technological innovators, private sector stakeholders, non-governmental organizations, academic and research institutions, in shaping the future of customs operations. The landscape of customs engagement is expanding, encompassing diverse stakeholders with varied interests and expertise. The challenge lies in leveraging these partnerships with a clear purpose of streamlining and modernising customs processes and combating illicit activities such as trade frauds, mis-invoicing, mis-declarations and smuggling.
One group of new partners comprises technology firms and innovators. In the context of Pakistan Customs, engaging with these partners involves tapping into cutting-edge solutions such as artificial intelligence, Machine Learning, data analytics and blockchain. Engaging technology-driven entities enables Customs to modernize its processes, enhance efficiency, and bolster risk management systems. It is reassuring to assert that Pakistan Customs has embraced these state-of-the-art technological innovations, positioning itself as a future-ready organization. However, these technological solutions need to be further expanded to ensure wider embrace and applicability.
Another pivotal set of new partners includes members of the private sector, such as logistics companies, freight forwarders, manufacturers, and trade associations—businesses playing critical role in the supply chain. By establishing purposeful partnerships with private sector stakeholders, Pakistan Customs can familiarize itself of industry trends and best practices by cultivating a more streamlined and robust trade ecosystem This collaboration should extend beyond routine compliance to create solutions aimed at addressing shared challenges and should aim at developing innovative solutions, putting in place mechanism of improved information exchange and developing mutual understanding of the challenges faced by both sectors.
Academic institutions and research organizations form another vital category of new partners. Partnering with these institutions will enable Pakistan Customs to access expertise, insights, and research that contribute to informed decision-making. For instance, research collaborations can play a crucial role in accurately identifying the scale and devising effective strategies to combat issues such as mis-invoicing and smuggling. Academic partnerships can also facilitate capacity-building initiatives, ensuring that customs officials are equipped with the latest knowledge and skills needed to keep them abreast of the latest global trends.
In an era marked by rapid technological progress, customs administrations, including Pakistan Customs, are obliged to actively engage with these transformative elements. This engagement requires a careful equilibrium between maintaining established customs practices and adopting innovative approaches to accommodate the evolving requirements of the global supply chain. As the linchpin of international commerce, the global supply chain calls for a customs strategy that goes beyond traditional methods. For Pakistan Customs, this means utilizing technology to improve cargo clearance efficiency, applying comprehensive risk management tactics, and using data analytics to maintain a competitive edge. It must stay in sync with the rhythm of the global supply chain, aligning its traditional duties with the challenges of a globally interconnected and technology-oriented trading landscape.
One of the critical areas where partnerships come into play is combating illicit trade. Pakistan, with its strategic geographical location, faces challenges related to smuggling, money laundering, and the unlawful movement of goods across its borders with Iran and Afghanistan. Engaging traditional partners, such as neighbouring countries and international law enforcement agencies, becomes imperative for effective border management. Simultaneously, embracing new partners, including technology firms specializing in surveillance and data analytics, can empower Pakistan Customs with advanced tools to enhance their enforcement capabilities. To further strengthen enforcement endeavours, a comprehensive whole-of-government approach is being employed. Given the resource constraints faced by Customs, other government agencies’ resources are being leveraged by Pakistan Customs in the fight against smuggling and these collaborative endeavours can benefit immensely from innovative technological solutions.
The theme’s emphasis on purposeful engagement is particularly relevant for Pakistan Customs in the context of its limited resources. Striking a balance between traditional and new partners requires a clear strategic vision and effective resource allocation. Traditional partnerships may provide stability and reliability, but embracing innovation and new collaborations is essential for staying agile and responsive to ever-changing challenges. Besides, embracing technological innovations drives efficiency.
Despite its challenges, Pakistan Customs has demonstrated commitment and innovation in aligning with the objectives of the WCO. Leveraging traditional partnerships with neighbouring countries, such as Afghanistan, Iran and China, Pakistan Customs has strengthened cross-border cooperation to address shared challenges. Concurrently, initiatives like the integration of modern technological solutions, such as artificial intelligence and Machine Learning, showcase Pakistan Customs’ dedication to engaging with new partners for enhancing efficiency and effectiveness.
Pakistan Customs-A Resilient & Progressive Agency for Trade & Border Security
Changing our public sector governance system against a rapidly changing global landscape due to technological revolutions, industrial advancements, environmental degradations, pandemics leading to international and national health crises, and geopolitical contours is inevitable. However, growth ensuring efficient service delivery, concerning these factors, may perhaps be a choice by a government agency. Pakistan Customs is the guardian of physical borders and economic frontiers contributing major revenue collection and also exporting goods into the world economies thereby attracting potential foreign reserves for the state. Pakistan Customs as an agency is primarily responsible for facilitating international trade and regulating the moment of imported and exported goods. Another significant role performed by Pakistan Customs is to safeguard consumers, businesses, environment, agriculture, and industry by thwarting any attempt to clear hazardous substances, weapons, ammunition, unreported currency, spurious medicines, narcotics & other contrabands, smuggled goods, improperly classified goods, unlicensed technology and goods contravening to intellectual property rights laws of the land. Pakistan Customs, therefore, is the first line of defence against the unlawful entry of imported and exported goods. To face and meet these challenging responsibilities, officials of Pakistan Customs are working round the clock at forty-six (46) entry and exit points across the country.
Unlike the best international practice of simplifying and seamless border security operations in terms of ‘one face at the border’, here, we have multiple agencies working in silos and at times performing redundant responsibilities. Even though the officials of Pakistan Customs are not equipped with adequate tools like weapons, technology gadgets, and scanning equipment, etc., the annual performance of Pakistan Customs has been remarkable. The following data explains the contribution of Pakistan Customs in terms of revenue collection as well as operations against smuggling:
Remarkably, Pakistan Customs has been able to contribute around 40-50 percent (%) of the Federal Board of Revenue’s annual revenue collection (net) in the last six (06) years. The year-wise progressive performance in curbing the menace of smuggling is evident in the following table:
Considering the current theme of 26th January, International Customs Day, “Customs Engaging Traditional and New Partners with Purpose”, it is high time to realize the need for a well-coordinated inter-agency collaboration and cooperation leading to secure and efficient services to the trade community, businesses, consumers, and international travellers at various entry-exit points of the country. With the rapidly changing global advancements in technology, the importance of well-coordinated inter-agency cooperation has become of tremendous importance. Trade regulation and facilitation face perpetual challenges in the form of terrorism, bilateral & and multilateral trade agreements, smuggling of contraband, drug trafficking, natural disasters, pandemics, and various threats to national security. A single agency, thus, cannot cope with these challenges and accordingly requires a comprehensive inter-agency collaboration strategy.
During the COVID pandemic, customs administrations around the world realized the need for interagency cooperation underlined by robust information sharing, application of risk management principles, and automation to keep supply chains intact, especially for essential commodities like foodstuff and medicine. Pakistan Customs played an effective role in developing and implementing procedures that resumed cross-border trade while minimizing the threat to public health. The lessons learned during that process are now being broadly applied to the transformation of customs processes.
Pakistan Single Window is a vivid and practical demonstration of inter-agency collaboration. It provides a single platform for electronic clearances of imported and exported goods with hassle-free speedy clearance leading to reduced cost and ease of doing business. Under the existing trade structure, though a complex one, Pakistan Customs is collaborating with more than fifty (50) entities including financial institutions, Other Government Agencies (OGAs), and PSI companies apart from 75,000 plus registered users (importers, exporters & clearing agents).
The role of Pakistan Customs, being the lead agency in trade facilitation, becomes more crucial in ensuring a safe, secure, and facilitated trade regime. Traditionally, Pakistan Customs has witnessed a cordial relationship with other operational agencies from the public and private sectors at entry-exist points and customs stations. Nevertheless, a lot more is required to be done in this realm. The improved legislation, innovative governance policies, and the use of advanced technology may lead to achieving the goal of sufficient revenue collection while ensuring the country’s economic stability and border security.
Lastly, the functions and responsibilities of Customs administrations have become so critical that it is far beyond the capacity of the existing governance structure and resources allocated to it. Pakistan Customs historically proved itself as a dynamic and resilient organization, initiating, welcoming, absorbing, and delivering institutional reform goals. It has the potential to build the country by contributing a major chunk of national revenue as well as defending against national security threats provided given due legal mandate along with required operational resources. That may be the suitable way to respond to the ever-advanced global trading system posing every day a new challenge.
Customs’ Partnership with Trade and other Government Agencies
The World Customs Organization has set a theme of the year 2024 for Customs to engage with traditional and new partners with purpose. This reminds the WCO SAFE framework of standards which was approved by the WCO council in 2007. The framework contained three pillars of establishing partnership for security and facilitation of trade. The first pillar contained Customs to Customs cooperation, second pillar Customs to Trade and third pillar was about forging partnership with other Government agencies related to cross border trade. The aim of the frame work was security and facilitation of cross border trade. The SAFE framework provided detail guidelines and principles for establishment of partnership with trade and government regulatory agencies.
Another international instrument standing for forging a close partnership with international trade stakeholders is the Trade Facilitation Agreement, 2013 to which Pakistan is a signatory. It is estimated that by the implementation of TFA the global trade cost can be reduced by 14 percent and it will add 2.7 percent to world export growth. The article 8 of TFA stipulates the provisions for Border Agency Cooperation. It provides that each Member shall ensure that its authorities and agencies responsible for border controls and procedures dealing with the importation, exportation, and transit of goods cooperate with one another and coordinate their activities in order to facilitate trade. Moreover, it requires that to the extent possible and practicable, cooperate on mutually agreed terms with other Members with whom it shares a common border with a view to coordinating procedures at border crossings to facilitate cross-border trade. Such cooperation and coordination may include (a) alignment of working days and hours; (b) alignment of procedures and formalities; (c) development and sharing of common facilities; (d) joint controls; (e) establishment of one stop border post control.
To achieve the objectives of facilitation and compliance Pakistan Customs’ reform initiatives such as establishment of Pakistan Single Window (PSW) and electronic customs clearance system (WeBOC) have provided a robust platform for seamless exchange of information at one portal where hassle free trade processing and issuance of regulatory certificates and NOCs by more than a dozen regulatory institutions is accomplished. Now 100% of Pakistan’s cross border trade transactions are taking place through PSW and WeBOC system online electronically. This has significantly reduced the time and cost of doing business in Pakistan that is why Pakistan has demonstrated jump improvement on Ease of Doing Business Index of the World Bank. The WeBOC modules such as Risk Management System for clearance of goods based on the international best practices and developed on the principles of the WCO guidelines has been instrumental in reduction of time of clearance from three – four days to few hours. Now more than 73% of cargo is cleared in 24 hours from port area saving the cost of millions of dollars and supporting the economic growth in country. Another mile stone recently achieved by the Customs for facilitating the exporters is timely and hassle-free payment of rebate claims. No more offices are visited by the exporters for their rebates. It is all computerized, online and automated based on the computerized risk management system where amount of rebate claims are paid to exporters in their bank account through State Bank of Pakistan. Pakistan Customs has already using AI and Machine learning techniques to Customs clearance risk management system and have planned to take the Customs system to advanced technologies.
Customs has been engaging with stakeholders for increasing compliance and trade facilitation in different ways. Firstly, Customs maintains a close coordination with Chambers of Commerce and industry, Federation of businesses and various trade associations by holding dialogue and consultations to get their input regarding trade-related policies, regulations, and procedures. The engagement provides valuable insights to design and implement effective trade facilitation programs.
Why the WCO places emphasis on establishing a strong partnership with trade and other stakeholders has many objectives. For example, the close coordination with trade partners will bring transparency, predictability to procedures and help in elimination of corrupt practices. This is one of the components of the WCO Arusha Declaration 1993. On the other hand, partnership will bring higher level of compliance for Customs and for trade regulatory bodies as the trade will be having clear and accessible information about trade regulations, customs procedures, and documentation requirements.
As a way forward, Pakistan Customs needs to further build on the milestones so far achieved. Despite existing level of collaboration with trade bodies a regular interactive session for the Capacity building and awareness programs at the Federation houses, Chamber of commerce should be scheduled. This will enhance the understanding and compliance of stakeholders with customs regulations. Another essential element for improvement of any system is the mechanism of regular feedback and evaluation. Customs should seek feedback and input from stakeholders on the effectiveness of trade facilitation measures on regular basis. A system should be devised that traders shall provide comments and feedback under confidential manner for further improvements. Feedback can be collected through surveys, consultations, or dedicated channels for reporting concerns or suggestions. The feedback should be used to assess the impact of customs procedures on stakeholders and guide continuous improvement efforts.
We lack in an area where it comes the recognition and appreciation of the stakeholders where they are good at compliance of laws and procedures. Customs should acknowledge and appreciate stakeholders who demonstrate compliance with customs regulations and actively engage in trade facilitation efforts. Such recognition be in the form of awards, certificates, or incentives, encouraging stakeholders to maintain a positive approach toward customs requirements and further promote trade facilitation measures.
In conclusion, customs can effectively promote compliance and trade facilitation by forging partnerships with stakeholders and collaborating purposefully. Through stakeholder engagement, capacity building, transparency, and technological advancements, customs can create an environment that ensures higher compliance level and trade facilitation essential for reducing cost of doing business and economic development of Pakistan.
Extended Role of Pakistan Customs in Today’s World
Customs has not only historically been an essential service for trade policy-making, legislation, regulation, facilitation and control, but, in most recent times, it has become an inevitable institution to fulfill the pressing requirements of conducting and regulating a nation’s trade.
From its very primitive role of collection of levies, duty and taxes on importation and exportation, it gradually transformed itself to offer revenue analysis and prediction, whereby the governments of time have had successfully planned, engineered and executed various budgetary goals and carried the nation forward.
Customs, in Pakistan, has played an instrumental role in enacting and implementing various national laws pertaining to goods at ports and protected the societal interests by preventing ingress of unwanted goods and egress of essentially wanted goods and services in and from the country. Moreover, goods making their way into the country through smuggling have also been dealt with robust counter-smuggling administration by preventive Collectorates and Directorates of Pakistan Customs.
Recently, more stringent controls have been put in the place and, using appropriate legal framework, such smuggled goods are seized and met with just legal treatment. New enactments have further increased responsibilities of Pakistan Customs to see trade offences through different angle i.e. of money laundering and violation of foreign exchange regulations in order to formalize the economy. Nevertheless, effective deterrence is attained only by conducting intelligence based operations and snap checking of goods, incorporating element of surprise. With these extended roles, Pakistan Customs has become a pivotal organization for country’s socio-economic wellbeing and prosperity.
Traditionally, Customs had been at play since the times before Christ. It was begotten as a service of revenue collection in ancient Greece and the same continued till advent of modern era. The logic for prescription of such duty and taxes was, firstly, revenue collection for national treasure and, secondly, levying taxes in exchange of giving access to the local markets, roads, facilities and infrastructure to foreign goods.
With the beginning of nineteenth century, countries like Germany used high rates of tariff (duty and taxes) for protecting domestic markets / products from undesired competition of foreign origin goods. This approach was adopted by many country and is, till date, used by developing countries to protect their domestic industry. However, with the inception and prevalence of new world order and concept of neoliberal economies, the world moved towards Free Trade Agreements, Regional Trade Agreement and Preferential Trade Agreements, which were characterized by removal of tariff and non-tariff barriers, use of technology and simplification of procedures for imports and exports
The world is moving, inventing, producing and innovating at ever highest tempo, which in turn has beefed up speed of goods movement, trading, importation and exportation. Manufacturing of an advanced article / device might take place in different countries at different times i.e. each country might perform a particular part in manufacturing of the product: sifting, melting and forging of the metal at one place, re-melting, purifying and shaping at another, while finishing / manufacturing and assembling at yet another place. To cater to the needs of these advanced forms of trade and business along with traditional styles of trading, advancement only in information technology is not sufficient. These require extensive legislation, field specialization, supportive domestic authorities, appropriate trade and investment policies, infrastructure, tools and machinery.
To fulfill trade and economic needs of today’s world, Pakistan Customs has always worked diligently and brought renovation and reforms within Customs and its sistering organizations. Some instances of the said innovation and reforms are development of Pakistan Single Window (PSW) and enactment of Export Facilitation Scheme (EFS). On one hand, PSW has facilitated all exporters and importers in claiming of goods by filing of goods declaration and getting delivery by fulfilling all requirements in the system; and on the other hand, the EFS has provided facility to genuine manufacturer / industrialists to import goods free of any duty or taxes, perform value addition / manufacturing and export the same. Using PSW, the regulatory bodies like PSQCA, MoFA, DPP, Customs Laboratory etc., can upload the certificates, licenses, permissions, reports and observations / instructions in the system for required Customs action. Besides, optimum use of technology and qualified human resource has also rendered Customs suitable to conduct statistical analysis of the revenue and offer complete and accurate projection of the revenue (collected duty / taxes) so that targets assigned to FBR are achieved timely. This amalgam of HR, technology and regulation has sharpen the tools of Customs to enable Pakistan to compete with the world at large, apart from imposing full-fledge enforcement at seaports, airports, land customs stations and inland smuggling.
Legal trade and commerce has also always been under threat of disruption and failure at the hands of smuggling or, to simplify, illegal trade. Smuggling, as a menace, has never ceased to exist at global, continental, regional and national level. Goods are smuggling into or out of a country when duty and taxes or non-tariff barriers are raised. These restrictions and prohibitions may occur due to various national reasons; however, huge demand of restricted and prohibited goods allure the smugglers / delinquent elements for smuggling the goods through formal channels i.e. ports and informal channels i.e. undeclared stations / routes. On these fronts too, Pakistan Customs has laid down a robust enforcement and dealt with this menace with iron fist. At the port stage, the examination and classification of goods in correct HS code, application of valuation rulings and checking of importability and exportability of the goods is performed by Customs. All the goods that do not comply with the criteria prescribed by the national laws are dealt with stern legal action to create deterrence and preventing any further attempts of illegal trade. Moreover, Pakistan Customs seizes and reports seizures of smuggled goods having value of billions of rupees. These contraband find their way to local markets and sales points in Pakistan through undeclared customs station and routes. With limited human resources, Customs seizes these goods, arrests the smugglers and their accomplices and initiates criminal proceedings against them. The goods are ultimately confiscated and disposed of, while revenue collected from their auction is deposited in the government treasury.
In addition to enforcement against smuggling, Customs’ extended role in inquiring and investigating offences of money laundering, arresting the culprits and bringing them to the book, has become more important than ever. Money generated from sell of smuggling goods is kept hidden by the smugglers and is subsequently transported out of the country. Pakistan Customs, being premier counter-smuggling department, has to stop smuggling of goods, apprehend the culprits and their money and present them before competent courts of law. Whole of this episode culminates only when culprits are awarded appropriate legal punishments and penalties. It is noteworthy that intelligence-based operations, regularly conducted by the Customs, increase deterrence. Economy of Pakistan is protected against those ill-intensions and criminal acts. As such, all the goods that skip primary Customs controls, through coordinated offence of smuggling, are brought back to required legal action by Customs enforcement and intelligence.
Undoubtedly, enforcement and intelligence based operations of Customs are huge need of the hour, as the smuggling, though a global threat, has, in particular, negatively affected economy of Pakistan and flagrantly violated our laws. Coupled with empowerment of enforcement, strengthening and simplification of laws and procedures at clearance stage is needed as well. As part of economic policy, upgrading, advancing and revitalizing Pakistan Customs, a pro-reforms organization, as main player and leader in the country’s trade and commerce strategy would fetch remarkable outcomes. Owing to Customs effective role in facilitation and regulation of trade and commerce and deterrence against illegal trade / smuggling, the Customs has been a catalyst for its sistering agencies to bring improvements and reforms to facilitate trade and step up efforts for development of national economy and safety of society. In current era of economic crisis, Pakistan Customs has emerged as a victor at the national stage through fine accomplishment, consistent transformation, renovation and advancement as per criteria of modern times. The fitful response of Customs towards its extended role has enabled it to fulfill national expectations and uphold national trust.
Pakistan Customs-On Strengthening Partnership with Law Enforcement Agencies
The WCO has dedicated 2024 to “Customs Engaging Traditional and New Partners with Purpose”. With this theme in mind, and the ever changing dynamics of world, in terms of technology, the WCO has recognized the need to modernize and adapt to a new, more agile structure in order to keep up with the changing nature of global trade where existing partnerships with LEAs are strengthened and new dynamics of collaboration are explored for creating deep rooted enforcement infrastructure. This includes enhancing training and capacity building programmes, adopting new technologies and improving communication and collaboration with stakeholders. Through this new approach, the WCO aims to be better equipped in order to facilitate safe, secure and efficient trade, while promoting sustainable economic growth and development. This Modernization Plan is one of the key deliverables specified in the WCO’s Strategic Plan 2022-2025.
Pakistan Customs is committed to creating a more dynamic and responsive Organization that can better address the challenges and opportunities of the diversity in global economy as demanded in the 21st century. In the recent backdrop of FATF’s requirements, Pakistan Customs, as an organization has played a vital role in identifying the cases of TBML (Trade Based Money Laundering). It’s a complex and layered transaction of dirty money using legitimate trade channels. Pakistan has very vigilantly devised a mechanism of reporting all suspicious transactions to and from shell companies. After the enactment of Anti Money Laundering Act (AMLA), 2010, the financial Management Unit was established in terms of Section 6 of AMLA 2010. These FMUs are based in the State Bank of Pakistan and the Federal Board of Revenue, through its electronic database, is sharing data with these FMUs, which critically analyze all suspicious transactions and then report is back to the focal point. The focal point in this case is the Director General, Intelligence and Investigation (Customs) which has a number of different Directorates looking after and dealing with all such affairs. The Director Cross Border Currency Movement and the Directorate of DNFBPs. Pakistan Customs also has the inherited powers under the Control of Narcotics Substances Act 1997 and all such cases which are instituted by Customs under the CNSA, 1997, also required forfeiture of property and bank accounts as a result of pre and post seizure potential inquiry/investigations.
Pakistan Customs through a team of very professional and dedicated officers is doing its job to achieve its goals. The Enforcement Collectorates of Customs are also instituting cases of smuggling and all such cases when investigated may find some linkages to terror financing and then comes the role of our external partner namely National Authority for Counter Terrorism Activities (NACTA). NACTA is supported by various National intelligence agencies responsible for identifying and eliminating all terrorist groups which are being financed indirectly either through TBML, proceed of crimes under the CNSA 1997, DNFBPs and funding through charity are the money sources which need to be tapped and checked to bring all these transactions through legitimate and controlled channels. This would not only broaden the tax base but also bring the undocumented economy.
Pakistan Customs Engaging Other Partners-A Framework for Collaborative Governance
The World Customs Organization (WCO), established on January 26 1952, as Customs Cooperation Council, is an independent intergovernmental body withthe mission to enhance the effectiveness and efficiency of 185 representative Customs administrations that collectively process approximately 98% of world trade. The Secretary General of the World Customs Organization (WCO), Mr. Ian Saunders, has shown commitment to provide leadership and executive management of the priorities of Customs community at global level, including developing global Customs instruments, standards and tools, securing and facilitating global trade, protecting revenue collection, building Customs-business partnerships and delivering capacity building in support of Customs reforms and modernization. At the 89th WCO Policy Commission session held in Venice, he highlighted the evolving role of Customs professionals in an automated world and advocated for customer-centric approaches and the use of data, artificial intelligence and technology for efficient and effective Customs operations.
With this forward-looking motive in mind, the WCO’s theme for 2024 was launched by Secretary General as“Customs Engaging Traditional and New Partners with Purpose”.It is a call to the WCO Members to reassess their engagement strategies, both by deepening their existing alliances and by forging new partnerships in the ever-evolving global landscape. WCO has emphasized on following Key Calls to Action: Enhance Engagement with Traditional Partners, Forge New Partnerships, Collaborate with Purpose, Increase Diversity and Inclusivity in Engagements, Assess Impact and Adjust Strategies, and Leverage Technology and Data.
Pakistan Customs has played a pivotal role in the development of sustainable economy besides its regular function of revenue collection. There has been a paradigm shift towards enforcement functions emerging as a major challenge with clear targets. Besides automation and bringing all the stakeholders under one roof by implementing Pakistan National Single Window-PSW, supporting the WCO’s concept of facilitating the global transition to green trade and reducing its own environmental footprint, the establishment of the National Targeting Centre-NTS and creation of more Directorates and Enforcement Collectorates are also steps towards collaborative governance. This uphill task needs support from the internal as well as external partners as Pakistan Customs cannot act alone without taking into account the interests of its partners. Therefore, Customs Organization has taken up collaborative efforts with other partners to develop consultation, promote information exchange and cooperation and reduce the barriers to facilitate smooth flow of trade by jointly identifying bottlenecks and offering solutions.
Pakistan Customs as an organization has also taken major steps towards its restructuring with the support of World Bank and Asian Development Bank. World Bank’s initiative to support Pakistan Customs under the Pakistan Raises Revenue Program is one of the examples of external cooperation to make Pakistan Customs a modern and much more efficient organization. There are various capacity building programmes which are being run with the support of International Narcotics and Law Enforcement (INL) US Embassy, the United Nations Office on Drugs and Crime (UNODC) Country Office Pakistan and World Customs Organization under the CECAC Project which are some of the examples through which Pakistan Customs is getting support for capacity building of not only Mid-level senior officers but also the operational officers to perform their duties in a more professional manner. Pakistan Customs through its flagship initiative of Pakistan National Single Window has integrated and automated more than 70 various external stake holders to join hands and make the clearance process not only transparent but efficient by eliminating paper based manual processes and achieving digital transformation.
Pakistan Customs has also engaged its aviation carriers through ICAO and taken a giant leap in connecting the airline data through GTAS and advance passenger information (API) to profile high risk passengers arriving or departing Pakistan. Integration of IBMS and CDS data with the internal partners is also a value addition to the existing network. Pakistan Customs is also working in close coordination with National Counter Terrorism Authority (NACTA) where cases of seizures of currency and gold smuggling are taken up to probe aspects of terror financing and money laundering.
Needless to say, Pakistan Customs is committed to maintain international standards, foster mutual cooperation with other stake holders to facilitate legitimate trade, secure a fair revenue collection and protect the society in line with WCO mission. Pakistan Customs is actively collaborating with both long-standing partners and emerging allies, incorporating innovation and purposeful engagement to counter the expected challenges and seize future opportunities. It realizes the significance of adaptability and inclusivity in customs practices in the backdrop of ever-changing scenario of international trade and the commitment to creating a more purpose-driven, efficient, and interconnected global trade environment.
Strengthening Customs Measures to Combat Massive Smuggling Operations
Smuggling poses a significant threat to national economies, security, and fair trade practices. Customs authorities play a crucial role in curbing these illicit activities. To effectively tackle massive smuggling operations, it is imperative to implement following robust measures that address the root causes and enhance the capabilities of customs agencies.
- Advanced Technology Integration:
Embracing cutting-edge technologies such as artificial intelligence, machine learning, and data analytics can revolutionize customs operations. Advanced scanning systems, automated risk profiling, and real-time data sharing among customs agencies can significantly enhance detection capabilities.
- Collaborative International Efforts:
Smuggling often involves trans-national criminal networks. Strengthening cooperation between countries through information sharing, joint operations, and intelligence exchange is essential. The establishment of international task forces can provide a unified front against cross-border smuggling activities.
- Capacity Building and Training:
Invest in comprehensive training programs for customs officers to ensure that they are well-equipped to identify evolving smuggling techniques. Continuous professional development and knowledge sharing within the customs community can foster a culture of expertise and excellence.
- Strategic Risk Assessment:
Implementing a risk-based approach allows customs authorities to allocate resources effectively. By focusing on high-risk cargo, routes, and individuals, customs can optimize efforts and increase the likelihood of intercepting illicit goods.
- Legislation and Penalties:
Strengthening legal frameworks and imposing stringent penalties for smuggling can act as a deterrent. Clear and enforceable laws empower customs authorities to take decisive action against perpetrators, sending a strong message that smuggling will not be tolerated.
- Public Awareness Campaigns:
Engage the public in the fight against smuggling by raising awareness about its negative impact on society. Educate individuals on the legal consequences of participating in or supporting smuggling activities, fostering a sense of responsibility among citizens.
- Customs-Private Sector Collaboration:
Forge strong partnerships with the private sector, including shipping companies and logistics providers. Collaborative initiatives can enhance supply chain security, making it more difficult for smugglers to exploit vulnerabilities in the movement of goods.
- Investment in Infrastructure:
Upgrade and modernize customs infrastructure, including ports, border checkpoints, and monitoring systems. State-of-the-art facilities and equipment can improve efficiency, reduce bottlenecks, and enhance the overall effectiveness of customs operations.
- Whistleblower Protection:
Establish mechanisms to protect and incentivize whistleblowers who come forward with information about smuggling activities. Encouraging individuals to report illicit practices can significantly aid customs in identifying and dismantling smuggling networks.
- Continuous Evaluation and Adaptation:
Regularly assess the effectiveness of anti-smuggling measures and adapt strategies to address emerging challenges. Customs agencies must remain agile and proactive in the face of evolving smuggling tactics.
Conclusion:
Effectively curbing massive smuggling operations requires a multifaceted and dynamic approach. By integrating advanced technologies, fostering international collaboration, investing in human capital, and enacting strong legal frameworks, customs authorities can fortify their defenses and protect national interests against the threat of smuggling. Constant vigilance, adaptability, and a united global front are paramount in the ongoing battle against illicit trade.
Evolution of Pakistan Customs-An Agent of Change
The historical evolution of Pakistan Customs unfolds a narrative of distinct phases, navigating the trajectory from the pre-independence era to its contemporary eminence. Prior to the independence, Customs functioned under the rubric of the Sea Customs Act, 1878. Thus the independence of Pakistan in 1947 bequeathed a functional Customs organization to the newly founded state of Pakistan. The Customs Act of 1969 emerged as the cornerstone of the evolution of Pakistan Customs, replacing its colonial predecessor and providing a legislative tapestry befitting an independent nation. Embracing technological progress and cementing international alliances, notably through membership in the World Customs Organization, the apparatus of Pakistan Customs transcended its traditional role, cultivating an ethos of efficiency and transparency by adapting itself to the changing of international trade patterns. The journey of Pakistan Customs spanning over a period of almost one and half centuries and attendant transformations over this period are reflected by its different logos over time, exhibiting the scope and functions of Pakistan Customs through different phases its journey.
Pakistan Customs: Adopting the Whole of Government Approach
According to the World Customs Organization (WCO) the responsibilities of a customs administration are revenue collection; national security; community protection; trade facilitation; and collection of trade statistics. None of these responsibilities can be fulfilled if any Customs administration works in a silo.
This year the theme for International Customs Day is “Customs Engaging Traditional and New Partners with Purpose.” In other words, the World Customs Organisation(WCO) calls the customs administrations to enhance their collaborative efforts with relevant stakeholders: both old and new. In this regard, one approach that governments are adopting successfully is termed as the Whole-of-Government Approach (WGA).
The Whole-of-Government Approach (WGA) refers to joint activities performed by diverse ministries, public administrations and public agencies in order to provide a common solution to a particular problem or issue. The Approach calls for enhanced cooperation and collaboration between multiple national or international bodies and law enforcement agencies. It offers a more integrated approach to public service delivery, with an aim to eliminate duplication, optimize resources and create synergies to provide seamless services to the citizens and businesses. Customs cannot operate effectively without adoption of this approach.
A whole-of-government strategy implies that the systems deployed throughout government are able to communicate with one another. Pakistan Customs through the portal of Pakistan Single Window (PSW) has successfully demonstrated the efficacy of this strategy. PSW is an Integrated Digital Platform that allows parties involved in trade to lodge standardized information and documents with a single-entry point to fulfill all import, export, and transit-related regulatory requirements. It aims at reducing the time and cost of doing business by digitalizing Pakistan’s cross-border trade and eliminating paper-based manual processes. It aims at process re-engineering and back-end automation of participating government departments while offering integrated risk management for smarter controls, compliance and facilitation.
Due to the promulgation of Pakistan Single Window, the country has significantly improved its ranking on the UN Global Survey on Digital and Sustainable Trade Facilitation. This survey covers over 160 economies and 60 measures related to the WTO’s Trade Facilitation Agreement (TFA). The survey is conducted jointly by all five UN Regional Commissions, UNCTAD and a growing number of global and regional partners every two years. It is heartening to note that Pakistan’s trade facilitation score has improved from 56.99% in 2021 to 70.97% in 2023, primarily due to PSW.
The post-epidemic world has taught us one important lesson: that interdependence has become a matter or survival, as we ought to stand united in face of any natural calamity/disease. The recovery and healing of the world requires the governance systems to adopt an all inclusive approach. The Customs administrations being at the forefront of supply chain have one of the most important roles to play by ensuring safety and security of the global citizens. Similarly, Pakistan Customs should further adopt an open communication policy based on national and international collaborations. Information exchange (both domestic and international) using Inter-agency agreements, MLAs, MoUs should also be revived and strengthened.
Criminal networks have become increasingly sophisticated over a period of time. There is a dire need to identify new trends and domains so that resources can be deployed at the right areas. One glaring example of a recent surge in trans-national crimes has been discussed in a joint Study of the OECD and EUIPO “Trade in Counterfeit and Pirated Goods – Mapping the Economic Impact” (April 2016), complemented by another Study of the EUIPO on “Trade in counterfeit goods and free trade zones”(2018). These reports highlight that trade in counterfeit and pirated goods has grown from US$250 billion annually in 2008 to more than US$461 billion in 2013.
Another updated report on “The Economic Impacts of Counterfeit and Piracy” reveals that counterfeiting and piracy continue to grow at an astounding rate. Despite increased efforts by the private sector, governments, international government organizations and a growing number of NGOs, the problem is getting worse, not better. The infiltration of counterfeit and pirated products adversely affects the global economy and deprives governments of legitimate revenues for vital public services, forces higher burdens on tax-payers, results in loss of jobs and exposes consumers to dangerous and fake products. Such insightful reports clearly highlight the problem areas that need to be addressed by the Customs administrations globally.
There is a need to establish a task force within Pakistan Customs, mandated to study and identify similar priority areas so that relevant support functions can be strengthened adequately to address these pressing threats. A step in this direction has already been taken by the Customs Academy of Pakistan, by tasking Customs officers to write meaningful reports on different topics for later modification and policy-making. This idea of “knowledge-creation” appears like a small step but it shall go a long way in enabling us to strategize effectively, while fulfilling our international obligations.
Despite all internal and external challenges, Pakistan Customs is doing a great job. It is one of the most automated departments of the government and has recently achieved a historical landmark in coordination with National Logistic Corporation (NLC) by clearing the first ever shipment under the multi-modal TIR Convention. Besides Directorate General of Transit Trade Karachi and NLC multiple other agencies were actively involved in this historic shipment including: PNC-ICC, terminal operator QICT, International Road Union (IRU) etc. This initiative will boost transit trade within Pakistan and bring more trading opportunities for Pakistani and regional business community. With such initiatives, it would not be wrong to conclude that Pakistan Customs is effectively engaging traditional and new partners with purpose. All we need to do is to keep improving and keep evolving to match the pace with which the world is moving.
Mr. Sharjeel Jamal
How Pakistan’s Customs System Needs Reform to Boost Economic Growth
Pakistan is a country with immense potential for development and prosperity, but it faces many challenges in its trade and taxation policies. One of the key areas that needs urgent reform is the customs system, which is plagued by inefficiency, corruption, and complexity.
The Problem of Multiple Collectorates
Currently, Pakistan has multiple collectorates that handle imports, exports, and anti-smuggling activities. These collectorates have different policies, approaches, and systems, and there is no coordination or integration among them. This creates confusion and problems for the traders, who have to deal with different rules and regulations at different points of entry and exit.
Moreover, the multiple collectorates also lead to improper processing of data, under-valuation, smuggling, and mis-declaration of goods, which result in revenue loss and unfair competition. According to a report by the World Bank, Pakistan loses about 9.5% of its GDP due to trade mis-invoicing.
The Need for a Single Collectorate and a Unified System
To address these issues, Pakistan needs to adopt a single collectorate model, where all the customs functions are performed by one department, named Customs. This department should have the authority and responsibility to control and monitor everything that goes in and out of Pakistan, including goods, people, and money.
Furthermore, Pakistan needs to implement a unified and modern system for customs clearance, that is compatible with international standards and best practices. Such a system should be based on automation, risk management, and post-clearance audit, rather than manual inspection, intervention, and adjudication.
The Benefits of Customs Reform
By reforming its customs system, Pakistan can achieve many benefits, such as:
- Ease of doing business: A simplified and streamlined customs process will reduce the time and cost of trade, and improve the competitiveness and attractiveness of Pakistan as a trading partner and destination.
- Increased tax revenue: A transparent and efficient customs system will enhance the tax base and collection, and curb the evasion and leakage of taxes.
- Accountability and governance: A centralized and integrated customs system will improve the oversight and accountability of the customs officials and the traders, and reduce the opportunities and incentives for corruption and malpractice.
- Sustainable development: A modern and compliant customs system will facilitate the implementation and enforcement of environmental, social, and health standards, and promote the trade of green and ethical products.
The Examples of Successful Customs Reform
Pakistan can learn from the examples of other countries that have successfully reformed their customs systems, such as:
- Singapore: Singapore has one of the most efficient and effective customs systems in the world, ranking first in the Trading Across Borders indicator of the World Bank’s Doing Business report. Singapore has a single customs authority, the Singapore Customs, which handles all the customs functions, including trade facilitation, revenue collection, and border security. Singapore also has a fully automated and paperless system, the TradeNet, which allows the traders to submit and process all the trade-related documents electronically, and obtain the customs clearance within minutes.
- Turkey: Turkey has made significant improvements in its customs system in the past two decades, as part of its efforts to join the European Union and integrate with the global economy. Turkey has reduced the number of customs offices from 225 to 81, and consolidated the customs functions under the Ministry of Trade. Turkey has also implemented a modern and integrated system, the Turkish National Customs System (TNC), which enables the electronic submission and exchange of trade data, and the risk-based selection and inspection of goods.
The Way Forward for Pakistan
Pakistan has taken some steps to reform its customs system, such as introducing the Pakistan Customs Computerized System (PaCCS) in 2004-05, which increased the revenue by approximately 43% per year, and launching the Pakistan Single Window (PSW) in 2021, which aims to provide a one-stop platform for trade-related procedures. However, these initiatives have faced many challenges and limitations, such as the closure of PaCCS in 2010, and the lack of integration and compatibility of PSW with the existing customs clearance system, the Web-Based One Customs (WeBOC).
Therefore, Pakistan needs to accelerate and deepen its customs reform, by adopting a holistic and comprehensive approach, that involves the following actions:
- Establishing a single collectorate and a unified customs authority: Pakistan should merge and streamline its existing collectorates and customs functions, and create a single and centralized department, named Customs, that has the mandate and capacity to handle all the aspects of customs administration and management.
- Implementing a modern and integrated customs system: Pakistan should replace its outdated and fragmented customs systems, such as WeBOC and PSW, with a new and advanced system, that is based on automation, risk management, and post-clearance audit, and that is aligned with the international standards and best practices, such as the World Customs Organization (WCO) Framework of Standards to Secure and Facilitate Global Trade (SAFE).
- Strengthening the customs leadership and governance: Pakistan should appoint and empower a competent and visionary leader for the Customs department, who can spearhead the customs reform and transformation, and ensure the accountability and performance of the customs officials and the traders.
- Enhancing the customs cooperation and coordination: Pakistan should improve the cooperation and coordination among the customs and other relevant stakeholders, such as the Federal Board of Revenue (FBR), the Federal Investigation Agency (FIA), the Immigration Department, and the trade associations, to ensure the smooth and seamless flow of trade and information.
- Building the customs capacity and culture: Pakistan should invest in the training and development of the customs staff, and foster a culture of professionalism, integrity, and service, among the customs officials and the traders.
By undertaking these actions, Pakistan can reform its customs system, and unleash its potential for development and prosperity.
Sana Mushtaq, Preventive Officer
Collectorate of Customs Enforcement, Karachi
We are One, We are Customs
Seeking the moon, amidst dark clouds
Listening for the mute wind’s song
Feel the life in each dead star
Listen the beat of forgotten heart
Explore the inner us and open your heart
We are different individuals pumping one heart
Let’s Enforce, Facilitate and Progress together
Remove the differences and stay One Customs
Seeking the moon of unity amidst dark clouds of differences
Waiting to listen the single heartbeat of Customs