A myriad of technological fields including Artificial Intelligence (AI), Cloud Computing, Internet of Things (IoT), Blockchain, and 5G technology have brought about many substantial benefits in digitalization. The swift progression of these digital technologies is fundamentally changing the way that governments, enterprises, and citizens across global nations connect with one another. Acknowledging the pivotal role of digital transformation, numerous countries have imposed comprehensive strategies and initiatives concerning digital adoption. It could be seen in some cases in the United Kingdom, the Netherlands, Australia, Denmark, Israel, Mexico, Singapore, Thailand, and Uruguay. The digital transformation varies among countries significantly, depending on the socioeconomic development strategies pursued by each respective country. In Vietnam, the Customs Department stands as a pioneer among state entities undertaking digital transformation. In 2023, for the sixth consecutive year, the General Department of Customs has topped the list of government agencies in the Administrative Reform Index, contributing to creating an equal, transparent, and open business environment, reducing costs for businesses, enhancing trade facilitation and the countrys competitiveness (Ministry of Finance, 2023). This result was achieved thanks to the application of information technology, and digital transformation in all management aspects of the customs sector from 2014 to the present. Presently, digital transformation permeates all aspects of the Customs domain. This encompasses employing Information and Communication Technology (ICT) for office streamlining, utilizing the Internet for information sharing, and adopting automated clearance systems for declaration submissions, risk management, validation, and processing, culminating in approvals issuance. Technology has fundamentally revolutionized the modus operandi of both Customs and governmental functionalities.
THEORETICAL FRAMEWORK FOR DIGITAL
Factors influence “Digital transformation”
Digital technology has significantly improved connectivity among governments, businesses, and individuals, making the adoption and effective use of digital tools crucial for successful digital transformation Enhancing digital literacy and fostering innovation are essential for expediting this process Governments must not only encourage businesses to adopt digital technologies but also implement policies that build trust in the digital environment by raising awareness and empowering users to manage digital risks The growth of Internet users is closely linked to technological advancements, particularly the availability of affordable smartphones, which have facilitated easier Internet access In developed nations like South Korea, Japan, and Iceland, nearly all citizens engage with the Internet daily, highlighting the impact of mobile technology on expanding Internet usage.
Governments globally are leveraging digital technologies to enhance the accessibility of ICT processes, services, and data for citizens This shift is accompanied by legal policies designed to support and streamline the digital transformation process.
The legal framework includes various legislative documents, regulations, and operational management texts, all of which represent the clearest picture of the feasibility when implementing digital transformation.
Infrastructure is vital for successful digital transformation, comprising two key elements: digital infrastructure and internet infrastructure These components are essential in advancing the journey towards a digitally transformed society.
The digital infrastructure plays a vital role in facilitating the successful implementation of digital transformation strategies, enabling seamless interactions among governments, businesses, and citizens (Ndubuisi, G., Otioma, C., & Tetteh,
G K., 2021) Although this one is not the sole determining factor, its importance cannot be underestimated Having a robust digital infrastructure establishes a strong foundation for unrestricted and global connectivity, enabling the free flow of information Therefore, investing in modern and cost-effective digital infrastructure is essential for nations aiming to embark on a successful digital transformation journey.
Data processing and analysis play a vital role in driving economic growth during digital transformation To enhance data accessibility and sharing, countries are investing in robust digital infrastructure, ensuring resilience and seamless connectivity.
The Internet infrastructure is essential for driving socio-economic development for businesses, governments, and individuals It has enabled the growth of new industries like software production and digital content, while also significantly boosting sectors such as e-commerce, tourism, and media publishing With nearly 125,000 online public services available, including approximately 1,400 level 4 services in areas like taxation and education, e-government services have thrived The establishment of e-governance systems and smart cities highlights the Internet's integral role in daily life An outdated Internet infrastructure would impede the digitization efforts of governments and businesses, underscoring its critical importance in the success of digital transformation initiatives.
In Vietnam's digital era, the labor market faces challenges such as a shortage of high-quality human resources and a rising unemployment rate, as highlighted by the DBT Center's report Experts warn that without embracing digital transformation within the next 5-10 years, around 60% of businesses may experience workforce downsizing Key drivers of this shift include automation, robotics, artificial intelligence, and digitization, which increase the demand for skilled labor and necessitate proactive workforce upskilling While digital transformation disrupts traditional models, it also creates new opportunities, such as the gig economy seen in platforms like Uber and AirBnB Therefore, the digital age not only reshapes labor supply and demand but also offers the potential for higher-income job prospects, provided that the workforce receives the necessary training and skills development from governments and businesses.
Scientific research is essential for driving technological innovation, as advancements in scientific knowledge serve as the foundation for new digital technologies These digital technologies largely rely on the discoveries made through scientific research.
In the last ten years, China's contributions to computer science journals have surged, nearly tripling and surpassing the United States in scientific publications within this discipline (Xie, Qingnan & Freeman, Richard, 2019).
Despite a growth in Chinese scientific papers, their global citation rate remains low at around 7%, significantly below the world average and the U.S rate of 17% (OECD, 2019b) In contrast, countries like Italy, Israel, Luxembourg, and Poland show higher citation rates in computer science relative to their overall scientific output Notably, approximately 20% of computer science publications from Switzerland rank among the top 10% of the most cited worldwide (OECD, 2019b) Scientific research is crucial for technological advancement, with countries prioritizing research likely to produce more impactful computer science papers Therefore, strategic investment in scientific research is essential for successful digital transformation Focusing resources on universities and research institutes will foster scientific and technological progress, drive innovation, and develop a skilled workforce, ultimately leading to significant economic, social, and national benefits.
Overview of digital transformation in custom sector
1.3.1 Concept of digital transformation in custom sector
Customs administrations have historically faced challenges due to bureaucratic inefficiencies Prior to the 1960s, customs operations relied solely on manual, paper-based methods The 1960s marked a significant shift as the introduction of computers prompted efforts to modernize customs procedures through electronic systems In 1961, the Economic Commission for Europe (UNECE) established the Working Party on Facilitation of International Trade to promote streamlined trade procedures and the effective use of automated data processing for international trade facilitation However, this digitization primarily allowed for the electronic storage of previously paper-based information, resulting in isolated storage systems with limited interaction among them.
The advancement of information and communication technology (ICT) in the 1980s marked the beginning of digitalization, enabling countries to manage increasing commercial activities more efficiently Developed nations have created their own automated ICT systems, while many developing countries utilize the Automated System for Customs Data (ASYCUDA) established by the United Nations Conference on Trade and Development (UNCTAD) This digitalization process connects various customs clearance systems, allowing for efficient electronic data exchange, whether within customs administrations or between different ICT systems Such data exchange is crucial for speeding up cargo clearance, ensuring accurate statistical reporting, enhancing integrity and transparency, and improving monitoring and control mechanisms, making it a valuable asset in global trade.
The dissertation examines digital transformation in the customs sector through the implementation of an advanced digital technology platform This platform enhances processes such as customs declaration, payment, post-clearance inspection, tax administration, fraud detection, risk management, and information exchange via the National Single Window (NSW) and ASEAN Single Window (ASW) The integration of these technologies aims to improve the effectiveness and efficiency of customs officers, enhance the business environment, and streamline customs clearance, ultimately offering convenience and cost savings for individuals and enterprises.
1.3.2 The benefits of digital transformation for the Customs sector
Digital transformation in the Customs sector offers significant benefits, improving business performance and positively impacting various ministries, sectors, and stakeholders across the nation.
Digital transformation in the Customs sector brings significant advantages, leading to fundamental reforms that enhance state-level customs management and boost officer productivity This shift creates a better business environment by streamlining processes, lowering costs, and increasing convenience for citizens and businesses involved in customs procedures Importantly, it enables a transition to a digital ecosystem where customs operations are executed seamlessly and remotely, thanks to the integration of advanced ICT systems and extensive data repositories, supported by technologies like Artificial Intelligence (AI) and Big Data As a result, customs operations are automated and monitored throughout pre-clearance, clearance, and post-clearance phases, ensuring effective management of export, import, transshipment, and transit activities.
The implementation of digital transformation in the Customs sector brings about significant benefits, which include:
Enhancing Customs administration efficiency allows both Customs authorities and businesses to optimize workforce productivity, minimize operational costs, and accelerate cargo clearance By adopting electronic data exchange, timely and precise information sharing is achieved, resulting in better control and reduced congestion at ports and airports.
Integrating automation with electronic data exchange enhances the processing of goods information before departure, enabling Customs to conduct timely inspections and risk assessments This proactive handling of data allows for swift decision-making regarding cargo release through electronic channels.
The implementation of a streamlined "single window" mechanism enhances efficiency in export and import transactions by allowing Customs authorities, legal agencies, and businesses to submit data through a centralized processing system This integration enables Customs to quickly relay essential information to clearance units at border gates, thereby promoting a cohesive and efficient customs clearance process.
Consistent compliance with state customs management requirements: Achieving transaction processing ensures adherence to domestic laws and regulations while treating all trade partners fairly and impartially.
The implementation of digital transformation and automated tax collection in the Customs sector offers substantial advantages, including precise and prompt tax calculations Automation enables the swift identification and resolution of overdue or problematic debts, enhancing overall efficiency in tax management.
The integration of advanced technology in Customs systems enhances precision in data analysis and allows for immediate access to real-time updates By implementing sophisticated Management Information Systems, Customs authorities can optimize the use of this information Additionally, automated Customs improves post-audit controls at both the Customs Bureau and national levels, as timely information provided by traders is electronically transmitted, boosting accuracy through automated validation functions.
The digital transformation of Customs procedures enhances the accuracy and timeliness of Customs statistics By automating declaration processes, trade statistics are instantly integrated into the data for exports and imports, following established protocols This efficiency enables other government agencies to promptly implement necessary actions, thereby strengthening the integrity of national statistics.
The strong push for digital transformation in the Customs sector not only enhances Customs administration but also positively influences the national landscape This transformation benefits the economy, boosts international trade, supports import-export businesses, and aids relevant ministries and agencies Ultimately, digitizing the Customs sector fosters significant improvements across multiple sectors within the country.
The digital transformation efforts in the Customs sector yield several substantial advantages for businesses, encompassing:
Streamlined Customs Procedures: Digitalization facilitates efficient and prompt customs clearance procedures, resulting in reduced logistics expenses and bolstering the competitiveness of businesses.
Enhanced Convenience and Accessibility: By embracing digital systems, businesses gain the convenience of declaring and fulfilling customs formalities at their preferred time, location, and through various platforms.
Integrated Data Submission: Leveraging digital technologies, businesses can submit goods-related information just once, which serves multiple administrative functions via the national single-window system.
The implementation of digital tools enhances transparency in customs procedures, strengthens anti-corruption initiatives, and enables businesses to effortlessly track the status of their transactions throughout the supply chain.
By realizing these benefits, the digital transformation endeavors in theCustoms sector provide invaluable advantages for businesses while contributing to the overall efficiency and integrity of customs operations.
1.3.2.3 For Ministries, Departments, and relevant stakeholders
Digital transformation in Vietnam's Customs sector significantly enhances managerial capacity and boosts efficiency and transparency across various ministries This transformation acts as a catalyst for the advancement of e-Government and Digital Government initiatives in the country Key aspects of this transformation include improved processes and increased accountability.
The integration of digital systems enables various ministries, sectors, and stakeholders to efficiently share information regarding export and import shipments independently of Customs authorities This seamless communication improves state management effectiveness and lays the foundation for the progress of e-Government and Digital Government initiatives.
Experience in Digital Transformation Initiatives within the
Singapore Customs has been at the forefront of information and communication technology (ICT) since the 1980s, significantly enhancing its digital strategy compared to other nations In 1989, it launched TradeNet, the first global electronic data interchange system that streamlined trade document processing without physical paperwork This system enables swift permit approvals and integrates with government agencies and industry stakeholders, facilitating efficient trade permit processing, tax collection, and cargo clearance across air, land, and sea In 2018, the introduction of the Networked Trade Platform (NTP) aimed to digitalize and optimize international trade processes, ensuring seamless connectivity among all participants in the trade value chain The NTP provides traders with access to various value-added services, including cargo booking, trade financing, customs declarations, and payment reconciliation, all on a single platform A key feature of this technological advancement is the automated classification of HS codes through machine learning, which enhances risk management Singapore Customs leverages diverse data sources, including customs declarations and commercial databases, to transition from descriptive to predictive analytics By utilizing a data warehouse, officials can analyze shipment clearance times and declaration data to identify trends and anomalies A business intelligence tool is also employed for real-time risk assessments of customs declarations, helping to detect discrepancies and outliers Furthermore, Customs officers continuously update their skills in emerging technologies and collaborate with other government agencies to enhance their data analytics capabilities for fraud detection.
Vietnam can enhance its naval officers' capabilities by learning from Singapore's focus on capacity building in data analysis The Singapore Customs agency prioritizes comprehensive training for its customs officers in risk assessment techniques, ensuring they are well-equipped to perform their duties effectively Officers involved in data analysis receive in-depth training to grasp the fundamental principles and theories of data analysis Furthermore, Singapore Customs organizes regular collaborative training sessions with other customs administrations and domestic agencies to strengthen the professional skills of officers in data analytics.
The Korea Customs Service (KCS) began its computerization in the 1970s, automating around 93% of its operations and promoting data utilization among staff (Cho, H G., 2016) The UNI-PASS system was developed to enhance Customs clearance by facilitating collaboration among 39 government agencies, Customs authorities, and various stakeholders, including private organizations, trading companies, and logistics providers (Choi, Y 2021) Unlike Vietnam's NSW system, which focuses primarily on regulatory permits, UNI-PASS integrates data analysis and decision-making information, such as Bills of Lading and unique cargo tracking numbers, ensuring transparency for Customs officers and traders (Kang, T., 2019) This system allows access to crucial documents and tracks the delivery timeline to prevent logistical bottlenecks Furthermore, KCS employs a risk management system similar to Vietnam's, creating profiles to monitor behavior and assess risk, aiding Customs officers in their inspection processes Between 2018 and 2020, KCS piloted a blockchain initiative to improve information transparency and build trust among data contributors (Choi, Y.).
In 2021, the project aimed to automate the data entry process, reducing reliance on manual intervention Within the blockchain framework, all participants in a transaction, including sellers, express carriers, and Customs brokers, promptly transmit their information to Customs During the pilot phase, KCS oversaw all transactions on the blockchain, ensuring data accuracy KCS also employs artificial intelligence (AI) technology to help customs officers identify the nature of goods in shipments, minimizing the need for manual X-ray examinations and subjective judgments regarding import regulations Currently, KCS supports foreign governments in modernizing their projects across fourteen countries, including Cameroon, Tanzania, and Uzbekistan.
Dubai Customs has established a state-of-the-art digital infrastructure that significantly enhances customer experience by minimizing wait times and improving online interfaces In 2022, this commitment was recognized with the 100% Paperless Stamp from the Dubai Digital Authority A key element of this transformation is a smart mobile app that allows travelers to electronically submit Customs declarations, replacing traditional paper forms This app features artificial intelligence for automatic recognition of goods through photos, providing instant HS Codes and duties Additionally, it includes a built-in scanner for seamless data entry and integrates all services at Dubai International Airport Furthermore, Dubai Customs has innovated in e-commerce with a Blockchain-based Cross-Border E-Commerce Platform, facilitating efficient data sharing among importers, exporters, couriers, and logistics companies, thereby optimizing goods movement and automating Customs declarations for online orders.
Dubai Customs emphasizes the importance of risk assessment in its procedures, utilizing a risk assessment engine that gathers data from various sources to create detailed risk profiles (WCO, 2020) High-risk transactions are subjected to additional scrutiny and mitigation measures The agency's commitment to innovation is evident in its development of "smart inspection glasses," which allow inspectors to upload cargo declarations and view scanned images and documents through voice commands or a virtual keyboard, similar to smartphone functionality This unique and transformative approach to digital transformation by Dubai Customs could serve as a valuable reference for other customs administrations, border agencies, and industries aiming to improve their digital capabilities.
Customs agencies globally are undergoing significant digital transformation, focusing on both import-export management and internal processes Countries are advancing through two phases: Becoming Digital and Being Digital, often prioritizing technologies like Artificial Intelligence, Cloud Computing, the Internet of Things, and Virtual Reality Effective digital transformation necessitates committed efforts from customs agencies, alongside strong support from government departments and authorities.
Countries worldwide are focusing on creating cross-functional data repositories to enhance data utilization for managing business and trade risks A key aspect of this process is assessing source data to gain a comprehensive understanding of entities like containers, vessels, and import/export companies By using unique identifiers, organizations can connect and identify similar entities potentially linked to suspicious shipments for further investigation This initiative aligns with the WCO's strategy to develop a digital customs framework, emphasizing the importance of leveraging existing data and fostering collaboration with stakeholders to improve customs operations Central to this digital transformation is a human-centered approach that aims to enhance user experience and effectively integrate technology in the workplace Promoting digital services is essential for raising awareness and developing user habits across all levels.
ACTUAL SITUATION OF DIGITAL TRANSFORMATION
Introduction about HCD
HCD was founded on April 2, 1955, as the Hanoi Customs Office, operating under the Ministry of Industry and Trade Its main role is to manage customs operations in Hanoi and surrounding areas, functioning under the General Department of Vietnam Customs.
2004, following various workshops and annual performance evaluations, HCD proposed April 2 as its official commemorative day, which was subsequently approved.
On August 3, 1985, a pivotal decision by the General Director of the General Department of Vietnam Customs led to the establishment of Hanoi Customs, unifying all customs units within Hanoi under one management The initial structure included three departments and four customs border units, staffed by 225 employees, with the headquarters situated on the second floor of A4 Giang Vo, Ba Dinh District, Hanoi.
During the early stage of Vietnam's economic reform between 1986 and
In 1990, the government implemented legal frameworks to regulate economic activities, particularly focusing on import-export and investment management This led to HCD receiving considerable staffing boosts, resulting in a marked rise in customs operations By 1989, the department had already managed procedures for 2,500 flights and served 189,134 passengers traveling to and from the country, while the import-export trade turnover reached 193 million USD.
345 cases of customs law violations, resulting in the collection of 10.26 billion VND in export-import taxes.
Since 1990, with the introduction of the Customs Ordinance on December
On February 24, 1990, the customs sector began a process of renewal and integration, clarifying its tasks and missions The Hanoi Customs Department responded by implementing procedural reforms and optimizing customs inspection processes, which streamlined import and export activities in the capital, reduced processing times, and minimized inconveniences for travelers.
Subsequently, with the implementation of the Customs Law on January 1,
In 2002, the Hanoi Customs Department experienced significant advancements in trade and international interactions, driven by amendments to investment laws These changes fostered a surge in both foreign and domestic investments in industrial zones, resulting in their expansion and development.
The Customs Department has continually enhanced its administrative management system, focusing on both quantity and quality improvements To support modernization and integration initiatives, the department has been restructured into eleven distinct departments and thirteen subordinate Customs branches.
On January 1, 2013, the introduction of electronic customs procedures marked a significant leap in efficiency and effectiveness, streamlining customs operations in compliance with Decree No 87/2012/ND-CP
Over its 58-year journey, the HCD has experienced remarkable growth and development, marked by the steadfast dedication of customs officials across generations Their tenacity and commitment have been recognized by the State, which awarded the HCD the Third-class Independence Medal and the Third-class Labor Medal in 1990, followed by the Second-class Labor Medal.
Since 2000, the Hanoi Customs Department (HCD) has received numerous accolades, including the First-class Labor Medal in 2005 and an outstanding competition flag in 2002 Many individuals and collectives within the HCD have been honored with prestigious titles from the State, the Ministry of Finance, and local authorities The Party organization of the HCD has been recognized for its exemplary performance, earning the "Clean and Strong Party Organization" flag for the periods of 2001-2004 and 2005-2009, as acknowledged by the Hanoi Party Committee Additionally, grassroots organizations such as labor unions, youth unions, veterans' associations, and women's unions have shown resilience and stability, underscoring the HCD's commitment to building a united and thriving community.
Customs Department at Noi Bai International Airport
Express Customs Department North Hanoi Customs Department Customs Department for Investment and Manufacturing
Head of the Customs Department
Gia Thuy Customs Department International Railway Station Customs Department in Yen Vien
Bac Thang Long Industrial Park Customs Department
Hoa Lac Customs Department Phu Tho Customs Department Vinh Phuc Customs Department Yen Bai Customs Department
Figure 2.1 Organizational structure of HCD (Source: HCD)
The HCD is a provincial-level authority responsible for state customs management across five provinces and cities, overseeing 24 units including 4 Customs Sub-Departments in Vinh Phuc, Phu Tho, Yen Bai, and Hoa Binh, as well as the Hanoi International Airport and Express Delivery Customs Sub-Departments It also includes 3 Sub-Departments for managing Inland Clearance Depots and 4 Sub-Departments focused on industrial and high-tech zones, with 8 additional Sub-Departments in Hanoi The HCD employs 778 staff, with 546 working in the 12 main Sub-Departments Since April 2010, the Party Committee of the Hanoi Customs Department has been upgraded and operates under the Municipal Party Committee, consisting of 6 Party cells and 18 grassroots cells with 612 members The Youth Union includes 12 groups with 315 members, while the trade union comprises 24 branches made up of officers and public servants.
Moreover, the Veterans Association counts 96 members, while the Lawyers' Association aligns with the Hanoi Lawyers Association, aggregating 88 members
The implementation of the Customs Law has led to a thorough alignment of the HCD's organizational framework with its provisions, impacting various functions, tasks, authorities, and procedures in customs operations The Customs Sub-Departments now play a diverse and essential role in these operations.
Acquiring and perpetually updating risk-related information stemming from customs clearance processes associated with commercial imports and exports.
Applying analytical criteria to determine the scope of inspections carried out within Customs Sub-Departments.
Rigorously scrutinizing information and discerning indicators indicative of potential violations against customs legislation during the course of customs clearance procedures.
Deciding the form and extent of inspections and conducting customs inspection activities during imports and exports clearance.
Disseminating information and feedback on inspection outcomes during customs clearance, evaluating the effectiveness of risk management within Customs Sub-Departments, and making recommendations for enhancements.
2.1.3 Overview of digital transformation progress in the Hanoi Customs
Table 2.1 Brief overview of Customs Digitalisation from 1994 to 2022
1994-1995 The initial actions taken to embark on the journey of IT application involved the utilization of software to gather statistical data.
2001 The modernization process starts by implementing the initial electronic clearance declaration.
2005-2009 Initiating a pilot implementation of electronic customs procedures at the Customs Branches situated in Ho Chi Minh
2014 It successfully deployed the new electronic customs clearance system VNACCS/VCIS nationwide, including the risk-based approach, (e-Declaration, e-Manifest, e-Invoice, and e-
In 2017, the National Single Window and Automated System for Customs Management were introduced, enhancing cargo control and bonded movements while integrating information and licenses with various government agencies From 2018 to the present, the integration of digital systems into Customs operations aligns with the broader development plan for 2020-2030, which aims to establish a proficient and technologically advanced Customs administration, driven by strategic objectives.
- The entirety of customs processes (100%) achieving full digitalization and electronic execution.
- Conversion of 95% of documents linked to customs records into a digital format.
Achieve comprehensive digital oversight of all records related to organizations and individuals involved in import-export activities, including those responsible for departures, arrivals, and transit functions, as well as the goods associated with these operations.
- Transitioning all crucial customs control transactions to electronic data, signifying a comprehensive digitization effort (100%).
- Offering level 4 online public services for 100% of high-demand administrative procedures related to licenses and specialized inspections for imported,exported, and transited commodities, accessible across various digital platforms.
- Conducting 80% of customs inspection operations within the digital realm and the ICT infrastructure managed by the General Department of Customs.
- Executing the entire set of administrative procedures (100%) related to licensing and specialized inspections for imported, exported, and transit goods through the national single window framework.
Between 2001 and 2009, the Customs sector initiated its digital transformation journey, termed the "Doing Digital" phase, where it began adopting digitalization despite most processes still being manual The GDVC led the way by integrating ICT to improve operational efficiency, achieving significant milestones like the Electronic Customs Clearance System and the Electronic Customs Declaration System This allowed businesses to enter document details into computer systems and send declarative information to Customs' ICT infrastructure, generating an acknowledgment number for further processing However, it is important to recognize that despite some ICT support, the process remained largely manual, particularly in the post-data transmission stages.
In 2013, the "Becoming Digital" phase commenced with the launch of the electronic customs software Ecuss version 4.0, aligning with Circular 196/2012/TT-BTC and Decree 87/2012/NĐ-CP by GDVC That same year, the GDC began implementing the Vietnam Automated Cargo And Port Consolidated System (VNACCS/VCIS) with assistance from the Japanese government This system consists of two key components: the VNACCS, which automates customs clearance operations, and the Vietnam Customs Intelligence Information System (VCIS), which serves as a data repository for customs operations and risk management The VNACCS system is specifically designed to enhance the efficiency of customs clearance for both import and export goods.
Enabling efficient information exchange with external stakeholders (Export-Import Enterprises, government agencies, shipping agents )
Managing declarant and declarant-object data processing, overseeing various procedures, and optimizing declaration form sorting
The VCIS system is dedicated solely to the internal operations of the customs agency and does not interface with external entities outside the customs sector Designed to automate cargo clearance and management, VNACCS/VCIS includes various software components that meet the operational needs of Vietnam Customs These applications support multiple processes such as electronic declaration (e-Declaration), electronic manifest declaration for maritime vessels (e-Manifest), transaction invoice reporting (e-Invoice), electronic payment processing (e-Payment), transportation declaration (OLA), selectivity management, risk profile handling, oversight of export-import enterprises, and cargo clearance monitoring Once fully implemented, the VNACCS system will streamline 133 customs operational procedures, enabling both online operations and six batch processing procedures.
Actual situation of digital transformation in HCD
2.2.1 Objectives of Digital Transformation in HCD
On May 20, 2022, Deputy Prime Minister Le Minh Khai endorsed Decision
No 628/QD-TTg, thereby approving the Customs Development Strategy until
By 2030, Vietnam aims to establish a modern Customs institution comparable to those in developed nations, focusing on a digitalized and intelligent Customs model This strategy seeks to fully automate all operational aspects, significantly reducing the need for direct Customs personnel involvement The transformation into intelligent Customs will position Vietnam as a contemporary institution that aligns with global trends and effectively utilizes advanced technologies from the Fourth Industrial Revolution, including AI, Big Data, Blockchain, and IoT By 2025, the Vietnamese Customs sector aims to reach standards similar to those of developed countries such as the EU, US, Japan, and China, addressing the needs of intelligent governance, enterprise management, and the entire import-export process.
Advance digital transformation in customs operations by aligning with the digital transition that supports enterprises and government bodies in implementing the National Single Window and ASEAN Single Window Mechanisms The primary objective is to fully execute all customs procedures in a virtual environment, eliminating the reliance on paper documentation.
The Digital Customs initiative aims for full digital transformation in customs management by 2025, featuring a fully integrated IT system that meets international standards and automates all customs processes from start to finish This technological advancement will enable 24/7 customs operations accessible from any location and across all transportation modes, while also incorporating cutting-edge technologies from the Fourth Industrial Revolution to enhance information utilization.
In the execution of customs procedures:
The General Department of Customs has effectively implemented Digital Customs, aiming for full digitalization of customs procedures This initiative allows for remote access to customs processes at any time and via any mode of transportation It ensures comprehensive management and oversight of the entire customs process, covering all aspects from the initiation to the conclusion of exported and imported goods, as well as transit activities and both outbound and inbound transportation.
Digitize 100% of customs document sets, transforming them into electronic data and processing them within a virtual network environment, excluding classified state-secret documents.
We aim to fully update all standardized customs procedures (TTHC) on the online public service portal, ensuring comprehensive access to level 4 public services This initiative allows users to access services from multiple platforms, at any time, and from any location.
The Customs Business Process must be executed in a digital, platform-based environment, leveraging intelligent devices for effective customs monitoring and utilizing digital data analytics tools to enhance management and operations.
Enterprises can utilize a digital platform to access and exchange information, monitor the progress of administrative procedures, and receive outcomes related to customs operations.
Receive and exchange relevant information concerning the execution of customs procedures, and state customs management, with banks, relevant Ministries, Departments, and affiliated institutions within the IT system.
In terms of risk management:
Automatically gather and integrate information from customs declaration activities, outcomes of customs operations, and information exchange with state management bodies, international customs agencies, and relevant domestic and foreign entities.
Leverage advanced Industry 4.0 technologies to improve risk management by evaluating compliance and classifying risk levels for customs declarants, passengers, and goods Implement automated risk classification and assessment, alongside thorough risk analysis to pinpoint critical areas for timely alerts These strategies will be integrated throughout the pre-, current-, and post-customs clearance phases via an efficient IT system.
Manage all records of organizations and individuals involved in export,import, and transit activities, as well as individuals, transportation, and goods relevant to customs activities in a digital format.
In regard to the National Single Window and ASEAN Single Window mechanisms:
The National Single Window Portal is essential for facilitating the exchange of information, data, and electronic documents among stakeholders involved in cross-border trade, supply chain, and logistics operations.
Administrative procedures for licensing and specialized inspections for the export, import, and transit of goods are conducted through the National Single Window mechanism.
In terms of IT infrastructure:
Ensure synchronized and 24/7 operation of IT equipment to fulfill the requirements of implementing the Customs Digitization Project and application deployment of IT systems at the Hanoi Customs Department.
Deploy the integration and connection of various tools and equipment, such as cameras, GPS tracking seals, and electronic scales, to support customs management and surveillance activities.
Execute virtualization strategies for workstations to safeguard the operational continuity of customs personnel and administrators.
Develop a synchronized internal network structure and communication framework that conforms to the phased architecture of communication infrastructure deployment within the Finance Sector and Customs Sector
In early 2014, the customs sector and the HCD began implementing electronic customs procedures, as mandated by Clause 2, Article 8 of Customs Law No 29/2001/QH10 and its subsequent amendment through Law No 42/2005/QH11 These laws require the government to establish detailed regulations for electronic data exchange, define the legal validity of electronic documents, and outline the responsibilities and rights of entities involved in export, import, and customs operations, including the development and management of the customs computerized information system.
The implementation of electronic customs procedures began in early 2014, guided by Article 3, Clause 20 of Customs Law No 29/2001/QH10 and its amendments These regulations affirm that customs declarants can utilize electronic declarations Furthermore, Article 2, Clause 29 of Customs Law No 54/2014/QH13 specifies that customs declarations must be made electronically, while Article 3, Clause 30 mandates the registration of electronic customs declarations Additionally, Decree No 87/2012/NĐ-CP provides detailed guidelines on electronic customs procedures for commercial imports and exports.
Electronic customs procedures streamline customs-related processes, including declaration, reception, decision issuance, and data processing Utilizing electronic mediums and the customs electronic data processing infrastructure, these procedures aim to expedite customs operations, facilitating the efficient movement of goods across international borders.
The operational framework emphasizes adherence to international customs standards for declarations and documentation, focusing on electronic data interchange principles It involves a thorough analysis of information and legal compliance by cargo owners, while also assessing risks of potential legal violations in customs Customs declarants utilize standardized templates for electronic declarations, transmitting data securely via the Internet to the designated Electronic Data Interchange (EDI) service provider, known as the C-Van intermediary This entity facilitates the efficient exchange of information between businesses and customs authorities The transmitted data is processed by the customs server, leading to informed decision-making by customs officials in line with established procedures.
Electronic customs procedures are facilitated by the Ecus software, which streamlines processes for customs authorities and businesses Companies must install this software to submit essential customs information, including declarations, valuations, certificates of origin, and transport documentation Once the electronic customs declaration is compiled, it is sent to the Customs Office, where an automated system processes the submission and provides businesses with important updates These updates include declaration acceptance, identifiers, customs clearance methods, and tax notifications, ensuring a smooth customs experience.
Customs administrations classify consignments based on a traffic light system: GREEN status indicates an exemption from inspection, YELLOW status requires a document review, and RED status mandates a physical inspection, which varies by item type and includes the collection of pertinent shipment data.
Figure 2.2 E-custom procedures According to Decision 1966 QD TCHQ, 2015 Source: GDVC
Evaluating Achievements and Challenges
The official implementation of the system has brought substantial benefits to stakeholders such as Customs, airlines, businesses, and individuals Deputy Director Hoang Quoc Quang highlighted that this system has initiated a transformative change in Customs management practices.
The transition from traditional paper-based customs processes to an advanced IT-driven management system has revolutionized customs operations This modern approach integrates data seamlessly across three critical stages: before, during, and after customs clearance By automating the receipt and processing of electronic data prior to flights, Customs can identify potential risks and implement effective risk management protocols This proactive monitoring of goods not only deters smuggling and commercial fraud but also plays a vital role in enhancing national security.
There are several outcomes collected by HCD in DT
2.3.1.1 For the Customs agency and the government
Between 2014 and 2022, Hanoi Customs experienced a remarkable surge in import and export turnover, escalating from 13.6 billion USD in 2014 to 64.6 billion USD by 2018, where it has remained stable This four-year period highlights the explosive growth of trade activities, driven by significant advancements in information technology that have transformed Customs management and operations.
Import and export turnover (billion USD)
Figure 2.8 Import and export turnover in Hanoi Custom Department from 2014 to 2022
Between 2014 and 2022, Hanoi Customs significantly increased its contributions to the State budget, with revenue rising from 11,707.7 billion VND in 2014 to 21,816.7 billion VND by 2017, effectively doubling its value This upward trend continued consistently in the following years, showcasing the unit's commitment to enhancing budget revenue.
In 2022, the State budget revenue soared to 28,644 billion VND, marking a remarkable 116.7% increase from 2021 and exceeding the assigned target by 104.5% This impressive growth underscores the effectiveness of Hanoi Customs' modernization initiatives, including the successful implementation of electronic customs declaration software, advanced risk management procedures, and automated cargo monitoring systems, all of which have significantly improved state management efficiency.
State budget revenue (billion VNĐ)
Figure 2.9 State budget revenue in Hanoi Custom Department from 2014 to
The current emphasis of HCD is on streamlining clearance procedures for bulk cargo and containerized shipments, with key goods including iron and steel products, complete automobiles and components, machinery, raw materials, rice, and petroleum products These categories represent a significant share of the overall export value (HCD, 2022) As the variety and volume of goods have increased, the Customs Risk Management and Reduction (RMR) process has become crucial within the HCD framework.
Table 2.3 highlights the rising compliance levels in import-export activities, showing an increasing trend in detected violations, which indicates the effectiveness of risk-based inspection and assessment criteria set by the bureau For example, non-compliance cases rose from 193 in 2016 to 398 in 2022, reflecting a significant 206% increase, alongside a doubling of financial fines for violations during the same period While policy leniency has fostered a supportive environment for businesses, it has also allowed some entities to exploit the system with increasingly sophisticated tactics Customs personnel often face challenges due to a lack of specialized training in Risk Management and Regulation (RMR), limiting their proficiency Therefore, it is crucial for the Bureau to assign specialized personnel to RMR roles in branch offices and implement regular training programs to enhance the skills of officers in both multitasking and specialized RMR functions.
Table 2.3 Violation Detection in Import and Export Activities from 2016-2022 in HCD
Year Detection of Violations from
Yellow and Red Signals (Case) Revenue Generated from
The system facilitates online connections between warehouse operators, airlines, and Customs, eliminating the need for paper-based document submissions This shift results in significant time, cost, and resource savings, enhancing overall business efficiency and competitiveness Both systems comply with international standards for interactions between Customs authorities and aviation operators, improving management initiatives, statistical tracking, and record-keeping Additionally, the Automated System for Customs Management streamlines processes for import-export businesses, reducing transportation and warehousing costs while increasing economic efficiency By fostering an online public service environment, the system allows enterprises to engage swiftly and accurately at any time, enhancing transparency in customs procedures and minimizing direct interactions between import-export companies and customs agents during goods verification.
A 2022 survey on the implementation of the automated customs management and supervision system (VASSCM) at Noi Bai International Airport revealed that companies experienced an average time savings of approximately 2.5 hours per shipment during the importation process Specifically, the time required for confirming goods within the supervision area decreased by an average of 1.2 hours, while procedures related to warehouse units for goods retrieval saw an average reduction of 1.32 hours per shipment.
Ninety percent of surveyed businesses reported that the adoption of the VASSCM system led to a decrease in costs associated with import and export processes compared to the time before the system was implemented.
The VASSCM system offers significant benefits for businesses, as evidenced by 91% of surveyed enterprises reporting that it has streamlined document submissions and improved procedures for the movement of goods in and out of warehouses and customs supervision zones.
Approximately 82% of enterprises reported that the VASSCM system significantly reduced the time required for document preparation for warehouse and yard operations, saving an average of 0.83 hours This system also decreased document preparation costs for 82% of the surveyed businesses Furthermore, 73% indicated that VASSCM enabled proactive time management for procedures with warehouse and yard entities, operating 24/7 regardless of customs authority hours The automated system led to reduced expenses related to loading, unloading, transporting, and storing goods for 73% of participants Additionally, 91% of businesses noted a decrease in the time needed for cargo clearance procedures, while 82% experienced lower management costs, including printing and personnel expenses, and 73% reported reduced costs for executing import and export procedures.
The Hanoi Customs Department reports that 38% of enterprises find customs declaration procedures to be easy, reflecting significant improvements since 2015 A comparative analysis shows that the percentage of businesses considering tax remittance straightforward increased from 22.7% in 2015 to 39.8% in 2020 Additionally, around 21% of enterprises now rate document examination and cargo verification processes positively, up from 9% and 5.6%, respectively These positive trends are attributed to ongoing efforts and the effective integration of advanced Information and Communication Technology (ICT) within the Customs sector.
Percentage of Businesses evaluating procedures as easy to implement over time(%)
Figure 2.10 Business Satisfaction Level with Import-Export Administrative Procedure Implementation (Souce: VCCI’s Report Business’ Satisfaction with
2.3.2.1 Problems in the Customs Information Technology System
The General Department of Customs has deployed over 20 distinct systems that operate independently without a unified design or integrated management, leading to inefficiencies Customs personnel must navigate multiple systems for data retrieval, often requiring different logins, which hinders productivity and delays work completion This fragmentation prevents the systems from achieving key objectives such as fast customs clearance, compliance management, and comprehensive supply chain oversight Additionally, certain aspects of state customs management, including inspection, exemptions, reductions, and tax refunds, remain unautomated and lack IT integration.
The VNACCS/VCIS system is outdated and overburdened, struggling to manage customs procedures for low-value shipments and express deliveries, while its obsolete hardware lacks necessary replacements This inadequacy forces businesses to rely on physical paper documents, as the system's functionalities are insufficient Additionally, the system's limited inspection assistance necessitates manual inspections by customs personnel, increasing the risk of subjective intervention Since its implementation in 2014, the Hanoi Customs Department has not upgraded its servers, leading to unstable and slow operations.