Luận văn thạc sĩ Quản lý công: Innovation in customs procedures from pre-check to post-check: Evaluation of inspection after customs clearance at the Quang Ninh province's customs department in current period

With this meaning, Masters Thesis “Innovation incustoms procedures from pre-check to post-check: Evaluation of inspectionafter cuvoms clearance at the Quang Ninh Customs Department in cu

UPPSALA UNIVERSITY & @>

VERSITY OF ECONOMICS & BUSINESS,VNU

VNU-UEB

UNIVERSITET a

INNOVATION IN CUSTOMS PROCEDURES FROM PRE-CHECK

TO POST-CHECK: EVALUATION OF INSPECTION AFTER CUSTOMS CLEARANCE AT THE QUANG NINH PROVINCE’S

CUSTOMS DEPARTMENT IN CURRENT PERIOD.

Authors: Nguyen Thanh Binh

Nguyen Huy Dong

Supervisor: Prof Lars-Torsten Eriksson PhD

Local Supervisor: Dr Nguyen Quoc Viet PhD

Class: MPPM INTAKE 6 - Group 8

Hanoi, May - 2013

Be‘ore presenting our thesis, on behalf of our team, I would like to thank the authors of the Swedish teachers as well as Vietnam teachers who has beenteaching, training and guidance during our course Especially PhD NguyenQuo: Viet - supervisor in Vietnam national university in Hanoi and Prof Lars-Torsten Eriksson PhD - Uppsala University guided us to complete this thesis.

We would also like to thank the department of Quang Ninh customs andfacilitate enterprises to help us complete this survey research

Titl:: Innovation In Customs Procedures From Pre-check To Post-Check: Evauation Of Inspection After Customs Clearance At The Quang NinhProvnce’s Customs Department In Current Period

Lev:l: Public Management Master Thesis of public management

Autior: Nguyen Thanh Binh

Nguyen Huy Dong

Suprrvisor:

Swedish supervisor: Prof Lars- Torsten Eriksson PhD

Local supervisor: Dr Nguyen Quoc Viet , PhD

Datewhen the thesis is presented: May 18” 2013

Puryose of Research:

To aialyze the impact of the inspection after customs clearance in Quang NinhCusttrms Department on professional phases:

+ Customs procedures at Customs Offices at the border-gate

+ Propose to amend and supplement policies and mechanism

* Customs control

~ Information collection and processing

~ Inspection, examination

~ Advise and give recommendations for the management, administration

To sudy and analyze the assessment conducted by enterprise on the impact of the irspection after customs clearance at the Quang Ninh Customs Department

to ther operations of import and export:

~ Procedures for customs clearance

- Business efficiency of enterprise

~ Having fair in business operation

+Compliance with the laws

Methodology:

Tht papers use SWOT analysis method (analysis of strengths, weaknesses,

opporunities, threats) to assess the effectiveness of changes in public govertance, in specific: the effect of changes in operating procedures ofcustoms clearance from pre-test to post-test

Do the actual survey, questionnaire interview for the enterprises havingexport-import activities through Quang Ninh Province and the customs officials

in the province.

Main findings and conclusions:

The inspection after customs clearance is a difficult business an was put into implement in the field of customs recently Research for improving and strengthening the efficiency of this activity is indispensable for the reform,modernization and development of the customs sector

Research activity of Quang Ninh Department Customs and the inspectionafter cusioms clearance processes to find the optimal solutions for enhancing the

quality of implement the inspection after customs clearance activity the customs

industry in general and in Quang Ninh Customs Department in particular Theeffectiveness of the activities will make a change to the manner of operation andmanagerent in the customs indutry which moves from traditional managementmethods to modern management methods applied risk management techniques The activity contributed to the successful implementation of reforms andmodernization in the industry With this meaning, Masters Thesis “Innovation incustoms procedures from pre-check to post-check: Evaluation of inspectionafter cuvoms clearance at the Quang Ninh Customs Department in currentperiod” tas achieved some results:

Th: thesis clarified the concept and characteristics of the inspection aftercustoms :learance, then determined the role and the position of the activity in customs ndustry, and pointed out the need for its development in the current

pericd Besides, the thesis examined some experiences of the other provincialcustans offices which have characteristics similar to Quang Ninh CustomsDepztnent to be basis for improvement the quality of post-clearance inspectionactivties operation in Quang Ninh Customs Department.

The paper reviewed the real situation of the inspection after customscleannze operation in Quang Ninh Customs Department from 2007 to currentpericd, compared the results with current requirements to find out shortcomings

and imitations From result research, we give recommendations to increaseefficency of ICC

Limiations of Thesis:

- Bcause of limitation time, the group chose small scale which is not highreresentative

Suggestions for future research:

- Inthe furture, research directions focus on detail proceeds of Inspection afterCistoms Clearance operation Besides, other researches can apply this reearch model for other provinces.

Contibution of the thesis :

- Determining the general theory of the inspection after customs clearance

- Assessing effect of the inspection after customs clearance at Quang NinhProvice Analyzing advantages and disadvantages of inspection after customsclearace

- Proposing policy recommendations in order to improve the performance

of thdnspection after customs clearance

Keywords:

Ispection after customs clearance (ICC), Export-Import (Ex-Im), PreChecing, Post Checking, Internal Factor, External.

6.1.\pplication of SWOT analysis to assess the effect of changes in public governance: In

casef change in customs process from pre-check to post-check in Quang Ninh Customs Deprtment

6.2 'esults of questionnaires survey for the enterprises having export-import activities throgh Quang Ninh Province

7 Aalysis

8 Caclusion

REFERENCES

LIST OF TABLES

Table 1: Listing of Internal factors in descending order of perceived Importance 12

Table 2: List of Internal factors in descending order on perceived Performance 13 Table 3 List of internal factors sorted in descending order on perceivedperform:nce gaps 14Table 4 List of external factors sorted in descending order of perceivedImportarce .l§ Table 5 List of external factors sorted in descending order of perceived

Performince 215

Table 6 List of Internal factors sorted in descending order of perceivedPOGPOt AGS Gaps sasssasssssssusssasssssssssnssossessssssssosssssssessessntssshossieesiewsissssasssasasseossersecave 16Table 7:Proposed SWOT matrix for enterprises

Table 8:List of internal factors which are arranged in descending by importance 19Table ¢ List of internal factors is arranged in descending by the1PDDIELREIEALÏOHi s:.¿: ¿ co: cv t00656212000202002342457443645814414868243424814860143838148433905415253855835561 20

Table 110 List of internal factors which are arranged in descending by the gap 21

Table 111 List of external factors are arranged in descending by important level 22Table 12 List of external factors is arranged in descending by implementation 22Table 13 List of external factors is arranged in descending by gap 23Table 14 Proposed SWOT matrix for customs Officials . - 24

: World Trade Organization

1 Introduction

With the development of society-economy and the fact that Vietnam has become a member of the World Trade Organization (WTO), export and importtrade activities, investment and tourism have increased rapidly This raisesproblems for the Customs service that it is now critical to accelerate the customsclearance for goods, to strictly manage import and export activities and to ensurerevenue for the state budget

In this context, the customs professional activities are evolving from thetraditional customs management methods, based on goods inspection for clearance

into the advanced management method based on risk management technique It

means that, on the basis of information collection, analysis and processing for

clearance and use of professional measures (risk management, post-clearance,audit, control, information collection), it has become inevitable requirement One

of the most effective models of professional measures is the inspection aftercustoms clearance

Under current regulations, the examination before the customs clearancemeans the customs offices check customs dossiers, relevant documents andphysical inspection of goods at customs procedures Before the implementation ofthe Law on Customs (when post-clearance inspection is not applicable), mostgoods are subject to inspection before customs clearance.

Pos-clearance inspection is performed after the export and import goodswhich have been cleared in the following cases:

- To check the signs of violation of customs laws or to determine ability to violatecustoms ‘aw based on the information analysis of the customs offices

- To check as scheduled in order to assess level of compliance with the customslaws of the customs declarer

Regarding the scope of post clearance inspection, in addition to checkingdocuments and vouchers relating to goods stored at customs, customs offices also

have right to check accounting vouchers, accounting books, financial statementsand other documents relating to the clearance of goods stored at enterprise.

Therefore, the pre-clearance inspection (when Customs Law was not enacted) was implemented by customs offices for most goods lots during customsprocedures; regarding post-clearance inspection, the Customs offices only examthe cases in which there are signs of violation of customs law or likely violation of the customs laws or customs inspection as planned to assess the level ofcompliance of the customs declarer; regarding the scope, the customs offices maycheck not only at customs site but also at the enterprise.

At the moment, when not apply ICC in customs procedures, records and all

goods must be inspected before customs clearance So, for the customs authorities,

they must use a lot of manpower for checking Large workload, while the peopleand the equipment for the test is limited, so the inspection result is not high, beside

it is waste time and effort On the other hand, the efficiency inspection is low andthe potential risks are high while ICC civil servants do their duty All shipmentsmust be checked, it makes prolong clearance time, incurring costs, procedure time,and missed business opportunities

When applying risk management through the implementation of ICCprofessional, the management of customs has been moved from the traditionalmanagement methods (inspect before) to modern management methods (inspect after) in customs operations Customs officers enhance the sense of responsibility,professionalism and ethics: all the processing steps of electronic customsdeclarations of customs officers and customs declarations are recorded particular insystem about time, valuable content and legal using, so participants have responsible to implement and have knowledge of customs procedures increasing more and more.

In addition, the application of risk management techniques and ICC,customs authorities can release the majority of shipments They retain high riskshipments The other goods which is not chosen is freed immediately but they can

2

be inspected after custom clearance Inspection can cover all customs regimes,such as temporary import for re-export process, tax-free area Thus, the customsauthorities may enhance control over the regime cannot check at the border ICC allows changing approach to test pure and comprehensive examination andoriented inspection Through monitoring, inspection and evaluation of businesstransactions during a long time, customs officials will make comparison,comparing aggregate data (from local to central not least from the consistency ofthe data or the difference between the businesses ) The violations are detectedand identified early So it can be prevented commercial fraud and anti-tax lossesfor the state.

Enterprise need ensure the accuracy of the statistics: the information which

is declare directly, ensuring the legality and liability of parameters, exclude thepossibility of bias in the import data from customs authorities as performtraditional customs

In addition, the enterprise also save time by automatic system, cost savings,including transportation expenses while performing declaration (declaration viaInternet);buy customs declaration (electronic customs declaration is printed on A4paper) the cost of preparing the paper records (customs documents areminimizing), the human cost

In summary, ICC contributes to improving the efficiency of the administrativestate: the steps in the process customs declarations are recorded and replyparticularly, the declarer can easily monitor condition processing of customs toarrange work actively, managers can easily manage processing status ofsubordinates by the transparency of the declaration system customs

On the international aspect, customs authorities of developed countriesconsider the inspection after customs clearance as a professional phase in themanagement technique of modern customs Moreover, the application of the model

of inspection after customs clearance is consistent with international standards and

commitments of Vietnam during the integration process The inspection aftercustoms clearance has being widely popularized and applied all over the world.

For Vietnam Customs, the model of inspection after customs clearance hasbeen implemented only since 01 January 2002, the effective date of the Law on Customs Despite the initial encouraging achievements, this model has revealed alot of shortcomings and deficiencies and needs to be supplemented and amendedappropriately In the process of implementation of the model of inspection aftercustoms clearance, Vietnam Customs in general, and the Customs Department of Quanz Ninh Province in particular, are experiencing some difficulties as follows:

Firstly, it is insufficient awareness among internal customs, enterprises,society and some relevant state bodies on inspection activities after customsclearance.

Secondly, workload has rapidly increased and pushed more pressure With the growt in the number of import and export shipments per year at rate from 20 to 30%, in 2010, there are nearly 3.7 million import and export shipments that must

be cleared by customs Such huge volume of work has created pressure significantly on customs clearance and inspection after customs clearance.

Thirdly, legal system still has had asynchronous regulations so that itsimplementation is very difficult

Fourthly, it is consciousness of law abidance of enterprises Some enterprisesdelibeately violate the laws and attempt to evade taxes It makes more difficult forthe customs bodies when conducting inspection after custom clearance

Fifthly, the model of inspection after customs clearance is asynchronous,especially on organizational structure issues, on coordination among the functionalunits inside and outside customs industry and on application issues of informationtechnclogy in professional activities

lì order to deal with these difficulties and shortcomings mentioned above, itneeds to come up with innovation that could make breakthrough solutions to

improve the quality of the inspection after customs clearance at the Quang Ninh Province’s Customs Department in the near future.

2 Review on previous researches

In foreign countries, there are many authors and international organizationsthat analyze the inspection after customs clearance through articles and researches

on this problem, such as ASEAN Post - Clearance Audit Manual - The Final Draft

2004 of ASEAN, or Outline of Valuation and PCA in Japan of Kitaura Maki in

2005 These researches describe mainly techniques of the inspection after customsclearance but do not draw an overview of deployment of this method in theinspection after customs clearance model for a specific nation Furthermore, theseresearches describe the inspection after customs clearance model in foreigncountries which have some differences in comparison with Vietnam

In Vietnam, there are some researches on the inspection after customsclearance such as scientific researches of Department for the inspection aftercustoms clearance in 2004 and 2005, research of Hai Phong Customs Department

in 2002 or "The professional measure of inspection after customs clearance" byPham Ngoc Huu in 2004 These researches mention about development strategies

or analyze in detail the professional measure of inspection after customs clearance

of Vietnam Customs

From the aspect of Quang Ninh Province, there is no research on the activities

of the inspection after customs clearance in Quang Ninh Customs Department aswell as the assessment of effect of such operation

Based on the general report and recommendations about Inspection afterCustoms Clearance ( ICC) in enterprise head office by ICC civil servant, Director

of Quang Ninh Customs issued Decision of ICC in enterpise head office, whichspecifies: (i) test period, (ii) test scope, (iii) test content, (iiii) assigned ICC teamleader and team members ICC team leader responsible for planning details andassign team members to test performing, to prepare situations and to deal withsituations Real situation of ICC in enterprise head office in Quang Ninh Customs

in recent years reflects the professionalism, transparency, increasing the efficiency

of inspection activities of customs authorities which helping businesses improvecompliance capacity,detecting and preventing irregularities in the import and

export operations, reduce losses to the state budget

Before 2005, the awareness of the business community as well as the

customs office about ICC in enterprise head office is very vague On the otherhand, by the regulations of the law is not clear, the organizational structure is

irrational, professional capability of civil ICC servants is restriction lead to not

high performance efficiency Many of ICCs prolong and not focus in enterprise heaoffice that causing waste resources, even affecting the business activities of theenterprise From July 2006, with a series changing of organizational structure,

business processes, and especially the change in awareness, ICC activities inenterprise head office have discipline The number of checks and sum of tax are

collected through ICC activities is grown more and more, and especially throughICC in enterprise head office, Quang Ninh Customs Department is one of the

maritime industry units and the business community appreciated the

professionalism and transparency, with great effect to help businesses improve

compliance capacity while improving the effectiveness and efficiency of customs

administration in the area

3 Research question

The thesis aims to find answers to key questions: Efficiency of Checking

after clearance of customs operations in Quang Ninh ?

There are few questions:

+ what ICC proceeds is being applied?

+ Capacity, the level of customs officials to perform post-clearance checks?

+ Business awareness of post-clearance checks?

+ Benefits due to customs clearance test gives businesses, customs officials

and the State?

4 Purposes of research:

To analyse the impact of the inspection after customs clearance in Quang Ninh Customs Department on professional phases:

+ Customs procedures at Customs Offices at the border-gate

+ Propose to amend and supplement policies and mechanism

+ Customs control

+ Information collection and processing

+ Inspection, examination, internal protection

+ Advise and give recommendations for the management, administration.

To study and analyse the assessment conducted by enterprise on the impact of theinspection after customs clearance at the Quang Ninh Customs Department to theiroperations of import and export:

+ Procedures for customs clearance

+ Business efficiency of enterprise

+ Having fair in business operation

+ Compliance with the laws

5 Subjects and scope of the research:

The inspection after customs clearance at the Quang Ninh CustomsDepartment, and practical assessment of the enterprises which often have export-import activities through Quang Ninh Province about the inspection after customsclearance

export-The origin of-SWOT (Strengths, Weaknesses, Opportunities, Threats) wasSOFT analysis (Satisfactory-good in the present; Opportunity (good in thefuture); Fault (bad in the present); Threat (bad in the future)) which was the

outcome of the researches on corporate planning conducted by Stanford Research

Institute from 1960 tol1970 The SOFT analysis was presented in a seminar atZurich in 1964 and then Urick and Orr changed F to W and called it the SWOT(Humphrey, 2005) Weihrich (1982) subsequently modified SWOT (or TOWS) inthe format of a matrix that matches the internal factors (the strengths andweaknesses) of an organization with its external factors (opportunities andthreats) to systematically generate strategies that ought to be undertaken by theorganization.

Until now, SWOT method has been widely used in the enterprises Analysingstrengths and weaknesses, opportunities and threats (SWOT analysis) is one of the

seven steps of the business strategy of an enterprise including: Define the mission and

goals, analyse strengths and weaknesses, opportunities and threats; continue planning,check and predict results; Prepare tactical plans, prepare strategic plans We can assert

that SWOT analysis plays an important indispensable role for the strategic planning

process of the enterprises However, SWOT analysis applies not only in the business

strategies evaluating process of the enterprises, but also an effective tool in the

government's policy planning process and in the field of public governance Manydomestic and foreign researchers have applied the method to evaluate the

effectiveness of new policies or the effect of changes in public governance For

example, the case of Germany, the government has regularly use SWOT method as atool to develop their strategies (Weihrich Report (1999)) or a research of Dr L C Kooand Hannah Koo also applied the method to indicate strengths, weaknesses,

challenges and opportunities of Macao in their development strategies’ In

Vietnam, the SWOT method also becomes an effective tool in policy planning and

“Dr L C Koo and Hannah Koo (2011) Developing strategies for the Government of Macau, SAR with SWOT analysis, journal of strategy and Management, volume 4(1):20 Emerald Publishing, Feb 22.2011.

evaluation A research of Le Cao Thanh (2006) used the SWOT analysis to assessthe development strategies for brick - pottery villages in Vinh Long province.

The process of business strategy planning of the enterprises same as policyplanning process or adjustment in public governance activities of the governmentare based on optimizing a certain benefit If the enterprises toward to strategiesmaximize their profits, the decision of the government in the public sector is themaximum benefit of the whole society For determinations based on mass benefits,indicating strengths, weaknesses, opportunities, threats of the new policies, as well

as adjustments in the public governance sector is necessary and large contribution

in effectiveness evaluation of the public policy planning process in order tominimize risks of policy implementation

SWOT analysis is applied to analysis of changes in public governance

mechanism, in specific innovation in customs procedures from pre-check to check same as the SWOT analysis in the enterprise’s strategic planning is

post-simulated by the following table:

and solutions which are order and priority in order to improve the efficiency of thedecisions and public choices.

6.1 Application of SWOT analysis to assess the effect of changes in publicgovernance: In case of change in customs process from pre-check to post-check in Quang Ninh Customs Department

Before using SWOT to evaluate the effect of changes in customs process from

pre-check to post-check in Quang Ninh Customs Department, it is necessary to

clarify the internal factors and external factors of the enterprises and the customsagencies Based on these factors, the content of the questionnaire is designed to

collect information about the ranking of importance and performance of each

- For civil servants:

9 internal factors:

(1) The impact of ICC activities for the collected State budget,

(2) Efficiency of ICC operations with amendments and supplements managementCustons policies

(3) Impact of ICC to ramification goods

(4) Role of ICC in inspection, testing, and internal protection

(5) The effectiveness of ICC in management, direction and leadership of all levels

(6) Impact of ICC for cargo clearance

(7) Impact of the ICC in arrangement human resources

(8) Impact of ICC in improving the quality of human resources.

(9) Inernational cooperation in ICC operation

10

5 External factors:

(1) Awareness customs compliance of enterprise.

(2) Consistency and transparency of the text related to state management about

customs.

(3) The cooperation of the agencies involved in the ICC operation

(4) Remuneration for ICC civil servants.

(5) Other relevant factors

- For enterprise:

5 Internal factors

(1) Awareness of enterprises of inspection after customs clearance (ICC)

conducted by customs bodies

(2) Assessment of enterprises about law and justice enforcement in ICC

(3) Saving cost for enterprises after performance of ICC

(4) Saving time for enterprises after performance of ICC

(5) Saving human resources for enterprises after performance of ICC

6 External factors:

(1) Professional ability of customs officials in conducting ICC

(2) Awareness and attitude of customs officials in conducting ICC

(3) Facilities for carrying out ICC

(4) The international linkage in activities of ICC

(5) The observance of the law on customs by other enterprises in ICC

(6) Procedures for settlement of complaints by the customs office for theenterprises in activities of ICC

Based on the Likert scale, the research team will develop a questionnaire (inthe Appendix) for the enterprise and civil servants object, to collect and evaluatethe status of state enterprises when applying ICC management methods, which provide suggestions and recommendations to improve and promote the development of modern management Results collecting and processing data from the questionnaire are presented in detail next part of the report.

6.2 Results of questionnaires survey for the enterprises having export-importactivities through Quang Ninh Province

Internal strengths and weaknesses of enterprisesTable 1 lists the band score on the importance of five internal factors insideenterprise sorted in descending order together with the corresponding performanceand gaps through interview with 30 enterprises which often have export-importactivities through Quang Ninh Province

Table 1: Listing of Internal factors in descending order of perceived

Importance

| Descriptive Statistics Importance | Performance | Gap

|

Saving human resources for

enterprises after performance of ICC | 9.2 8.07 1.13

| Saving time for enterprises after

performance of ICC 9.17 7.7 1.47

Awareness of enterprises of

inspection after customs clearance

(ICC) conducted by customs bodies 9.07 6.4 2.67

Saving cost for enterprises after

performance of ICC 9.07 7.9 1.17

Assessment of enterprises about law

and justice enforcement in ICC 9.03 7.8 1.23

Sources: Results collected through the questionnaire survey

Table 1 show that all 5 internal factors are so important to the enterprises because

of ther high scores and closed ranking The factor of human resources saving isrankec first due to its important role to enterprises in recently economy context.This factor draws many concerns as it is vital factor that determine profit of anyenterprise If enterprise can save human resources for customs clearance, it willcreate competitive advantage and improve business efficiency for enterprises The

12

other important internal factors to the enterprises are to save time, awareness of theenterprises of ICC, to save cost (travelling expenses, cost of document preparationetc ), and assessment of the enterprises about law and justice enforcement inICC.

Table 2: List of Internal factors in descending order on perceived Performance

Descriptive Stati: Importance | Performance J Gap

| Saving human resources for enterprises |

| afier performance of ICC (9.2 | 8.07 1.13

Saving cost for enterprises after

| performance of ICC 9.07 7.9 — 17

Assessment of enterprises about law

and justice enforcement in ICC 9.03 7.8 1.23

Saving time for enterprises after

performance of ICC 9.17 7.7 1.47

Awareness of enterprises of inspection

after customs clearance (ICC)

conducted by customs bodies 9.07 6.4 2.67

Sources: Results collected through the questionnaire surveyThe factors are sorted in descending order on perceived performance in Table 14;those which are perceived to be relatively well performed to be reckoned asStrengths (bolded) of enterprises while the remaining factors are Weakness (italic).There are 4 Strengths and 1 Weakness being “Awareness of the enterprises ofICC” These factors will be used in the SWOT matrix

Table 3: List of internal factors sorted in descending order on perceived

performance gaps

| Descriptive Statistics | Importance | Performance | Gap

| Awareness of enterprises of| | |

| inspection after customs clearance | | |

| (ICC) conducted by customs bodies | 9.07 | 6.4 2.67

| Saving time for enterprises after | | |

| performance of ICC 9.17 | Ta 1.47 Assessment of enterprises about law

and justice enforcement in ICC 9.03 7.8 1.23Saving cost for enterprises after

performance of ICC 9.07 79 1.17

Saving human resources for

enterprises after performance of ICC | 9.2 8.07 1.13

Sources: Results collected through the questionnaire survey

Tablle 3 outlines key internal factors for enterprises with the performance gapssorted in descending order The factor having big gap in performance is also aWeakaess of enterprises being “Awareness of the enterprises of ICC” Theawareness of enterprises about the nature, role and importance of ICC is incorrectand ircomplete so that they do not want to cooperate, support and coordinate withcustons officials Many enterprises do not abide by the law or just pursue profitevem violate the laws, especially the law on customs and law on accounting Thereasors for such perceptions and thoughts impact directly and comprehensively todifferent phases of ICC

External opportunities and threats of the enterprises

Besides Internal strengths and weaknesses, there are External Opportunities andThre:as outside any enterprises We will choose Opportunities and Threats from

the folowing external factors:

14

Table 4: List of external factors sorted in descending order of perceived Importance

Desc riptive Statistics Importance | Performance | Gap

The o3servance of the law on customs by

other enterprises in ICC 9.4 78 1.6

Professional ability of customs officials in |

conducting ICC | 8.83 6.17 2.66

Procedures for settlement of complaints by) |

the customs office for the enterprises in|

activities of ICC 8 8.3 -0.3Awareness and attitude of customs officials

Descriptive Statistics Importance Performance | Gap

Procedures for settlement of

complaints by the customs office for | 8 8.3 -0.3the en‘erprises in activities of ICC

The observance of the law on

Lo 9.4 7.8 1.6custons by other enterprises in ICC

Facilities for carrying out ICC 74 7.4 0

Awareness and attitude of customs

ta v 7.73 7.07 0.66

| officials in conducting ICC

| Professional ability of customs

| a ‘1 8.83 6.17 2.66

| officiels in conducting ICC |

|The international linkage in

7.47 43 3.17activites of ICC

Sources: Results collected through the questionnaire survey

Table 6: List of Internal factors sorted in descending order of perceivedPerformance Gaps

Descriptive Statistics Importance Performance | Gap

| The international linkage ¡in

| activities of ICC 7.47 43 13.17

| Professional ability of customs

|dEtiitenhoniSt |e ate

The observance of the law on i

| customs by other enterprises in ICC | 9.4 | 7.8 1.6

| ‘Awareness and attitudes of customs

| officials in conducting ICC 7.73 7.07 0.66

Facilities for carrying out ICC 7.4 7.4 0

Procedures for settlement of

complaints by the customs office for

the enterprises in activities of ICC 8 8.3 -0.3

Sources: Results collected through the questionnaire survey

In the Table 6, we can choose Opportunities (bold) and Threats (italic) Thetop Opportunity for enterprises is Complaint resolution procedures The settlement

of complaints by customs offices may be consistent and carried out in two phases:the first-instance settlement and the second settlement If the complaint resolutionprocedure is quick and transparent, it will help enterprises to protect their benefitsand belief in ICC They will cooperate with customs officials and thus reduce thenumber of violations In addition, there are three other Opportunities for theenterprises being: the observance of the law on customs by other enterprises withICC, facilities to carry out ICC and awareness and attitude of customs officials inconducting ICC Beside the Opportunities, there are Threats obstructing businessactivities of enterprises such as Professional ability of customs officials inconducting ICC and the international linkage in activities of ICC

16

In fact, these problems cause many worries and concern not only to enterprises but also to the functional authorities and export-import economy ICC

is a difficult profession measure that requires civil servants making ICC to haveboth general and in-depth knowledge in many fields and to be passionate with suchcarrier Although the civil servants making ICC are trained basically in theuniversities, the majority of them are so young and inexperienced so theirinformation assessment and analysis skills are limited that lead proposal results andobject selection ineffective These problems pose obstacles for enterprises becausethey cause waste of time and money as well as impact on the international market.Exporti-import activities and investment are sometimes directly involved withforeign factors and international linkage Many shipments can only be classified onthe basis of verification oversea thanks to the help of the customs authorities inmany countries in the region and over the world that have signed cooperationagreement with Vietnam Customs However, international economic integrationand the implementation of international commitments on customs also create theThreats for acti ities of ICC as well as enterprises because work volume arisessuddenly requiring more human resources Standards and norms of goods wereinternationalized that bring higher requirement for enterprises

7 Analysis

The essential factors for SWOT analysis include: the internal factors (Strengthsand Weaknesses in Table 2) and the external factors (Opportunities and Threats in

Table 5) described inside and outside situations of enterprises

Table 7: Proposed SWOT matrix for enterprises

J Internal Strengths Internal Weaknesses

| Saving human resources | Awareness of the

| for enterprises affter | enterprises of ICC

SWOT performance of ICC

| Saving cost for |

| enterprises after

|

| performance of ICC

Assessment of theenterprises about law and justice enforcement in ICC

Saving time for

The observance of the

law on customs by other

Working closely and be ready to help customs

violations

authorities to performactivities of ICC, therebycreating prestige oncapability of enterprise

Improving awarenessand knowledge of ICC as

| well as complaint

| resolution process in ICC

| Well known about laws

on ICC and then givingadvises and proposal tothe competent authorities

to continue improving the system of the law

cooperation, take advantage of

opportunities to learn and exchangeexperiences in importand export business as

ICC withinternational partners By this, it create

Learning and understanding the

regulations as well as

| international |commitments in the field

of Vietnam import and |

export with other |

countries |

Source: Results of questionnaires survey for the customs officers

18

The strengths and weaknesses internal of Customs officers in ICC

Table 1 summarizes the results of internal factors on perceptions of 25/45 ICCofficer at Quang Ninh Customs Department Likert scale is the sequence data(discrete data) and statistical manipulation limited The results can be analysedlogically, data are considered as continuous data In the table 1, the scale ofimportance perceived in descending order with the implementation is listed 4/9internal factors most important in bold will be used in the SWOT analysis Theinternal factors are relatively less important overlooked in the SWOT analysis

Table 8: List of internal factors which are arranged in descending byimportance

Descriptive Statistics Importance Performance Gap

Impact of ICC to ramification goods | 8,44 6,36 2,08

Impact of ICC for cargo clearance 8,4 6,12 2,28

Impact of ICC in improving the

quality of human resources 8,2 6,4 1,8

The effectiveness of ICC in

management, direction and

leadership of all levels 8,12 6,6 1,52

Efficiency of ICC operations with

| amendments and supplements

| management Customs policies 7,84 6 1,84

The impact of ICC activities for the

collected State budget 7,56 6,04 1,52

Role of ICC in inspection, testing,

| and internal protection 7,36 6,16 1,2

The effect of the ICC in arrangement |

Streamline cargo is the most important factor in the number of internal factorsthat is determining the ICC performance Correct streamline cargo will helpthe process of customs clearance check is done more easily, reducing theamount of post-customs clearance inspection For exact ramification, customsofficer need have extensive knowledge and practical experience Thus,streamline cargo operations is becoming indispensable importance in Customsskill In addition, factors as the quality of human resources, process inspectionand customs clearance management executive also has big influence on theICC performance.

Table 9: List of internal factors is arranged in descending by the implementation.

Descriptive Statistics Importance | Performance Gap

The effectiveness of ICC in management,

oo 8.12 6.6 1.52direction and leadership of all levels

Impact of ICC in improving the quali

Proving me quay | go 64 18

of human resources

Impact of ICC to ramification goods 8.44 6.36 2.08

Role of ICC in inspection, testing, and

- : 7.36 6.16 12 internal protection.

Impact of ICC for cargo clearance 8.4 6.12 2.28

The impact of ICC activities for the

7.56 6.04 1.52collected State budget

Efficiency of ICC operations with

amendments and supplements | 7.84 6 1.84

management Customs policies | |

The effect of the ICC in arrangement | |

| 7.32 | 5.36 1.96human resources | |

International cooperation in ICC} |

| - | 6.92 | 3.72 3.2

| operation | |

Sources: Results collected through the questionnaire survey

20

There are 9 internal factors good performance factors are in bold which will beconsidered a strong point, factors have not done well (in italics) There are 6Strengths and 3 weaknesses that will be used in the SWOT analysis.

Table 10: List of internal factors which are arranged in descending by the gap

| Descriptive Statistics | Importance \Performance | Gap International cooperation in ICC operation | 6.92 | 3.72 3.2

L————————————

| Impact of ICC for cargo clearance 8.4 6.12 2.28

Impact of ICC to ramification goods 8.44 6.36 2.08

The effect of the ICC in arrangement

human resources 7.32 5.36 1.96

Efficiency of ICC operations with

amendments and supplements management

Customs policies 7.84 6 1.84Impact of ICC in improving the quality of

human resources 8.2 6.4 1.8The impact of ICC activities for the

collected State budget 7.56 6.04 1.52The effectiveness of ICC in management,

dire:ction and leadership of all levels 8.12 6.6 1.52

[Role of ICC in inspection, testing, and

| internal protection 7.36 6.16 1.2

1 Sources: Results collected through the questionnaire surveyThrough research, elements of international cooperation are a factor with thelargest gap; in the actual, international cooperation in ICC is not serious, theconnection between the national Customs to international Customs is still weak Inthe fiuture, in order to ICC operations are more efficient, customs officers need to

implement international cooperation and decreasing ' management customs clearance time.

External factor:

Table 11: List of external factors are arranged in descending by important level

| Descriptive Statistics | Importance | Performance | Gap

| ‘Awareness customs compliance of

| enterprise 9 9 0

| Consistency and transparency of the |

| text related to state management about

customs 8.12 6.08 2.04

Remuneration for ICC civil servants | 8.04 5.68 2.36

The cooperation of the agencies

involved in the ICC operation 8 5.4 2.6

The other relevant factors 5.28 4.84 0.44

2 Sources: Results collected through the questionnaire surveyAwareness of law-abiding is the most important factors that influences oneffectiveness of inspection In addition, the legislation system of customs clearancerequires the synchronization, more details on the responsibilities of enterprise aswell as customs officers

Table 12: List of external factors

Consistency and transparency of | | |

the text related to state} | |

| management about customs 8.12 | 6.08 | 2.04

[Remuneration for ICC civil]

servants 8.04 5.68 2.36

| The cooperation of the agencies

| involved in the ICC operation 8 5.4 2.6

4.84 0.44

| The other relevant factors 5.28

3 Sources: Results collected through the questionnaire survey

Awareness of legal compliance and uniformity of the legal system are factorswhich are implemented quite well (opportunities), remuneration for ICC civilservants and collaboration with other office are weak, they are the challenge of thepost-customs clearance inspection

Table 13: List of external factors is arranged in descending by gap

Descriptive Statistics Importance | Performance GapThe cooperation of the agencies

involved in the ICC operation 8 5.4 2.6Remuneration for ICC civil servants 8.04 5.68 2.36Consistency and transparency of the text

related to state management about

customs 8.12 6.08 2.04

The other relevant factors 5.28 4.84 0.44Awareness customs compliance of

enterprise 9 9 0

4 Sources: Results collected through the questionnaire survey

These factors need be focused on the next phase is such as collaboratedbetween Customs office to other office, encourage the customs officers and madethe legal system strong and strict

From the analysis and synthesis above, By SWOT analysis method, we will analysis factors and their impact on ICC operation:

Table 14: Proposed SWOT matrix for customs officials

| STRONG

| The effectiveness of ICC in

| management, direction and

| leadership of all levels.

Impact of ICC in improving the

Impact of ICC for cargo | International clearance.The impact of ICC | cooperation in ICCactivities for the collected State | operation

budget

Solution from O+S Solution from O+W

| OPPORTUNITY Customs officers must help | Strengthen

Awareness customs | enterprise to enhance the sense | cooperation between compliance of | of legal compliance by updating | customs officials and enterprise the legislation in customs and | enterprise

Consistency and| customs clearance Besides, | Increased connections

transparency of the text

related to state

management about

customs

They can explain the problems

| which related to the legal

inspection

24

relevance and practical clearance inspection |

Research activity of Quang Ninh Department Customs and the inspection aftercustoms clearance processes to find the optimal solutions for enhancing the quality ofimplement the inspection after customs clearance activity the customs industry ingeneral and in Quang Ninh Customs Department in particular The effectiveness ofthe activities will make a change to the manner of operation and management in thecustoms indutry which moves from traditional management methods to modernmanagement methods applied risk management techniques The activity contributed

to the successful implementation of reforms and modernization in the industry Withthis meaning, Masters Thesis “Innovation in customs procedures from pre-check

to post-check: Evaluation of inspection after customs clearance at the QuangNinh Customs Department in current period” has achieved some results:

The thesis clarified the concept and characteristics of the inspection after customs clearance, then determined the role and the position of the activity in customs industry, and pointed out the need for its development in the current period Besides,the thesis examined some experiences of the other provincial customs offices whichhave characteristics similar to Quang Ninh Customs Department to be basis forimprovement the quality of post-clearance inspection activities operation in QuangNinh Customs Department.

The paper reviewed the real situation of the inspection after customs clearanceoperation in Quang Ninh Customs Department from 2007 to current period,compared the results with current requirements to find out shortcomings andlimitations

Through SWOT analysis, the papers pointed out some finding from theassessment of ICC operation effectiveness The factors as the efficiencyrepresentative of the operation are ranked from highest to lowest:

+ For the enterprises:

Saving human resources for enterprises after performance of ICCSaving cost for enterprises after performance of ICC

Assessment of the enterprises about law and justice enforcement in ICC

Saving time for enterprises after performance of ICC

In particular, the factors to be considered as components creating business effect ofthe enterprises including:

Complaint resolution procedures by the customs office for the enterprises inICC

The observance of the law on customs by other enterprises in ICC

Facilities to carry out ICCAwareness and attitudes of customs officials in conducting ICC

+ For the customs agencies

- The effectiveness of ICC in management, direction and leadership of all

levels.

26

Impact of ICC in improving the quality of human resources.

Impact of ICC to ramification goods.

Role of ICC in inspection, testing, and internal protection.

Impact of ICC for cargo clearance

The impact of ICC activities for the collected State budget

There are 2 factors are considered important supporting for the customs agencies, which are:

Awareness customs compliance of enterprise

Consistency and transparency of the text related to state management about

customs

It is necessary to study carefully for creating a solid and stability legalframework of customs operations in general and the inspection after customsclearance in particular In next time, it is necessaryto amend or supplement theCustoms Law that its foundation must be built on the basis of the standards ofInternational Customs Organization and international practices On the otherhand, the customs legislation is very closely to other laws so it must be adjustedtransparently and consistently with other laws.Continue to improve laws toinspection after customs clearancetowards appropriated the standard ofWTO and ASEAN Customs organization; whereby extended object, scope andduration of the implement; periodic and unexpected inspection to assess thelevel of compliance of enterprises Expand authority for officer of inspectionafter customs clearance department especially for checking out companies whoshowed signs of violation of customs laws, coercive power, tax arrears Theidentification of objects and scope of the implement must be executed on thebasis of risk management systems and international standards All of the aboveprocesses need to be considered for legislating in Customs Law which will beamended substantially in the next time The levy a tax on both the nature ofgoods and good use can lead to overlap The value-added tax refund to exported goods is also an urgent matter due to enterprises often use fake

vouchers, short voucher to gain the refunds Some items which have high taxrate and are made the discrimination by the different companies created weakspot to benefit.

- Improving laws on taxes

Tax policy is an administration tool of the import-export activities In recentyears, the State has reformed continuously, amended and supplements toincrease transparency and fair However, even in internal tax policy, it also has

some potential risk factors In Vietnam, tax laws relate to the export or import

activities showed irrational points which creats weakness in management andsupervision The export or import taxes, value added tax, excise tax and otherrevenues of some taxed good is very high This lead to arise a problem that if

the tax evasion they will gain a huge profit rather than tell the truth to thecustoms authorities The tax payment deadline specified in the current tax law

is a matter with potential risk factors Many companies whose tax debts ofimport-export activities are up to billions but not have ability to pay impactedseriously on source of revenue for years The customs bureau usually faces tothe "tax arrears" Many businesses took advantage of the weak point toappropriate a large amount of tax money and run, do not import-exportbusiness or set up new company for other activities This risk factors can onlyare restricted when the customs authorities controlled the financial ability of theenterprises Therefore, it needs to duty regulations just before clearanceimplement or deposit as experience of the applied countries Continue toimprove the tax accounting, pay taxes mechanism to enhance self-awareness

of the observance of the laws of companies, and increase the responsibility ofthe customs authorities for guidance on customs laws, tax laws Completepayment taxes mechanism, and facilitate taxpayer by linking information andformation online payment system between custom houses, banks, treasuriesand declaration subjects

28

On the other hand, the tax policy changes regularly to meet the requirements of the exchange and development of international trade and development somesunrise industry However, it also has the disadvantage of implement whichaffects the calculation of the performance effectiveness of enterprises One ofthe general principles of management in general and tax policy in particular isthe transparency (including the right to access information and can bepredicted).

- Building standard professional processes

It should continue to complete the inspection after customs clearance process

according to international standards The activity is performed in logically

structured and organized manner The work applies the risk managementmethods in the selectionof the check-out subject, the survey before checking,and checking up It focuses on checking business and checking up books andvouchers of subject We have professional processes of customs procedures inthe traditional method which used paper records now The process will improveand unify application for the performance through online records Toimplement this solution, the Ministry of Finance and the General Department

of Vietnam Customs need to broadcast the propaganda to the business

community and the authorities about investing in technical infrastructure,

connecting information from agencies to businesses On that basis to build astandard process which is applied to the activities of the inspection aftercustoms clearance process as well as service management requirements in the

area.

The standardizing of the inspection after customs clearance processes, togetherwith other management programs must be completed and connected to itsactivities Vietnam Customs currently are receiving the project VNACCS/VCIS (automated clearance system / intelligence data) from the grant aid ofJapanese Government The project is expected to provide the automated

clearance system in 2014 Electronics data from customs clearance process will support effectively in the inspection after customs clearance operation.

- Incentive compensation of the checking out post clearance officer

The inpection after customs clearance operations are difficult and complex.They need to interaction among many units, agencies, organizations and individuals in the process of verifying, gathering of the information whichshowed the signs of breaking the laws Officers work in the poor condition hasnot received appropriate compensation yet.

So, firstly, The General Department of Customs needs to offer The Ministry ofFinance to allow the officer to get a part of funds from the results of collectingtaxes due in tax evasion through inspection after customs clearance activities

In the long term, The General Department of Customs reports to The Ministry

of Finance to be allowed to establish a fund "Support in the spection aftercustoms clearance operation" based on the tax revenue source from the activities.

The preferences, rewards for the officer is not only a physical value but alsoother value such as: the good opportunities for advancement and training, a opportunity for studying aboard, promotion of emulations When the officers worked well, it is necesary to have regimes such as: promotion, bonus, awards,appelation; a opportunity for studing aboard, etc

Besides incentives, rewards, the General Deapartment of Customs shouldintroduce the disciplinary rulesfor unlawful acts which impact negatively on companies’s implement and the results of inspection after customs clearance operation.

(2) Continue to improve the organizational structure and enhance the customs officer’ab

Strengthen the machinery appropriately to meet next assignments

Customs Department of Quang Ninh and leaders of all department need toidentify exactly the role and position of the inpection after customs clearance

30

operations Reviewing and making up for the experts, experienced officials

who has qualification, especially the ability in audit and independent testing

It is necessary to recruit sufficiently a number of officers working inspection

after customs clearance operations immediately, including some good officers

in outside sector be able to meet the job requirements of General Department

of Customs Restructure the machinery of the Customs bureau according into

2 groups: (i) the group of the data investigation and gathering, (ii) the group

of directly checking out The activities of checking out after clearance have

typical character so they should be allocated resource based on some keyprinciples:

+ The arrangement must ensure that can form a team of experts in professional

(3) Standardizing the quality of customs officer and reforming the traininginspecialist activities

To gain high results of the inspection after customs clearance operations, it

is necessary to the officer enhancing their knowledge and skills throughlearning by themselves

+ Understand and comply with laws, regulations and procedures on customs,

the principle of valuation, rules of classification of goods to detect fraud anderrors in the declaration about the customs procedures

+ Understand the process of conducting an international trade business activitythat complied with the GATT agreement The customs officers should haveexpertise in the international trade regulations.

+ Apply an accounting principle competently: The customs officers need to be equipped accounting knowledge to do checking vouchers, accounting books,financial statements

+ Apply the standards and procedures of audit: The inspection after customsclearance operation needs to use audit’s knowledge, so the customs officermust to be quite at home in audit skills

+ Apply the information technology: The activities of international transactions

as accounting, inventory, sales, assessment, etc are done by the computersystem currently Therefore, the customs officers must have the ability to check

on the computer systems

+ Good at foreign language: English language almost is used in internationaltrade along with other language as Franchise and Chinese, so foreign languageskill is indispensable to the customs officers for understanding the content ofbusiness letters and the commercial transaction’s documents

Besides improving organizational structure and increasing regular member to10% , Department; training and retraining are also strengthened to towards tothe customs process modernization The specific tasks to be carried out asfollows:

+) Continue to expand training courses which enhance the official skills

+) Arranges a study tour for officials in the countries which has done wellchecking out

Combination of an on-site training and an intensive training:

+ The on-site training is the activity that the senior civil servants instruct subordinate staff and new staff in necessary skills The training is held at

working place.

32