Analysis the effectiveness of application the electronic customs at quang ninh customs department

Analysis the effectiveness of application the Electronic Customs at QuangNinh Customs Department Abstract: This thesis has conducted analysis on the situation and evaluation of electroni

Analysis the effectiveness of application the Electronic Customs at Quang

Ninh Customs Department Abstract: This thesis has conducted analysis on the situation and evaluation

of electronic customs operation in Quang Ninh Customs Department.Through the combination of SWOT analysis and analysis of the result fromquestionnaire survey, the research clearly points out many factors whichcontribute to the efficiency of electronic customs operation, specificially asfollows: enterprises highly understand the capacity and responsibility ofcustoms authorities, enhancement of consistency, transparency and security ofelectronic customs operations; there are factors that actively support customsauthorities (i.e salary and incentive policies for customs officials); business’sreadiness and capacity By analysing strengths and weaknesses in the SWOTmatrix, this research also finds out opportunities and threats in regards theapplication of electronic customs procedure On the basis of combining theStrengths, Weaknesses, Opportunities and Threats of the inspection aftercustoms clearance activities, this research recommends some solutions toimprove the effectiveness of this customs operation in Quang Ninh CustomsDepartment

LIST OF FIGURES, CHARTS .5

1 The necessary of the study 7

2 Literature review 9

3 Objectives of the research .11

4 Object and scope of research 12

5 The method of research 12

6 Expected contributions of the thesis .13

7 Layout of the thesis 13

CHAPTER I: GENERAL THEORETICAL ISSUES ON E- CUSTOMS OPERATIONS .14

1.1 Concepts, characteristics, roles of e-customs procedures in customs operations

14

1.1.1 Concepts 14

1.1.2 Characteristics of customs administration in customs operations nowadays .15

1.1.3 Role of e-customs procedure in customs operations .16

1.1.4 The necessity of implementing e-customs procedures in current period 17

1.1.4.1 The increase number in import and export goods has caused the urgent need for reducing the clearance time of goods 17

1.1.4.2 Requirements on customs management of the State and of business community 18

1.1.4.4 Ensuring strict management, adapting to the rapid development of international trade .19

1.1.4.5 Meet the requirements of Vietnam Customs in the new situation 20

1.2 Concepts, impact factors and criteria to evaluate the effectiveness of e-custom in customs operations .20

1.2.1 The concept of e-customs efficiency in customs operations 21

1.2.2 Factors affecting the efficiency of e-customs in customs operations 21

1.2.2.1 Internal factors .21

1.2.3 Efficiency of electronic customs procedure in customs operations .28

1.3 Experience on improving the efficiency of electronic customs procedures in customs operations in some foreign countries 37

1.3.1 Experience on implementation of e-customs procedures in foreign some countries

38

1.3.1.1 Japan 38

1.3.1.2 Korea .39

1.3.1.3 Malaysia 41

1.3.1.4 Thailand .43

1.3.2 Lessons for Vietnam Customs in implementing electronic customs procedures 45

1.3.2.1 model of e-customs procedures .45

1.3.2.2 Implementation methods Most countries execute pilot implementation before official implementation For example: .46

1.3.2.3 Performance .46

1.3.2.4 Conditions for implementation .47

1.3.2.5 Benefits of e-customs procedures .47

1.3.2.6 Difficulties during implementation 48

1.3.2.7 The characteristics of each country 48

CHAPTER II: REALITY OF ELECTRONIC CUSTOMS EFFECITVENESS IN CUSTOMS OPERATIONS AT QUANG NINH CUSTOMS DEPARTMENT .49

2.1 Introduction about Quang Ninh Customs Department .49

2.1.1 The establishment and development process 49

2.1.2 Orginazational Structure 49

2.1.3 Geographical characteristics 51

2.2 Reality of e-customs procedure management in customs operations at Quang Ninh customs department .52

2.2.1 Overview of the application of management e-customs procedures in customs operations of Quang Ninh Customs .52

2.3 Assessing the effectiveness of e-customs procedures in the operations of Quang Ninh Customs Department .68

2.3.1 The impact of e-customs procedures on customs operations at Quang Ninh Customs Department 68

2.3.2 The challenge for the management by electronic customs procedures in operations in Quang Ninh Custom .87

CHAPTER III: EVALUATE EFFECTIVENESS OF THE E-CUSTOMS PROCEDURE IN QUANGNINH CUSTOMS DEPARTMENT BY SWOT ANALYSIS 94

3.1 Rationales for the application of the SWOT method in public governance effectiveness analysis .94

3.2 Application of SWOT analysis to assess the effect of changes in public governance: In case of change in customs process from traditional methods to e-customs methods in Quang Ninh Customs Department 96

3.2.1 Results of the questionnaire survey 100

3.2.2 Results of questionnaires survey for enterprises using electronic customs in Quang Ninh Province 107

Chapter IV:CONCLUTION AND SOME SOLUTIONS, POLICY RECOMMENDATIONS 118

REFERENCES .125

1.1 CONCEPTS, CHARACTERISTICS, ROLES OF E-CUSTOMS PROCEDURES IN CUSTOMS OPERATIONS 8

1.1.1 Concepts 8

1.1.2 Characteristics of customs administration in customs operations nowadays .9

1.1.3 Role of e-customs procedure in customs operations .9

1.1.4 The necessity of implementing e-customs procedures in current period .10

1.2 CONCEPTS, IMPACT FACTORS AND CRITERIA TO EVALUATE THE EFFECTIVENESS OF E-CUSTOM IN CUSTOMS OPERATIONS 14

1.2.1 The concept of e-customs efficiency in customs operations 14

1.2.2 Factors affecting the efficiency of e-customs in customs operations .14

1.2.3 Efficiency of electronic customs procedure in customs operations .19

Source: General Department of Customs .27

1.3 EXPERIENCE ON IMPROVING THE EFFICIENCY OF ELECTRONIC CUSTOMS PROCEDURES IN CUSTOMS OPERATIONS IN SOME FOREIGN COUNTRIES 27

1.3.1 Experience on implementation of e-customs procedures in foreign some countries .28

1.3.2 Lessons for Vietnam Customs in implementing electronic customs procedures

34

CHAPTER II 37

REALITY OF ELECTRONIC CUSTOMS EFFECITVENESS IN CUSTOMS OPERATIONS AT QUANG NINH CUSTOMS DEPARTMENT 37

2.1 Introduction about Quang Ninh Customs Department 37

2.1.1 The establishment and development process 37

2.1.2 Orginazational Structure .37

2.1.3 Geographical characteristics .39

2.2 REALITY OF E-CUSTOMS PROCEDURE MANAGEMENT IN CUSTOMS OPERATIONS AT QUANG NINH CUSTOMS DEPARTMENT .39

2.2.1 Overview of the application of management e-customs procedures in customs operations of Quang Ninh Customs 39

2.3.1.1 Electronic customs procedures change the management thoughts, improve risk management and post-clearance inspection, shorten customs clearance time, proceeding to standardize customs management regulations under the revised Kyoto Convention .54

3.3 SOLUTIONS TO IMPROVE EFFICIENCY MANAGEMENT OF ELECTRONIC CUSTOMS IN PROFESSIONAL ACTIVITIES IN QUANG NINH CUSTOMS DEPARTMENT 3.3.1 To supplement and complete the legal basis of the implementation of electronic customs procedures 80

In recent years, electronic customs procedures has been piloted according to Decision 103/2009/QD-TTg, and executed officially under Decree 87/2012/ND-CP and other related guidance documents However, to improve performance, electronic customs procedures need to be supplemented and completed the legal basis with details as below: 80

3.3.3 Reforming management, enhancing customs officers’ capabilities 82 3.3.4 Investment in infrastructure needed to implement electronic customs procedures Improving infrastructure, information technology, reviewing and upgrading network systems, network equipment for bandwidth guarantees, stability and safety, security and enhance the implementation of stand-by networking system, data center – to ensure high level of safety when implementing processing data system; calculate a reasonable rate of investment in the field of information

technology Upgrading existing applications according to centralize processing model of General Department of Customs in an uniform .82 3.3.5 Improving risk management system for customs operations - Establish and upgrade risk management system: Upgrading complete risk management system for export and import - Establish to upgrade information technology systems: Upgrading information support systems for risk management to meet requirements

of professional fields such as assessment, risk classification of customs clearance for import-export goods, transportation, and immigration passengers - Establish risk management team: strengthening human resource and customs equipments to collect information process of customs transactions and risk management 83 3.3.6 Strengthen coordination and cooperation in international electronic customs procedures - Continue to strengthen coordination and cooperation with experts from the Japanese Customs to execute the project VNACCS / VCIS and implement one- stop process in customs to ensure that the system is fully received and successfully operated in Vietnam - Strengthen cooperation with countries who have trade relations with Vietnam to exchange information about risk management and the origin of goods for customs management - Promote the implementation of one-stop customs regulations in country and in Asean, as commitment in Protocol on the Establishment of the ASEAN one-stop customs procedures; at the same time create

an advanced tools for the business community and management authorities 83 3.3.9 To improve the role of cooperation in the business community to improve the efficiency of electronic customs procedures Continue to promote implementation of

"Declaration of customer service" of the customs to deploy the commitment with the social community to ensure facilitation, meeting the State management requirements of Customs for trade, investment and international tourism At the same time, strengthen the propaganda to the business community to explain clearly the rights and responsibilities of partnership engaged in the process of customs clearance, then improving conditions of information technology and the quality of customs declarations as well as improve self-declaration and self-responsibility for the information declared .83

3.3.12 Development team of customs agents, professional customs brokerage -Support and encourage to form and specialize customs agents, customs brokerage Train and equip them with the basic knowledge of customs procedures, the classification, application code, valuation of goods under the criteria of modern customs to promote the clearance of goods - Have appropriate measures to encourage export enterprises using the services of customs agents, customs

brokerage 84

3.4RECOMMENDATIONS 84

3.4.2 For ministries management 85

REFERENCES .88

LIST OF TABLES

Table 1.1 : Exports and imports of goods in the country from 2008 to 2012Error: Reference source not found Table 1.1: Exports and imports of goods inthe country from 2008 to 2012 .Table 1.2: Exports and imports of goods through Customs department ofQuang Ninh province from 2008-2012 Error: Reference source notfoundTable 1.2: Exports and imports of goods through Customs department

of Quang Ninh province from 2008-2012 .Table 2.1 : Process of implemeting the VNACCS / VCIS receipt andlocalization

system

58

Table 2.2: Status of the implementation of inspection at the CustomsDepartment of Quang Ninh Province in the last few years Error: Referencesource not foundTable 2.2: Status of the implementation of inspection at theCustoms Department of Quang Ninh Province in the last few years

Table 2.3: Results of the fight against smuggling , illegal transportation ofgoods across the border and customs violations at the Customs Deparment ofQuang Ninh province from 2010-2012 Error: Reference source not foundTable 2.4: Results of the survey on the level of importance and the level ofassessment of Customs port block Error: Reference source not foundTable 2.5: Results of the survey on the level of importance and the level ofassessment of enterprises of Customs road blocks Error: Reference source notfound

Table 2.6: Results of the survey on the level of importance and the level ofassessment of Customs office block Error: Reference source not found Table2.6: Results of the survey on the level of importance and the level ofassessment of Customs office block

Table 2.7: Results of the survey on the level of importance and the level ofassessment of various kinds of companies Error: Reference source notfoundTable 2.7: Results of the survey on the level of importance and thelevel of assessment of various kinds of companies .Table 3.1: Listing of Internal factors in descending order of perceived

LIST OF FIGURES, CHARTS

Figure 1.1: Model of connecting customs declaration systemof enterpriseswith the electronic customs system of the authorities through socialnetworking infrastructure Error: Reference source not found Figure 1.1: Model

of connecting customs declaration systemof enterprises with the electroniccustoms system of the authorities through social networking infrastructure .Figure 1.2: Model of the focal point to receive information as the basis for customs clearance of import and export goods of the electronic clearancesystem Error: Reference source not found Figure 1.2: Model of the focal point

to receive information as the basis for customs clearance of import and exportgoods of the electronic clearance system .Figure 1.3: Diagram of data information processing of traditional customs 27 Figure 1.4: Diagram of processing centralized data and i nformation at theDepartment in the pilot phase of electronic customs procedures Error:Reference source not foundFigure 1.4: Diagram of processing centralized dataand information at the Department in the pilot phase of electronic customsprocedures .Figure 1.5: Diagram of processing centralized data and i nformation at theGeneral Department in the implementation phase of electronic customsprocedures Error: Reference source not found Figure 1.5: Diagram ofprocessing centralized data and information at the General Department in theimplementation phase of electronic customs procedures .Figure 1.6: Model of connecting the VNACCS with IT systems within andoutside the Customs to implement the national one- doorcustoms mechanism 31

Figure 2.1: Diagram of the organizational structure of the CustomsDepartment in Quang Ninh Province 45 Figure 2.2:Model of transfering the technology of Japanese Customs for Vietnam Customs 57Figure 2.3: The process of traditional customs Error: Reference source notfoundFigure 2.3: The process of traditional customs .Figure 2.4: The process of e-customs procedures Error: Reference source notfoundFigure 2.4: The process of e-customs procedures .Figure 2.5: Managing risk profile Error: Reference source not found Figure2.5: Managing risk profile .Figure 2.6: Model of the over-view system Error: Reference source notfoundFigure 2.6: Model of the over-view system .Figure 2.7: Model of centralized data processing Error: Reference source notfoundFigure 2.7: Model of centralized data processing .Chart 2.1: Chart on the growth rate of the enterprises registered to participate

in e-customs procedure Error: Reference source not found Chart 2.1: Chart onthe growth rate of the enterprises registered to participate in e-customsprocedure .Chart 2.2: Distribution percentage of customs declaration at the customsdepartment of Quang Ninh Province 61 Chart 2.3: Compare the ratio of percentage of e-customs declaration over %rate of return E / total import and export declarations with targets assigned by the General Department of Customs 62 Chart 2.4: Compare the percentage of turnover from e-customs procedureover the total import/export turnover with targets assigned by the GeneralDepartment of Customs Error: Reference source not found Chart 2.4:

Compare the percentage of turnover from e-customs procedure over the totalimport/export turnover with targets assigned by the General Department ofCustoms

Chart 3.1: Trade growth và global GDP 1950-2010 (%) Error: Referencesource not found

1 The necessary of the study

As a government agency to provide "public service" in customs;reform, development and modernization is the urgent requirement of theGovernment to the customs In addition, Customs is subject to externalpressure, which requires a comprehensive change in order to respond quickly

to the increasing needs of international trade and the challenges ofincreasingly complex environment due to integration and globalization

With the characteristics of border management agency, managementand “public service" provision of Customs have a powerful impact on thefacilitation of international trade So, the first pressure on the customs is therapid development of international trade as a result of the application process

of advances in science, technology and especially information technology inmanufacturing, trade and services at international level The change in thecommercial method makes the trade almost become "no gap" and it happensalmost "every time and every where" This process led to the demand of labordivision, increasing specialization within the scope of international trade Thequantity and quality of participants in different roles ensure the increasinggrowth of supply chain of international goods

Participation in world trade helps countries to boost economic growth

In fact, countries with rapid integration into global economy are the mostlikely to achieve high growth rates Globalization and regional integration hasmade commodity markets and services expand increasingly and seem to have

no boundaries, creating markets for international trade globally The number

of international treaties and agreements related to trade is increasing rapidly

as well as the formation of FTAs, customs unions block, the axis ofdevelopment, economic Cooperation forums and even higher level of

integration such as the European Union.This means that the non-tariff barriersand tariffs must be increasingly reduced and removed Besides, countrieshave to commit to the reform process to ensure compliance with internationalstandards, minimize control activities to ensure maximum to facilitatecommercial activities within the framework of these treaties and agreements.

Certainly, customs procedures are considered to be non-tariff barriers,

so it needs to be changed, renew the procedures according to internationalstandards and meet international commitments This is an urgent task but full

of challenges to the customs when carrying out reforms in the path ofintegration, especially for the least developed countries or developingcountries whereas resources for reforms are too limited

In short, if the customs do not make changes in time, it will not onlymeet with commercial development, but also become a major barrier to trade

It will be unable to deal effectively with the negative effects as wholesalefraud, fraud, terrorism, and consequently will not accomplish the task ofprotecting revenues and public benefits, inadvertently prevent the growth ofnational economy

Facing with this situation, for the past few years, Vietnam Customs hasnot stopped promoting customs reform, development and modernization Inparticular, the robust application of science and technology to performcustoms procedures is considered to be the core mission, a breakthrough inthe reform of administrative procedures and has been specified in the MasterPlan of customs reform, development and modernization.Since 2005, thePrime Minister signed Decision No.149/2005/QD-TTg issued on June 20,

2005 to allow pilot e-customs procedures at the Customs Departments in HoChi Minh city and Hai Phong City With the results obtained after a time ofexecution, on 12 August 2009, the Prime Minister issued Decision No.103/2009/QD-TTg to amend and supplement a number of articles of the

Decision No 149/2005/QD-TTg on the pilot implementation of e-customsprocedures, allowing the pilot implementation of e-customs procedures at 10customs departments in cities/ provinces among 33 customs departmentsacross the country Then continue to implement at other customs departments

of other cities/ provinces at the request of Minister of Finance By 23rdOctober, 2012, the Government issued Decree No 87/2012/ND-CP detailing

a number of articles of the Law of Customs regarding e-customs proceduresfor commercial import and export goods, terminating the pilot phase andofficially implementing e-customs procedures all over the countries

Along with the general trend of the customs sector, in recent years,Quang Ninh Customs Department has made great efforts in adopting e-customs procedures in customs operations, creating fundamental changes inmanagement, reducing paperwork in customs documents, while maintainingtight control of compliance with customs legislation of declaration

However, this method includes many new techniques to apply incustoms operations, thus the implementation has coped with many difficultiesand challenges, especially problems in awareness, knowledge, applicationskills, promoting propaganda and encouraging enterprises to participate inbecause many businesses and individuals who have got used to work intraditional ways, are afraid of changes Meanwhile, international integrationand globalization including customs procedures require simplicity, harmonywith international standards based on the application of informationtechnology, centralized data processing and e-customs procedures

Consequently, as an officer in customs, I chose the topic "Analysis theeffectiveness of application the Electronic Customs at Quang Ninh CustomsDepartment" for my Laws (Public Management) graduation thesis

2 Literature review

During the renovation period, in Vietnam, there have been many

research works on customs law, state management by customs law in order tomeet the requirements of accelerating the process of international economicintegration, modernizing and reforming more strongly the state administrativeprocedures of customs, facilitating for import and export operations,immigration, transit, tourism; promoting foreign investment to ensure theimplementation of state policy on developing economy- culture- society,science - technology, international cooperation and exchanges, to defend ournational sovereignty and security, the legal rights and benefit of thegovernment, businesses and individuals Research works on the field ofcustoms are expressed in various levels from the ministry-level projects,seminars to doctoral thesis and master thesis.

In the world, we also have seen a number of studies on e-customs such

as the research "Exporting e-Customs to developing countries: a semioticperspective" of Stefan Henningsson & Niels Bjorn-Andersen Previousstudies indicated two important issues of e-customs

The first is faciliating commerce by applying information technologysystem and supply chain services for companies; the second is analyzing costand benefit of system improvements The role of customs as "gatekeepers" ischanging due to the development of international trade, tariffs and non-tariffbarriers reduction, the increase in crime and threat of terrorism and theexpansion of different types of logistics However, these researches have onlystudied on the application of e-customs at international level withoutconnection to the social - economic and infrastructure conditions of Vietnam

in general and Quang Ninh province in particular

Based on the theoretical framework of e-customs, legal documents andVietnam commitments to electronic customs, the author uses the SWOTanalysis method to assess the effectiveness of e-customs implementation at

Quang Ninh Customs Department, and then propose recommendations toimprove the effiency of electronic customs.

3 Objectives of the research

- Execute a comprehensive and systematic research on the effectiveness

of e- customs application in customs operations:

+ Currently applied e-customs model;

+ Capacity of customs officials;

+ clearance time of goods;

+ Enterprises perception of e-customs;

+ Benefits that enterprises get from electronic customs declaration;+ The interaction between enterprises and customs offices

- Proposals to improve effectiveness of e-customs procedures:

+ Quality of infrastructure to implement electronic customs

declarations;

+ Training and guidance for customs officers in electronic customs declarations;

+ Improve the performance of enterprises

- To achieve those aims, the project needs to:

+ Clarify some theoretical and practical issues on the efficiency of customs application in customs operations On a theoretical basis of e-customs effectiveness in customs operations, this thesis provides criteria toevaluate the performance of e-customs application and conditions to ensurethe management capability

e-+ Do researches, surveys to assess the application of electronic customsprocedure in Quang Ninh province, define difficulties, obstacles andlimitations as well as identify potential risks and the cause of those risks incustoms operations;

+ Propose solutions and recommendations to improve the efficiency ofe-customs application in customs operations in Quang Ninh, limit to thelowest level of its adverse effectst, contributing to the development objectives

of the Customs before the process of international economic integration

4 Object and scope of researc hh

- Electronic customs operations in Quang Ninh Customs Department.

- Realistic survey and appraisal on e-customs declaration of enterprises

which has import and export activities through the Customs Department of Quang Ninh province

Data of this survey is collected from 2010 to 31st December 2012

5 The method of SWOT studies in evaluating the effectiveness of public managementresearch

The origin of the SWOT analysis (Strengths, Weaknesses,Opportunities and Threats) is the SOFT analysis(Satisfactory, Opportunity,Fault, Threat), which is the result of studies on business planning conducted

by Stanford Research Institute from 1960 to 1970 The SOFT analysis waspresented in a conference in Zurich in 1964, Urick and Orr changed andcalled it SWOT (Humphrey, 2005) Then Weihrich (1982) modified SWOT(or TOWS) into a matrix, to harmonize between internal factors (ie strengthsand weaknesses) of an organization and its external factors (ie opportunitiesand threats) to create systematic strategies for implementation

SWOT analysis Model is a useful tool in acknowledging and makingdecisions not only in the business environment of enterprises, but also in thefield of public administration to analize policies, compare among choices topropose suggestions for complete policies

Applied in this study, the author uses SWOT analysis model to assessthe effectiveness of e-customs implementation at Quang Ninh Customs

Department, then offers policy recommendations to improve the performance

of electronic customs Besides, the survey uses empirical methods,questionnaires to investigate 100 import and export enterprises throughQuang Ninh Customs Department and 100 customs officers of Quang NinhCustoms Department on internal and external factors affecting the efficiency

of e-customs execution

To identify strengths, weaknesses, opportunities and threats thequestionnaires using the Likert scale with the scale ranging from 0 to 10(whereas 0 represents the least significant or worst implementation and 10represents the most significant and well-done) Along with the combinationbetween internal factors and external factors in the SWOT analysis, the studyproposes recommendations to improve the performance of e-customs

6 Expected contributions of the thesis

In theory, the thesis clarifies theories on the application of e-customsprocedure in customs operations, the framework and the progress of applyinge-customs in the world

On this theoretical basis, the author evaluates the effectiveness of customs operation in Quang Ninh and makes policy recommendations toimprove the performance of e-customs

e-7 Layout of the thesis

Besides, the introduction, conclusion and list of references, the thesis is

structured into three chapters

Chapter 1: General theoretical issues regarding electronic customs

Chapter 2: Reality of e-customs performance in the operations of Quang NinhCustoms Department

Chapter 4: Evaluate effectiveness of the e-customs procedure in Qquang

Nninh customs department by swot analysis

Chapter 43: ViewsConclu sdt ion , solutions and policy recommendations.

CHAPTER I: GENERAL THEORETICAL ISSUES ON E- CUSTOMS

According to Clause 6, Article 4 and Article 16 of the Laws of Customs

2001, "Customs procedures are the tasks that the customs declarants andcustoms officers must undertake according to this Law to goods and means oftransport"

E-customs procedures: a procedure in which customs declaration,

receipt, handling customs declaration information, exchange of informationunder provisions of the law on customs procedures among concerned partiesare implemented through the system of e-custom data processing (Clause 1,Article 3 of Decree No 87/ND-CP issued on 23rd October 2012 of theGovernment detailing some articles of the Law of Customs on e-customsprocedures for export and import commercial goods)

The e-customs declaration system: an information system for customs

declarants to declare, receive information and feedback from customsauthorities in the process of e-customs procedure implementation (Clause 3Article 3 of the Decree No 87/ND-CP issued on 23rd October 2012 of theGovernment detailing some articles of the Law of Customs on e-customsprocedures for export and import commercial goods

E-customs data processing System, electronic clearance system: the

information system managed by General Department of Customs toimplement electronic customs procedures (Clause 2, Article 3 of the Decree

No 87/ND-CP issued on 23rd October 2012 of the Government detailingsome articles of the Law of Customs on e-customs procedures for export andimport commercial goods

Electronic customs declarations: a document in electronic form

includes a set of indicators on declaration information for customs declarants(Clause 5, Article 3 of the Decree No 87/ND-CP issued on 23rd October 2012

of the Government detailing some articles of the Law of Customs on customs procedures for export and import commercial goods

e-Export of goods: goods are taken out of the territory of Vietnam or into

special areas regarded as customs separate areas in the territory of Vietnamaccording to the law (Article 28 of the Commercial Law on 14 June 2005)

Import of goods :goods from abroad are brought into the territory of

Vietnam or from special areas regarded as customs separate areas in theterritory of Vietnam according to the law (Article 28 of the Commercial Law

The challenge for customs authorities is to manage tightly andsystematically, prevent and fight successfully against commercial fraud, aswell as to promote quick clearance of goods, create favorable conditions for

the operations of export and import, reduce cost and time incurred forenterprises

1.1.3 Role of e-customs procedure in customs operations

- Step by step reform customs operations in the direction of consistencywith standards of modern customs in the region and in the world, convertfrom manual customs procedures to electronic customs procedures; review,drawing lessons to improve the process of e-customs procedures

- Executing e-customs procedure is the most basic content inimplemeting reform and modernization strategy of Vietnam customs Allenterprises will find that e-customs procedures contribute to increasecompetitiveness in the international trade, reduce clearance time and save alot of cost

- Contribute to the efficient overall assessment over the reality ofcurrent administrative procedures, detect shortcomings, thereby proposesolutions, complete the system of administrative procedure towards simplicityand convenience for individuals, organizations and businesses; create afundamental change in the administrative reform, ensure the consistency,simplicity, and transparency of administrative procedures, improvegovernment administration and promote economic and social development;contribute to the fight against corruption and waste

- Helps enterprises be more active in clearance time Previously,enterprises can only declare in office hours, now the electronic clearancesystem receives, inspects, registers, distributes the declaration during 24hours Enterprises get responses from customs office quickly and timely;which contributes to convenient and accurate declarations Using e-customsdeclaration, enterprises save a lot of travel expenses, cost for photocopies andprinting documents

- The implementation of e-customs procedure helps to reduce the time

of shipment clearance: for free- checking shipment, enterprises just need tocomplete online customs procedures, for shipment to be checked, theapplication procedure has been much more simple and faster Therefore,import and export enterprises always expect to cooperate and ready to supportthe Customs in the implementation of e-customs procedures.

1.1.4 The necessity of implementing e-customs procedures in current period

1.1.4.1 The increase number in import and export goods has caused the

urgent need for reducing the clearance time of goods

In recent years, turnover of exported and imported goods/ servicestends to grow anually, the number of merchants engaged in import and exportincreases in both quantity and import-export business effectiveness,specifically:

Table 1.1: Exports and imports of goods in the country from 2008 to 2012

(Unit: million USD)

Source: Website http://www.gso.gov.vn of Vietnam General Statistics Office)

Table 1.2: Exports and imports of goods through Customs department of

Quang Ninh province from 2008-2012

(Unit: million USD)

The data shows that exports and imports has grown increasingly faster,the trade balance has improved towards deficit reduction, which means thatVietnam's economy is strongly integrated into the world economy.

1.1.4.2 Requirements on customs management of the State and of business community

For the requirement of country development, customs are supposed toimprove management capacity to ensure effective implementation of state ‘seconomic policies, fight against smuggling, trade fraud, prevent traffickingand transporting prohibited goods and illegal transactions accross the border,ensure revenue for the budget, help to protect the social order and safety,consumer interests, national security and the environment

State management in customs must guarantee the convenience andventilation for import and export activities, promote investment, tourism andbroaden services etc It is important that customs procedures are simple,clear and transparent; customs clearance is carried out quickly to reduce costsfor businesses; information is provided public and promptly; the balancebetween service and management is ensured

1.1.4.3 Requirements of integration in consitency with the development trend

of international customs

In 2006, Vietnam became an official member of World TradeOrganization (WTO) It is the implementation of WTO requirements andcommitments including: common commitment on service, commoncommitment on tariffs, WTO commitments on banking - securities,accounting, auditing, tax - insurance services, distribution - logistics .Besides, they are commitments of bilateral and multilateral trade agreements,

of free trade areas as APEC, ASEAN

In the field of customs, the requirement to Vietnam is to simplifycustoms procedures under the Kyoto Protocol, determine customs value under

GATT Valuation Agreement, perform the Harmonized CommodityDescription And Coding System (HS Convention), execute commitmentsrelated to the protection of intellectual property rights for goods (TRIPSAgreement); ensure the system of customs legislation to be complete,consistent, clear and transparent in accordance with internationalcommitments; strictly and equally implemented for all individuals.

Currently, the implementation of e-Customs procedure in customsoperation is recommmended by The International Customs Organization andhas been applied in 59 member nations The growing tendency ofinternational customs today is to apply modern information technology foreffective customs management E-customs application is the developmentpath of most countries and the requirement of international customs in thetrend of globalization In an effort to implement e-customs procedure,Vietnam Customs showed willingness to participate in the execution ofinternational organizations’ aims, for national and international interests

1.1.4.4 Ensuring strict management, adapting to the rapid development of international trade

Today, international trade has been changing dramitically in bothcontent and form There has been an increase in various types of services,commercial business and new trading methods requiring the management,control and supervision of the customs authorities to respond In particular, e-commerce is an international trading method with rapid growth, diversity, andspace for global transaction In the past few decades, e-commerce hasdeveloped at a very high speed and is predicted to be the trend dominating theworld economy in 21st century

In e-commerce, transactions are carried out through means of moderntechnology with higly-reliable encrypted linkages Vouchers used in businessare electronic documents verified by digital signatures With the aim to take

the utmost advantage of applying scienctific technology to ensure tightmanagement of commodity transactions through e-commerce as well as tocatch up with the rapid development of international trade, e-customsprocedures are indispensable to Vietnam customs and countries around theworld to create the most favorable conditions for trade, investment andtourism E-customs in accordance with general development process of theworld is considered to be an advanced, modern and standard method ofcustoms administration.

1.1.4.5 Meet the requirements of Vietnam Customs in the new situation

In the context of the fluactuating world in economy and politics, besidetraditional tasks, Vietnam Customs is also requested to fight against terrorism,money laundering, diseases, to ensure security and safety for the society, etc.Whereas human resources of the Customs can not keep rising with theincreasing pace of work It is also difficult to manage effectively if humanresources continue to expand

In the new situation, for successful execution duties of the Customs ingeneral and Quang Ninh Customs Department in particular, the effectiveness

of implementation e-customs procedure will be the core and determiningfactor to change basically the thoughts of modern customs management,which means: Applying risk management methods in customs operations,gradually replacing the traditional way of managing each shipment at theborder to the entire information management during the process of export andimport of enterprises; changing from pre-test to post-test, classifyingenterprises based on the available database from customs authorities and thecollected data to draw appropriate management policies; orienting enterprisestowards obedience of laws in all activities

1.2 Concepts, impact factors and criteria to evaluate the effectiveness of e-custom in customs operations

1.2.1 The concept of e-customs efficiency in customs operations

The effectiveness of e-customs is the maximum exploitation of theadvantages of customs management through modern science and technology

in customs operation processes, contributing to reduce clearance time,faciliate for export and import activities, investment, trade, tourism, enhanceeconomic - social development, and national defense

1.2.2 Factors affecting the efficiency of e-customs in customs operations

After the Prime Minister issued Decision No.103/2009/QD-TTg,General Department of Customs has brought out many documents requiringCustoms Deparments of cities/ provinces in the pilot list to execute urgently.Customs Departments in provinces and cities have also actively andcreatively organized conferences to grasp thoroughly to member units andofficials to define the determination to implement this new policy Manycustoms departments have specified the targets assigned by the GeneralCustoms Department and required the Customs Sub-Departments to sign in

the commitments to achieve those targets.

The Customs Department of Quang Ninh has determined theimplementation of e-customs procedures to be the central political task ofQuang Ninh Customs Department in particular and the Customs in general sothe committees and leaders of the Customs Department has made drasticleadership and direction to implement synchronously many effectivemeasures in order to achieve the highest efficiency in e-customs exection

Human factors in the implementation of electronic customs procedures:

The capacity of officials: The capacity of officials who implement

electronic customs procedures has a huge impact on the efficiency of customs In the past few years, under the increasingly high requirement ofreform, development and modernization, the Customs has been continouslyimproving and fostering the capacity of officials

e-The qualification structure of officials at Quang Ninh CustomsDepartment is described as follows: Graduate-level accounts for 2.10%,undergraduate-level accounts for 83.23%, College-level occupies for 10.06%,Intermediate-level accounts for 3, 35%, other lower level accounts for1.26%.With the above qualification structure, it is obvious that staffs and officials ofQuang Ninh Customs Department are highly qualified, meet basicrequirements to carry out efficiently customs procedures by informationtechnology softwares and modern equipments for inspection andadministration

Training, Coaching: General Department of Customs, Customs

Departments of provinces and cities have organized a lot of training coursesfor officials who implement e-customs procedures to learn about businessprocesses, risk management, usage of information technology systems, aswell as cooperated with Vietnam Customs School in teaching to raise

awareness and knowledge on customs procedures for all customs officers inthe industry According to the report of the General Department of Customs

on pilot implementation of e-Customs procedure issued with the DecisionNo.103/2009/QD-TTg on 12 August 2009 by the Prime Minister, the GeneralDepartment of Customs has organized 50 training courses and the CustomsDeparments of provinces and cities have organized nearly 150 courses

The task of thought education: Changing from the traditional

management method to a new management method is extremely difficultbecause it affects many aspects of customs operation, affecting the thought,emotions, and consciousness of many customs officials This is the biggestobstacle not only to the customs, but also to other industries and agencies

IT Infrastructure:

In addition to human factors, information technology infrastructure is acritical element in the process of implementing e-customs procedures Clearlydetermining this, in recent years, the Ministry of Finance and the GeneralDepartment of Customs have invested in information technology and networkinfrastructure to Customs Departments at cites, provinces, ensuringsufficiency as well as the quality of the equipments to operate customs dataprocessing system in the period 2009-2011, namely up to 30/10/2011 theequipment and information technology infrastructure of the Customs gained:

- Servers, workstations, printers in the industry: 1179 servers, 9860workstations / 10,010 officials, 398 A3 printers, 2799 A4 printers , 410 UPSfrom 3KVA and above; 315 rack

- For the WAN infrastructure: 08 Customs Deparments haveestablished data centers linking the Sub-Department with Department through

03 lines (two 2Mbps lines of VNPT and EVN, one 512Kbps line of VNPT),

12 units have implemented e-customs procedures connecting the Department with Department thourgh 02 lines (one 2Mbps line, one 512Kbps

Sub-line of VNPT); the remaining 13 customs Department is connected with departments through 02 lines (one 512Kbps line, and one 256Kbps line ofVNPT).

sub-Quang Ninh Customs Department has arranged Data & IT Centerensuring technical requirements for the installation of 20 servers, WANnetworking system, LAN networking system, data backup systems, securityand safety assurance system, fire alarm systems, UPS power systems withcapacity of 60 KW which afford to gather and process information ofDepartment Customs Sub-deparments under the Department have arrangedprivate sever rooms with sufficient conditions for technical safety Each sub-department is equipped with 3 to 5 servers to process information forelectronic customs clearance

Network infrastructure: The speed of internet connection forinformation exchange with the Enterprise is the 14MB optical cable line ofFTTH technology The WAN connection to the Customs sub-Departmentincludes of 2 lines: 521Kb and 2Mb Monitoring points are connected by theLAN networking optical cable with the speed of 30Mb to meet therequirement of information processing for electronic clearance supervison

1.2.2.2 External factors

The system of legal documents:

For the last few years, electronic customs procedures have beenexecuted according to the Circular No.222/2009/TT-BTC issued on 25thNovember 2009 by the Ministry of Finance guiding the pilot electroniccustoms procedures and has had legal basis for the declaration, receipt andprocessing electronic customs documents, customs clearance based on e-customs declaration forms, allowing the usage of electronic documents

On the basis of the Circular No.222/2009/TT-BTC, GeneralDepartment of Customs has issued guidelines to units implemeting pilot e-

customs procedures on customs operations, risk management, declarationinspection, priority individuals for customs detailed instructions Theguidelines will be the basis for establishing the e-customs data processingsystem, in particular: issuing customs procedures for exported and importedgoods contracted for processing; favorable customs procedures for theVietnam Intel Products Ltd Company; the process of re-examinationdocuments implementing e-customs procedures

On 23rd October 2012, the Prime Minister issued DecreeNo.87/2012/ND-CP with detailed instructions for the Law of Customs tostipulate the electronic customs procedure for exported and imported goods,creating a solid foundation to officially implement electronic customsprocedures

Import-export enterprise community

Enterprises are partners of customs authorities They are factors thatdirectly influence on the effectiveness of e-customs The efficiency ofelectronic customs procedure depends on the willingness to join and thecapacity of participating businesses

During the first time of e-customs implementation, the participation ofbusiness community is still limited because of the lack of information as well

as the awareness and external conditions of finance and procedures However,the main reason is human, which is the problem of cognitivity strength,hesitance to reform while electronic customs procedure is a completely newand abstract method

Moreover, enterprises are only willing to participate in when they arewell-aware of the role and benefits of e-customs, assess the superiorities ofelectronic customs procedures in comparison with traditional customsprocedures Therefore, to carry out electronic customs procedures effectively,

it is crucial that the Customs promote propaganda about the benefits of

electronic customs procedures under different forms.

Besides, when participating in electronic customs procedures, importand export enterprises must also meet the conditions of the possibility ofcustoms declarations and information technology This is obviously not asmall problem because the majority of enterprises in Vietnam are medium andsmall businesses, the customs staff are unstable, financial investment forinformation technology equipment for customs declaration is limited

Cooperations among ministries, industries and relevant agencies:

In Vietnam, there are 20 ministries, 6 ministerial-level agencies and 13government agencies In addition, there are a number of agencies under theMinistry as the General Department, Bureau, Department v.v All of theseagencies have rights to promulgate documents guiding the implementation oflaws regarding the areas in which they manage and regulate the import andexport activities according to the laws

Infrastructure of social networks:

The social network infrastructure is a tool to transmit declarationinformation of customs declarants to Electronic Clearance System of thecustoms authorities and send feedback, instructions from the customsauthorities to customs declarations

DO AN

H NG HIệ P

D O A N

H N G H Iệ P

Electronic clearance system

Source:General Department of Customs)

The effectiveness of electronic customs procedure depends on the readiness

of the social network infrastructure to meet the demand of informationtransfer between the customs declarant and the customs authority in both

However, in general, the social network infrastructure of Vietnam still dealswith asynchrony among regions, between urban and rural areas; betweenurban centers with remote areas

1.2.3 Efficiency of electronic customs procedure in customs operations

1.2.3.1 E-customs procedures promote the role of foundation for customs operations

- Electronic customs procedures are performed on the electronicclearance system, creating a complete database to carry out all steps, stagesand sections of the operation In traditional customs procedures; steps, stagesand sections of operations are performed sequentially and discontinouslythrough paper documents together with information gained from examiningand inspecting paper profiles

With electronic customs procedure, all of these steps and stages areexecuted on the Electronic Clearance System, buiding a foundation toperform customs operations This System also provides guidelines in stepsand stages for a specific shipment, issues warnings based on the analysis ofdeclared information, presents the result of previous step as well asestablished criteria on risk management Then, results of the implementation

of steps, stages will be saved into a database of Electronic Clearance Systemand continue to be the basis for other customs operations such as import/export declearion liquidity, liquidity for temporary import and re-exportdeclaration , liquidity for processing contract, tracking tax debt, establishingcriteria for risk management, customs clearance inspection

In addition, with the model of centralized data processing, information

exchange among operational departments, among Customs Sub-Departments

is carried out easily and quickly

- E-Customs Procedure is the focal point to receive information fromcustoms declarants, relevant ministries and sectors through ElectronicClearnce System for clearance of exported and imported goods

For export and import commodity under the management of ministries,sectors, commodities enjoying special preferential import tariff treatment,customs authorities are only allowed to carry out clearance procedures underthe permission of relevant ministries and sectors Electronic ClearanceSystem will be connected to relevant authorities to receive and transferinformation to customs officers to follow up

Figure 1.2 Model of the focal point to receive information as the basis for customs clearance of import and export goods of the electronic clearance

system

Electronic Declaration

Information of C sector management

Information of B sector management

Information of A sector management

Minister/ sector A

Electronic Clearance System

Minister/ sector B

Minister/ sector C

Minister/ sector D

DO AN

H NG HIệ P

Information

of customs declaration

Information of D sector management

(Source: General Department of Customs) 1.2.3.2 Increase the ability in overall risk management for customs operations

All operational processes executed on the Electronic Clearance Systemallow customs authorities to control the entire process of customs proceduresfor exported or imported goods All information about the export/ importshipment, result of processing the previous steps and operational processes,the next performance requirements are displayed on the system so customsofficers will be able to reduce risks while implemeting e-customs procedure

Furthermore, with established criteria for risk management and list ofstandardized goods, at each step, electronic clearance system will providewarnings correctly for each specific lot of shipment This is a great advantage

of electronic customs procedures in comparison with traditional customsprocedures that brings dramatical efficiency to the operations of Customsbusiness

Electronic Declaration

Information of C sector management

Information of B sector management

Information of A sector management

Minister/ sector A

Electronic Clearance System

Minister/ sector B

Minister/ sector C

Minister/ sector D

DO AN

H NG HIệ P

Information

of customs declaration

Information of D sector management

Clearance confirmation, Allow to take the commodity back for maintance;

Temporarily release the commodity

1.2.3.3 Bring economic benefits and reduce costs for businesses engaged in import and export activities

The successful implementation of electronic customs procedures of theCustoms have contributed to promote the right of free business, to promoteand support for enterprises the ability of providing goods and services todomestics and international marketes as follows:

- Electronic customs procedures reduce clearance time, reducing costsfor storage and travel time for business, increased competition for importedgoods Businesses can take advantage of the efficiency of business due tocustoms procedures simpler, according to international standards, contributing

to the state budget revenues to promote economic development - social

- Electronic customs procedures creates transparency to the process ofcustoms procedures by all the information and settlement procedures areelectronic clearance system response through the Internet Import and exportenterprises can monitor the settlement procedures of customs administrationthrough the feedback and know specifically what to do to fulfill customsprocedures

In addition, electronic customs procedures will decrease direct contactbetween customs officers and enterprises’staff which hepls to minimizeinconvenience, harassment, avoid paying back the documents when makingcustoms procedures, reduce conflicts between customs officials andenterprises

- customs procedures facilitate activeness of enterprieses because customs Clearance Systems receives, inspects, registers for declarationsautomatically during 24 hours / 7 days When performing e-customsprocedures, rather than coming to the customs office during working hours asbefore, now in any location that has internet connection, at any time

E-enterprises can implement customs procedures, declare information aboutimport/ export goods in the coded form on computer system As a result,enterprises can take the initiative in the process of customs declaration,

In the trend of globalization, trade activities are carried out continuously,without limitation of space and time; the competitiveness of an import-exportenterprise depends on its capacitiy, strategies to enter international markets,preferential policies as well as the openness and reform of administrativeprocedures of each country E-customs procedure is a breakthrough in thereform of administrative procedures, facilitating for export/import enterprises

to penetrate into international markets

1.2.3.4 Contribute to strengthen the implementation capacity of customs officials

Electronic Clearance System provides customs authorities with a usefulmeans to perform customs operations It encourages countries to thoroughlyuse adjustment measures raised by world customs organization to make animpact on world trade exchange Through automatic customs clearancesystem, customs authorities can get enough information about the goodsbefore it is exported or imported, track tax debts and create conditions for awide range of commercial services Today, most advanced countries in theworld has changed the focus of commodity inspection into online-checkingfor customs information, which helps to reduce the rate of inspection

In the process of customs clearance, electronic clearance system is fullyintegrated with standardized data in commodity policy, criteria for riskmanagement for commodity and enterprises to automatically receive andinspect information of declarations, register for electronic declaration,distribute appropriately and issue warnings, instructions for customs officers

to perform Processed information and result of the previous execution are

expressed clearly on electronic clearance system and transfer to the customsofficer at the next stage.

It can be said that in electronic customs procedures, officers arecompletely supported due to the development of information technology: allrelevant information is provided sufficiently and timely for decision-makingprocess of customs officers

1.2.3.5 Contribute to strengthen the information and data processing

For recent years, the implementation process of electronic customs procedure

is divided into two stages, including the pilot phase executed on the 3.0Electronic Clearance System and the official implementation phase on the 4.0Electronic Clearance System Clearly, each stage is an advanced step in thedata process towards the phase of data process focusing on a national scale

For traditional customs, declarants directly submit customs documents

at customs sub-departments at the border gate Information is processed at thesub-department and transferred to the Department of the province/ city toprocess and then continue to transmit information to the General Department

of Customs Information after being processed at the General Department ofCustoms is sent back to the Customs Sub-Department through the system ofthe Customs Department Wich such information process, it will take a lot oftime, information is not unified and standardized, so many officers getinvoled in information technology operations, and it takes a lot of time fordata transmission while information is updated daily so sometimes does notmeet the requirements of customs operations

Figure 1.3: Data information processing of traditional system