Facilitating the Regional Movement of Goods

Asia Pacific Trade Facilitation Forum

Bangkok 26th November 2009

Paul Apthorp

ARN Developments

• Phase I December 2005

– Linking Singapore- Malaysia – Thailand– Growth 300 % 2006- 2009

• Phase II January 2007– Linking Thailand- Laos- Vietnam…via EWEC

• Phase III July 2008– Linking South China to the ARN via Hanoi– Linking Phonm Phen to Bangkok and Saigon Feb 2009

VTE

Singapore新加坡

Kuala Lumpur吉隆坡

Phnom Phen金边

Malaysia马来西亚

Bangkok曼谷

Ho Chi Minh胡志明

Vietnam越南

Laos老挝

Myanmar缅甸

Danang岘港

Guangzhou广州

PXG凭祥

Cambodia柬埔寨

Hanoi河内

China中国

Nanning南宁

Thailand泰国

ZVK

VTE

Trade Facilitation

• “The simplification and harmonization of International Trade procedures” (WTO)

• .. “ Streamlining and simplifying International Trade Procedures in order to allow for easier flow of goods”(OECD)

• “ Simplification and harmonization of International Trade procedures to assist the movement of goods” (DFAT Aus)

Countries & Customs

• Some Countries– Customs seen as Pro Export– Customs are “User friendly”…simplified export processes– Customs are trade facilitators First…. Revenue collectors Second– Customs allow internal bonded transfer on a per consignment basis

• User Friendly Customs in GMS– Thailand …..Inland bonding on a ‘per shipment’ basis– Laos ….. huge improvement across EWEC. ..user friendly route – Vietnam … pro export and pro trade attitude

Countries & Customs

• Some Countries

– Customs regulations differ by border and method of export• If the International land border is with the province….much easier

– Lack consistence in interpretation of regulations

– Strict adherence to Articles of Association• Not listed , can’t export …. Buy the license through a broker !

Customs

• Exporting

• Why does it need to be so hard ?

• Importing is another subject

Simplification & Harmonization

• Export Customs Clearance

• Holding up shipments for days

– Name on export license is not an exact match with Invoice– CIQ certificate is made out to a subsidiary – Packing list should list some items separately– Senior officer ( decision maker)…in meeting !

• Pre registration with customs

– Requiring HS codes to be pre-register to use a customs route

• 7 Days in advance• Including individual product weights …in grams • Bonded shipments require Endorsed Contract of sale

Simplification & Harmonization

• Export Customs Clearance…cont.

• Designated routes for certain products– Some products can only clear at certain export ports

• Pre Lodgment for export clearance– 24 hours in advance– Then the tea money ( $ 150) to get the stamp

• No consistency between export border– In the same country !

Simplification & Harmonization

• Export Licenses– Often bought though ‘agents’– Not needed at some export border customs – User friendly ‘pro export’ customs …don’t care ..don’t check

• Re-cycled packing material– Not mentioned in Articles of Association.. therefore …– Must buy export license from a broker

• For second had line assembly boxes !

Simplification & Harmonization

• Export Bonding … the real nightmare !

– Only one shipment per vehicle– No consolidation ….no matter how small the shipment– Must have contract of sale …stamped and endorsed

• Export Clearance– Some countries…pro export – Some regions / gateways ..pro export– Some are rule book junkies !

VTE

Singapore新加坡

Kuala Lumpur吉隆坡

Phnom Phen金边

Malaysia马来西亚

Bangkok曼谷

Ho Chi Minh胡志明

Vietnam越南

Laos老挝

Myanmar缅甸

Danang岘港

Guangzhou广州

PXG凭祥

Cambodia柬埔寨

Hanoi河内

China中国

Nanning南宁

Thailand泰国

ZVK

VTE

Cross Border Transport in Asia ..TodayCross Border Transport in Asia ..Today

• Road Transport– Border Transshipment– CBTA …. Coming in GMS… resistance by local interests– CBTA … not in operation yet ..despite the press announcements !

• Sea – Designed for Long Distance High Volume– Ports often congested with High charges– Can take a week to get a container out !

• Air– Capacity limitation in regional centers– Freighters only serve major hubs– Mainly narrow body PAX aircraft with small freight capacity

Reality Today

• Thailand- Hanoi – Pearl Delta ( Guangzhou- Shenzhen )– Growing demand : High Tech Component swapping– “get it out of the air”– Conventional Sea too slow– Must be time specific to meet JIT Manufacturing requirements

• North Vietnam – Demand for export freight capacity outstrips supply

• Cambodia Exports– Constrained by capacity– Going via road to SGN or BKK for air uplift– Going via sea to SIN for air uplift

“Did You Bring Any Help” ?

Costly Border Transshipment

Borders

• Borders Open 12 hours x 7 Days

• Multi Million Dollar Border Facilities

• But …..Customs Opening hours

– 5 Hours a day … 5 days a week

– With a 3 hours lunch

• Apparently it’s cultural !

• Time is more expensive than distance ( asset utilisation)

– The easiest and quickest route is generally cheaper than a slower shorter route.

– Transport takes the route of least resistance

• Vehicles ( Trucks, Planes , Ships)

– Cost money standing still

• Freight rates are driven by market forces not distance

The Cost of Transport

• Handling Costs Money

– Every time you stop, offload or Transship it costs money

• Handling Facilities have to be paid for !

– Cranes, Warehouses and Labour cost money

• The costs are passed on to the Customers !

– They go to the Cost Of Goods Sold !!– Affecting the competitiveness of goods, imports or inputs

The Certainties in Transportation

• London to Paris 1981 $ 900 One way

– No channel tunnel …….. Ferry costs $ 300 one way.– No open market– Permits required– Customs clearance .. With costs– 12 meter Trailers ( 40 ft)– 18 ton maximum pay load– $ 0.05 per kilo

• London Paris 2008 $ 900 One way ( $2300 with Inflation)– Channel tunnel– No permits– Reduced customs procedures– 13.6 Meter Trailers– 24 ton maximum pay load– $ 0.0375 per kilo ($0.1275 with Inflation)

Updating Transport – Regulations and Moderisation

• London to Paris 1981 $ 900 One way

– @ 18 tons = $ 0.05 per kg

• Using UK inflation

– $ 900 in 1981 = $ 2300 in 2008

– 2008 price should be $ 0.1275 per kg

• Current Price $ 0.0375 per kg

Updating Transport – Competition and Moderisation

Why Make Export Hard ?

• Export is the life blood of developing countries

• Export creates Jobs at all levels

• Why is Export Clearance so Hard in some countries

– Can understand Imports

– But why make export clearance so hard ??

The ChallengeThe Challenge

• “Encouraging a more modern and efficient door to door transport system such as that offered by Multi Modal Transport will go a long way towards alleviating rural poverty, enhanced trade and improve the foreign exchange earnings of developing countries and countries in transition”

“UNCTAD”

The Road from Guangzhou to BangkokDespite the obstacles