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Customs reform to facilitate trade

Timor-Leste is a country blessed with many natural resources, including oil and gas. While oil and gas has funded much of the country’s growth since Independence, it is time for Timor-Leste to realise its potential in other areas by diversifying its economy and reducing dependence on oil. And this means facilitating trade to create investment opportunities.

Through the current economic and fiscal reform process, the government will address the legal and administrative barriers to trade facilitation. New laws on investment and commercial activities will create a safer regulatory environment for investors. And a thorough reform of Customs will ease congestion, reduce delays, and create the transparency importers need.

As the first point of entry into any country, an efficient and predictable customs administration is critical to trade facilitation. Over a four-year period (2014-2018), all cargo clearance areas of Customs administration are being revised and improved in order to:

  • attract investment in Timor by making it easier for businesses to import and export goods.
  • facilitate regional and international trade.
  • help the government collect revenue in a fair and transparent way.

What are Customs reforms?

The reforms are a set of activities designed to increase the efficiency of Customs by simplifying and standardising processes to global practice. These activities include:

  • Modernise the Customs Procedures Code in line with international best practice.
  • Updating Timor-Leste’s international coding for all goods in line with ASEAN standards.
  • Introducing ASYCUDA World; modernising IT systems to facilitate the process of importing goods as well as strengthening the integrity of customs.
  • Delivering broker’s training to improve industry service.
  • Having self-assessment processes to simplify the clearance of goods.
  • Having advanced rulings for importers to improve business confidence.
  • Delivering specialised training for officers to assist lawful decision making.
  • Developing Standard Operating Procedures to provide certainty in decisions.
  • Developing and implementing a training and capacity building strategy for customs officers based on the Customs Procedures Code.
  • Implementing a full real time interface/integration between key software platforms such as IFMIS SERVE, ASYCUDA World, the tax administration IT system and PBS.
  • Strengthening Customs airport and land border cargo operations.
  • Improving the dispute resolution process in Customs.

What have been the major accomplishments so far?

  • Updated Customs Code
  • Harmonised System 2012 complete and standardised to ASEAN
  • Started Phase 1 of ASYCUDA WORLD
  • Started self-assessment pilot for electronic processing of containers
  • Structure of intelligence unit completed
  • Completed brokers’ training
  • How will Customs increase transparency?

The new Customs Procedures Code will make it clear what Customs enforcement powers are as well as clarifying what they are allowed, and not allowed to do.

Customs will need to explain delays in processing cargo and be accountable for others decisions, such as seizing goods or not giving licenses, and importers will have the right to a formal appeals process.

Customs will be obliged to consult and publish draft rules, directives or any changes to the Code to allow the private sector and the public the opportunity to comment on the proposed changes before they are formalized.

Customs will have to make explicit the precise information importers and exporter need, including records for auditing purposes.

Customs will be required by law to maintain an enquiry point free of charge. A call centre be established to service importers and exporters.

How will information technology facilitate trade?

Under the reforms ASYCUDA, the current IT system, is being significantly upgraded to ASYCUDA World. Right now, every container is checked by Customs which slows the ability to process goods and creates additional costs for importers. ASYCUDA World will help determine which containers should be checked, and which containers do not need to be checked by creating ‘profiles’ of companies and containers.

The profiles will ascertain if goods are legal or illegal, or if an importer needs to undergo further checks before being allowed to bring in goods. This is an efficient system to help customs determine which containers to search.

Every step in the process to import goods, from declaring to processing to collecting revenue, will be performed electronically. These new IT systems will reduce processing times at Customs to just 12-36 hours for compliant cargo. Non-compliant cargo, cargo which has not been declared property or is marked as suspicious in the profiles, will undergo further investigations.

How can Customs generate vital trade data?

National and international companies rely on published trade statistics for their business planning, business investments, business performance and decision making. Part of the role of Customs is to generate important and timely import and export data. This data is sent to the Bureau of Statistics which analyses the information and publishes the results.

The Harmonized System that has been developed specifically for Timor-Leste will generate more relevant information for national and international businesses. And because the Harmonized System is aligned to ASEAN, businesses can easily compare data from Timor-Leste to data from all other ASEAN countries. This is incredibly useful information for businesses and will help attract more investment to Timor-Leste.

How can Customs support Timor-Leste’s bid for ASEAN membership?

While Timor-Leste is not currently a member of the World Trade Organization, the government is currently adapting business and economic practices to comply with many of the articles under the WTO Trade Facilitation Agreement. The new Customs Procedure Code complies with the WTO Trade Facilitation Agreement, making it much easier for Timor-Leste to create procedures that will contribute to Timor-Leste joining ASEAN. Under the Trade Facilitation Agreement, Timor-Leste should adopt the following to facilitate trade:

  • Publish and make available on the internet information on the rules to comply when importing and exporting. The FRC is developing a new Customs website which will be regularly updated.
  • National border agencies should consult and provide the opportunity for public comment before new rules are brought in.
  • Customs must make available advanced rulings on classification codes.
  • Customs must develop a legal appeals procedure.
  • Border agencies and quarantine must apply fees and charges that reflect the actual cost of providing the service, and which are standardised.
  • Border agencies shall cooperate with each other and coordinate their activities to facilitate trade.
  • Customs will establish cooperation arrangements with Customs in other countries and establish a National Trade Facilitation Committee. Timor-Leste is about to establish this committee.
  • Conduct and publish regular time-release studies. Since late 2014, Timor-Leste has conducted three
    time-release studies to measure and improve efficiency.
  • Timor-Leste will be encouraged to establish a single window meaning that traders need only to submit all required documents and/or data once for use by Customs and all border agencies. Customs and Quarantine in Timor-Leste will be co-located to facilitate the single window process. There will be an ASEAN single window and CPLP single window to facilitate trade within the region and CPLP countries.
  • How can Customs support CPLP countries in the ASEAN region?

    In addition to the initiatives to support ASEAN membership, the reforms will support and enhance trade between CPLP countries. The Customs reforms will develop a single window for CPLP nations which will connect to the ASEAN single window and grow business access to markets for tourism, agriculture, livestock, forestry, fisheries, mining, manufacturing, industry and the oil and gas sectors.

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