Automated cargo clearance system to be shut down

Agility warns of legal action against FBR.

KARACHI: Kuwait-based software developer Agility has decided to shut down the Pakistan Automated Customs Clearing System (PaCCS), on account of what a company official described as “intolerable behaviour of the Federal Board of Revenue (FBR)”.

As a result, local importers and exporters may be forced to revert to manual processes for the clearing of cargo at the country’s ports.

The company owns the software developed to automate the clearing of containers at the ports, and has been responsible for its implementation and maintenance since its introduction in April 2005.

Initially, the project was introduced on a trial basis at the Karachi International Container Terminal (KICT), but by May 2007, it had also been implemented at the Pakistan International Container Terminal (PICT) and the Quaid-e-Azam International Container Terminal (QICT). Agility had earlier notified FBR that if negotiations for full-scale implementation of the software and payment of dues to the company are not resumed by February 28, it would shut down the software, thus, disabling the automated clearing system throughout the country.

Speaking to The Express Tribune, an official representative of Agility denied media reports that the company has decided to continue with the software, contending, “we are working out whether to file for arbitration in a local court or in an international forum,” adding that this decision will be finalised within the next two days.

“As soon as Agility files for arbitration for the recovery of payments owed to it by FBR, the software will be shut down,” said the representative.

While Agility seemed to finally put its foot down, the country’s tax authorities remained unimpressed by the latest ultimatum. FBR representative Asrar Raouf declined to comment on the issue, contending that FBR Member Customs Mumtaz Haider Rizvi was the relevant authority.

Rizvi, however, remained unavailable for comment, as did FBR spokesperson Riffat Qazi despite repeated attempts to contact both officials.

Agility officials claim that the Government of Pakistan abruptly halted negotiations over the full-scale implementation of PaCCS in May 2010. “Since that time, Agility has issued numerous reminders to FBR and the government for resumption of dialogue. Multiple extensions have been awarded to FBR, even though payments owed to the company have not been made during this time,” said the Agility representative.

“However, so far there has been no satisfactory response from the relevant authorities,” he added. The representative informed that the company intends to file suit against local authorities for recovery of its dues. “Out of an initial investment of $200,000, only $70,000 has been paid, while Agility has also incurred additional expenses over the past few years,” he contended.

Stakeholders have expressed concern that the closure of the system could jeopardise the timely clearing of shipments and force losses upon local businesses. “The system was shut down for just one day on May 28, 2010, after which negotiations between the government and Agility came to a halt,” recalled customs agent Abid Siddiqi. “That cost local businesses millions in additional expenses and also delayed the clearing of shipments,” he added.

Stakeholders have been vocal in their support for automation of customs procedures. While local agents are not entirely against FBR’s preference of local versions of the software, they point out that the current system had many glitches that were only removed after months of deliberations with customs authorities.

They fear that if the automated system is shut down, business activity will be heavily affected until a viable alternative is produced and implemented, or relations between Agility and FBR are mended.

Published in The Express Tribune, March 2^nd, 2011.