FBR brings reforms to clearance system without any loan

Faceless assessment substantially reduces container clearance time, curbs arm twisting

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ISLAMABAD:

Pakistan's indigenously designed assessment system has dramatically reduced the clearance time of containers by 39% and curbed arm-twisting of importers by 83% in less than two weeks, reinforcing that real reforms do not need any foreign loan or advisory.

After the implementation of the Faceless Customs Assessment (FCA) system, the average dwell time – the time a container takes at port – has reduced from 108 hours to 66 hours within two weeks. The significant reduction became possible after the Federal Board of Revenue (FBR) ended contact between the importer and appraiser and rolled out the automated faceless clearance system on December 15.

The new system has been installed by bringing changes to the FBR's own WeBOC platform. These changes are aligned with provisions of the Customs General Order and other relevant legal provisions, in line with the modern trade facilitation standards.

FBR Chairman Rashid Langrial has introduced the new system without taking any policy loan from foreign lenders. Nor did he hire any foreign advisory firm. The new system seeks to address the lingering systemic and individual issues by enabling remote, technology-driven customs assessments that minimise physical interactions through automated processes. The 66-hour clearance time is still far higher than the world average of less than half an hour and about two hours for a country like Pakistan. However, the time can be substantially reduced if the faceless assessment system, which is currently being implemented in Karachi only, is extended to other border areas and dry ports.

FBR's data showed that there had also been an 86% reduction in the examination of containers – a tool that appraisers often used before December 15 for arm twisting. Any delay during examination increased the cost for importers in the shape of demurrage charges. It did not leave any option for them but to pay bribe to avoid additional port charges.

The FBR chairman said that compared to December 15, the examination cases were slashed from 717 to just 98 – a reduction of 86%. Likewise, the number of cases called for documents went down from 3,346 in the pre-automation period to just 564 – a reduction of 83%. Langrial said that the high number of cases for calling documents reflected the arm twisting of importers.

Despite rolling out the new system, there has not been any reduction in the filing of goods declarations and the payment of duties and taxes.

From December 16 to 27, about 21,380 goods declarations were filed, which was 7% higher than the pre-automation fortnight. And the cases marked for assessment decreased 30% in an indication of lessening chances of kickbacks. The government received Rs116.4 billion in import taxes from December 16 to 27, up 14% compared to the previous fortnight.

Improving efficiency, transparency and reducing the clearance time are critical to supporting economic growth and promoting ease of doing business. The FBR is of the view that anonymity in assessment helps reduce the physical interface between the trade and customs. It has installed real-time dashboards for tracking assessments and system performance. Alerts for delays or irregularities are generated.

In the first phase, the consignments selected by the automated Risk Management System at the terminals of Karachi Port and Port Muhammad Bin Qasim are processed through the new system.

Documents are allocated to the assessment units at the Collectorates of Appraisement East, West and Port Qasim. Goods declaration documents are assigned to the staff randomly in a group-less setting – one declaration at a time on a "first-in, first-out" (FIFO) basis – by the customs computerised system.

Employees are not allowed to take their mobile phones inside the assessment hall aimed at minimising the chance of contact with the importer, Langrial said.

The FBR will implement the second phase by June 2025. In phase-II, the new system will be extended to all Appraisement Collectorates of the country, any other dry ports and the land border stations working under the Enforcement & Export Collectorates for import consignments.

Islamabad Dry port and Sialkot Dry Port will be brought under the new system by establishing units in Lahore, Peshawar and Quetta under the chief collectors of appraisement Punjab, North and Balochistan, respectively.

These units will cover the goods declarations filed in the Appraisement Collectorates working under the respective jurisdictions of chief collectors appraisement. The assessment of declarations filed at any dry port and customs station not falling under the jurisdiction of a chief collector appraisement will also be marked at the CAU for faceless customs assessment.

In the third phase, the FBR plans to roll out the new system at all airports and Export Collectorates. The assessment staff at airports and Export Collectorates will be made part of the pool at these assessment units for all import and export consignments.

The eligibility criteria and licensing regime of customs clearing agents have also been revamped and a point-scoring system is being introduced to make them responsible for correct declarations.

Under the point-scoring system, the customs agents who give true and honest declarations of description, value and origin will score more points and their profile will improve. On the contrary, the customs agents who fail to show improvements in declarations will lose points and eventually their licence may be cancelled.