Afghanistan's Agenda for Action - Economic Growth - usaid

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Afghanistan’s Agenda for Action: Developing the Trade & Business Environment – August 2007Management and the selective examination techniquehave not yet begun in Afghanistan. All shipments exceptdiplomatic shipments are inspected. Additionally, theCustoms law does not support Post Release Audit, anexcellent means to verify compliance and refine riskmanagement techniques. A Customs Post-ReleaseAudit is not a financial audit – rather, it serves todetermine compliance with all laws and regulationsapplicable to importers and is an evaluation of companypractices and records. It assists in judging the integrityof information supplied in the Customs declaration andthe importer's level of compliance with Customslegislative requirements.Customs overall aim should be compliance withCustoms’ laws and decrees. True compliance existswhen systems and/or departments at importingcompanies are aware of and take steps to comply withCustoms laws and decrees.Supporting InstitutionsAlthough the ACD is the main implementing institutionfor the movement of goods, an efficient trading systemrelies on an interdependent process that includes othertrade-related public sector institutions, trade serviceproviders and the traders themselves—importers andexporters. Their capacities, honesty and performancecan result in significant costs (or savings) within thetrading system, and optimized trade facilitation dependson their active involvement. Like the ACD, the traderelatedpublic agencies also need sound management,well-trained staff, modern equipment, modernfacilitative procedures and active dialog with the tradeto respond timely and predictably to issues whileguarding the public safety and security of the country.Additionally, the private sector trade community addstheir expertise and familiarity with expert legal andlogistical knowledge to the import/export process andas such is crucial to the efficiency and overallcompliance of international trade movements.A. Public InstitutionsThe traditional border agencies (other controlauthorities) are present in Afghanistan but in a verylimited way. Approvals are based upon pre-filing andpre-approval for goods falling under their jurisdiction.Interviewees did not report any significant delays orburdens with either clearances by Agriculture orMinister of Health.Currently, there is little coordination between ACDand the other control authorities—each trader orCustoms clearance agency must arrange their individualclearance and forms containing duplicative informationon the same shipments abound. While none of theagencies were considered serious impediments totrade, they do suffer many of the same issues of staffretention and antiquated processes and technology asACD. Limited training has been given to Customs fordetection of other control agency shipmentsproblems/issues particularly in the area of animal andplant diseases. In the future, opportunities for theautomated system AYSCUDA ++ will be available forthe other control authorities. They will be given theability designate commodities requiring scrutiny forholds or for the trade to file required licenses permitsand certificates electronically.B. Private InstitutionsPrivate importing and exporting firms are limited innumber since the bulk of importations are on behalf ofdonors, NGOs, foreign missions and for the militaryforces. Most of these relatively immature private sectorinternational trade participants require not only simpletrading rules and regulations from the publicimplementing institutions, but strong private sectorsupporting institutions to assist in transporting goodsto market and completing import and exportformalities. Such expertise is beyond the capabilities ofthe traders themselves.Private sector institutions, which support theAfghanistan’s international trade community, aregenerally limited in number and weak in human capacityand technical knowledge. Associations and Chambersof Commerce are new and relatively weak in theiradvocacy efforts on behalf of their membership.Additionally, a lack of dialogue between governmentofficials and the private sector impedes private sectorexpansion and public-private sector dialogue andpartnership. Further, unnecessary checks and balancesare often added to government and trade practiceswith little notice or regard for international best115
Afghanistan’s Agenda for Action: Developing the Trade & Business Environment – August 2007practices or consultation with the affected privatesector entities.C. The Afghan Trade Community:Importers, Exporters, Transport Sector,Customs Brokers, Express Carriers, andTrade Associations1. ImportersAlthough strides have been taken in simplification ofimport processing, reforms are needed to elevateAfghanistan to acceptable international trade facilitationstandards. Because Afghanistan is now emerging fromyears of conflict, the import market remainsundeveloped. Importers are nascent and rely heavily onCustoms Brokers to complete their Customsformalities including the payment of unofficial payments.2. ExportersThe government recognizes the growth of exports asthe principal engine of poverty reduction and economicgrowth. The government’s firm and continuingcommitment to expansion of exports has resulted insome facilitation measures for the export process.Since 2003, the Afghan Investment Supporting Agency(AISA) has been working with ACD and the OtherControl Authorities to simplify the export process, tostrengthen key export industries such as marble,grapes, carpets, herbs and fresh fruit, and todisseminate key information to Afghani exporters.3. Transport SectorAfghanistan is a large, rural, landlocked country. Amodern business orientated trucking industry is vital tothe growth of international trade in Afghanistan. Overland trucking is the only mode of transporting importsand exports to and from the port of Karachi or toconduct trade with neighboring countries. Afghanistanconducts cross border trade with its neighbors.Afghanistan’s competitiveness is encumbered regionallyand internationally by high trade transaction costs thatshould be systematically reduced:• Afghanistan’s international trade is treatedunevenly by its neighbors resulting in higher costs,delays and damage.• Afghanistan truckers must unload shipments at thePakistani border for transport to the Karachiseaport by Pakistani transporters.• Transport and facility operations do not meetinternational trade standards.• Poor infrastructure, lack of automated systems,and unpredictable transportation times increasecosts further.• Equipment deficiencies in the availability of rail carsin Pakistan increase demurrage (charges levied bycarriers for excessive retention of containers andrailroad rolling stock) and overall rail costs.• Transport business processes themselves areinefficient and antiquated.• Efficient and cost effective air transport is vital butnot available at Afghanistan’s airports.The trade and public sector need training in how toestablish manage and operate Customs clearancefacilities that are crowded and in disrepair will hindereffective implementation. Private stakeholders are notfully engaged in the dialog within the responsible publicministries in the selection and implementation of thedry port concept. The trade’s knowledge of tradepatterns, practices and problems in the private sectorcan be used to minimize mistakes and provide asmooth implementation. Private sector involvement inthe operation would ensure competitive pricing forservices as well.Air cargo services are expensive and limited. Shippingby air is not a viable alternative for most of the Afghanitrade community.4. Customs Brokers (Commissioners)The import process remains heavily bureaucratic,document-intensive and time-consuming. Customs isviewed as a major impediment to progress and thebrokers are considered the “grease” that eases theprocess. Afghanistan Customs brokers, althoughcompetent and well regarded, are not as professionalor knowledgeable as those brokers in other countries.There are 70 licensed brokerage firms (with hundredsof individuals holding individual licenses) in Afghanistanthat is sufficient for current trade volume. Customstrains brokers and administers a test that is notconsidered rigorous. Although some are competentwithin the sector, most lack training in current116
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