Pre-Arrival Processing REF#7106

16 Nov 2023 | Transport & Logistics Issue Tackled

Last modified date: 14 Jun 2024

Issue Description

Pre-arrival processing (PAP) involves traders or businesses sending information about their shipments ahead of their arrival to the Customs authority of the destination country. This allows the Customs officials to assess which shipments can be released directly upon arrival and which ones must be inspected. The transfer of information regarding each shipment is done electronically between Customs and the trade data provider.

As part of its commitments to improve trading conditions under the WTO Trade Facilitation Agreement (TFA), the Royal Government of Cambodia (RGC) is attempting to implement PAP of shipment data through the relevant authority, the General Department of Customs and Excise (GDCE).

The National Committee on Trade Facilitation, headed by the GDCE, has put together an Action Plan on National Trade Facilitation, which involves developing the country’s PAP capacity by enhancing the electronic interlinkages between the Customs clearance systems of Cambodia and trader systems. The goal is to cut down processing time for Cambodia-bound shipments.

Currently, PAP in Cambodia is not widely implemented and only certain types of traders are entitled to its benefits. This includes, for example, 40 businesses that were awarded by the GDCE the status of “Best Traders” due to their merits in complying with regulations.

The GDCE is also partnering with development organisations and projects to help support its PAP agenda. For example, it is collaborating with the European Union and German partners to strengthen capacity for PAP of sea and express consignments, while doing the same with Swiss partners on postal consignments. These collaborations involve allowing trade data providers to submit electronic cargo information pre-arrival to the GDCE via the newly-developed ASEHUB platform.

Despite these initiatives, however, there are still challenges in Cambodia related to the relatively slow processing times for goods’ declarations, particularly those arriving by sea or land. Most of the time, the GDCE is processing declarations at the moment of or after the goods’ arrival. This raises the question of what should be done to ensure the GDCE fully realises the potential of PAP.

A greater and more effective use of PAP—along with its intended benefits—relies on the availability of both physical infrastructure (e.g., ASYCUDA) and rules, procedures, and operations that enable its use. At the moment, there is a lack of both regulatory and operational frameworks for the GDCE to use PAP effectively. This could be partly due to concerns from the part of businesses and government officials that the use of electronic systems compromises the security of confidential information that is normally exchanged in Customs clearance processes, such as personal signatures and details about company operations or shipments.

Impact on business

The limited adoption of PAP of imported goods’ declarations into Cambodia can pose significant risks to the country’s Customs system. Firstly, it can lead to delays and inefficiencies in Customs clearance, increasing the cost of doing business and reducing the country’s competitiveness in the global market. This can result in a decrease in trade and investment, hindering the country’s economic development. Secondly, the manual processing of Customs declarations can limit the potential for revenue collection, as manual procedures are less efficient in detecting undervaluation, misclassification, and other Customs violations from users. Thirdly, a lack of pre-arrival processing can limit the government’s ability to monitor and regulate trade flows effectively, hindering its ability to detect and prevent the entry of illegal goods and activities.

Recommendation

  • Implement regulatory and operational measures to encourage pre-arrival processing.

Although we recognise the potential concerns over deeper implementation of electronic data exchanges between Customs and traders regarding the exposure of confidential information, we believe that current technologies allow said data to be exchanged safely, provided appropriate operating procedures and risk management frameworks are put in place.

We therefore respectfully recommend that the GDCE consider implementing a comprehensive regulatory and operational framework to encourage PAP. This framework should include clear rules and procedures for the submission and processing of pre-arrival information, mainstreaming of e-signatures and e-documents into Customs procedures, as well as measures to ensure the security of confidential information. The GDCE should also work to raise awareness on PAP among businesses and government officials, and to address any remaining concerns about the security of electronic systems.

By enabling a greater use of e-signatures and e-documents in pre-arrival processing, incoming shipments to Cambodia will be cleared into the country faster, reducing congestion at border points. This in turn will benefit businesses by cutting operating costs, thus encouraging greater trade flows and allowing the GDCE to collect more revenue.

Encouraging PAP will also speed up Cambodia’s achievement of its objectives under the WTO TFA and facilitate its regional and international trade integration.

Dialogue with

Royal government of Cambodia

Initiative from Eurocham: The issue has been raised by the Transport & Logistics Committee within The White Book edition 2024 in the Recommendation No. 3.

The GDCE issued Prakas 788 on the 27 October on pre-arrival processing and introduced it to the EuroCham members during the EuroCham event “From Paper to Pixels: Transforming Customs Procedures through Digitalisation”. This ministerial decree sets out the rules and procedures for electronic cargo declaration and pre-arrival processing. It allows the electronic submission of cargo declaration and allows the electronic submission of customs declaration prior to the arrival of goods.

You can find the Prakas here and the unofficial translation of the document here.

EuroCham Transports & Logistics Committee is thankful to the GDCE for establishing the pre-arrival processing. However, the Committee is looking forward to the implementation phase, see how it works in practice. This is issue on the 15th of December 2023 is considered as partially solved.

On June 11th, the GDCE officially announced that from the 1st of July to the 31st, the Phnom Penh International Airport will run the pilot test for the Pre-Arrival Processing. The GDCE invites all the operators to join this pilot test.

National Counterparts

General Department of Customs and Excise 

 

Contributors

Mr. Suy Bunthan

Chairman

Mr. Seng Vichet

Vice-Chairman in charge of the Logistics pillar

Mr. Matthew Owen

Vice-Chairman in charge of the Transportation pillar