Cut red tape and processes to boost free trade in Asean
AFTER the creation of the Asean Free Trade Area (AFTA), all 10 member countries of the regional bloc have removed tariffs and nontariff barriers for various products to boost trade.
According to the official website of Asean, the member states have made significant progress in lowering intraregional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA.
More than 99 percent of products in the CEPT Inclusion List (IL) of the Asean-6, comprising Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0-5 percent tariff range.
Asean’s newer members, namely Cambodia, Laos, Myanmar and Vietnam, are not far behind in implementing their CEPT commitments, with almost 80 percent of their products having been moved into their respective CEPT ILs. Of these items, about 66 percent already have tariffs within the 0-5 percent tariff band.
Vietnam had until 2006 to bring down tariffs on products in the Inclusion List to no more than 5 percent, Laos and Myanmar until 2008 and Cambodia until 2010. Asean members also resolved to work on the elimination of non-tariff barriers.
A work program on eliminating non-tariff barriers – which includes the process of verification and cross-notification, updating the working definition of Non-Tariff Measures (NTMs)/Non-Tariff Barriers (NTBs) in Asean, the setting up of a database on all NTMs maintained by member countries, and the eventual elimination of unjustifiable non-tariff measures – is currently being finalised.
Every party has done its best to achieve the AFTA goals. Countries and business groups within the bloc have harvested benefits from this policy, keeping in mind rapid growth in this region, particularly in attracting investments not only from within Asean but also from other regions.
Lowering the tax for goods and eliminating barriers are important steps that may be determined in the Asean customs cooperation framework. However, when we observe the real import process for goods, there are still some challenges and some steps created by authorities, particularly in Laos, that hamper trade.
Only officials know details about the commodities that have 0 to 5 percent tax. The sectors responsible for commerce and customs, still retain this information for beneficial purposes.
Laos shares borders with several Asean states, such as Cambodia, Myanmar, Thailand and Vietnam. People living in Laos regularly travel to these countries and import products for Lao markets. Therefore, they must know what products are subject to 0 to 5 percent tariffs. This information should be disclosed to the public so that people can easily bring in commodities for both trade and consumption.
In some cases, travellers or small traders have returned from a trip to an Asean country with certain products that may be on the list, but they do not know this and are asked to pay tax. Customs authorities should not charge tax if these items are on the list, or charge at a rate of 0 to 5 percent as stated on the list. But they have to collect some amount of tax as there can be no exceptions if importers do not show the necessary documents such as Form D.
Form D is used for declaring items of goods from the list. It is an obstacle for the business sector and people. If everyone ships products on the list of 0 to 5 percent tariffs, they must have this document. They must be approved by trade officials. It means that importing companies have to declare imported products to the trade sector first, filling all details in the form available only at the trade sector.
If we need to make the processes clearer and faster, information must be available at all border checkpoints, especially the list of products and the forms. In addition, the approval of the form is not necessary because it just creates difficulties.
Asean officials have worked for years to lower tariffs for many products to remove tax barriers and to stimulating trade, but official processes in some countries are still big obstacles.
When we try to abolish barriers, we must put in place easier processes for importing companies, travellers, retail importers and the general public.
Authorities in Laos must think how to make it easier to access sources of information at no cost. Regarding the form, if the authorities still require this document, they must supply it at border checkpoints, just as in the case of immigration documents provided by the police.
When people know the list of goods with clear tax rates, they can fill in the form and submit it to customs officials while entering the country. Officials can check the form and the goods declared by owners to make sure they match. They then can let the goods into Laos. This is very similar to the practice with general tax clearance forms at international airports.
Lao authorities working in this area must revive the implementation of processes to make sure the policy of boosting free trade provides sufficient facilities to the people, and not just officials.