Restructure FRCS
Separate and re-orientate customs to curb drug infiltrations
THE alarming large numbers of reported busts and seizure of drugs in Fiji tell us one thing, that Fiji is in the grip of a frightening epidemic of international and local drug trafficking and abuse.
It is frightening to imagine that what is reported in the media is perhaps just the tip of an iceberg. But one must pose and wonder, how did we get here?
There are several factors responsible for this one of which is the diminished role of the gatekeeper overseeing the cross-border movement of goods and people.
In Fiji that role is played by the Fiji Revenue and Customs Service (FRCS), a statutory organisation established under the FRCS Act 1998. As the major funder of the national budget the FRCS prioritises revenue collection and revenue management over other functions including gatekeeping overseeing the cross-border movement of goods and people.
The FRCS website shows that the fourth and last role of FRCS is to “protect the border”; the fourth of its five strategic focus areas is border security, and fourth of its six operating arms is border force”.
It is my considered opinion that the apparent much lower hierarchy ranking of, and implicit secondary emphasis and focus on, the gatekeeping function has compromised effective control of crossborder movement of goods into Fiji, culminating in the large drug infiltrations we see today.
How did we get here? To answer this, one needs to go back to the reforms undertaken by the Fiji government in the early 2000s.
Prior to the 2000s, Fiji had two separate tax departments for inland revenue and customs. In the 1990s, several developing countries merged customs with inland revenue department with a view to enhancing efficiency and effectiveness of revenue collection. The mergers allowed for the exploitation of economies of scale by combining the personnel, legal, and administrative functions of the separate departments.
It was argued that mergers made sense because of high incidences of tax avoidance and fraud, though these were in large part caused by generally high taxes coupled with complex tax legislation that provided incentives for tax fraud, avoidance, and evasion, among other things.
In early 2000 the Fiji government merged its revenue and customs departments to form a single agency, separate from the Ministry of Finance (MOF). With autonomy (from the MOF) under one roof it was anticipated that the two departments could free themselves from political interference in its day-to-day activities, freed from civil service constraints, and it could also establish its own personnel policies to enhance effectiveness and efficiency.
In addition, the merger was to provide greater accountability and operational flexibility without political or other interference. The headquarters of the merged departments was mandated to monitor the activities of the decentralised offices and responsible for personnel policy, including recruitment, compensation, training, and enforcement.
On the international scene, over the years the role of the Inland revenue departments has remained the same while that of the customs departments has undergone many changes in response to changes in the patterns and conduct of global trade. With import duty rates declining over time because of the commitments to liberalise trade, notably under multilateral, regional and bilateral trade agreements, customs revenues as a share of the total budget revenues have tended to decline.
During the same time, customs have received a mandate to protect society from dangerous cross-border activities.
This has been included in the mandate of the World Customs Organisation (WCO), to reflect the notion that customs are responsible for border security, preventing the cross-border movement of dangerous and unsafe goods.
The security concern was elevated to new heights after the upsurge in people converting bad money into the banking system. The focus shifted from just imports to the entire supply chain, including exports.
This has placed increasing demands upon customs departments. Every shipment passes through customs control at least twice, first as an export leaving one country and second as an import entering another country, making customs a key player in the international supply chain and in the global economy.
Faced with these challenges, many customs departments struggle to meet all the demands for their services. Often, because of the emphasis on revenue collection, inland revenue and customs administrations do not place equal weight and energy on border control and security.
Also, the centralised administration and control associated with merged inland revenue and customs administrations is inimical to effective operation of the customs function that must operate with a good degree of autonomy at seaports, airports, and at land border crossings.
Because of the nature of operations, customs works best if it is decentralised, with its own headquarters, regional/provincial and local offices. Successful customs departments in the developed countries including neighbouring Australia and New Zealand are divested from inland revenue and have traditionally enjoyed significant degrees of autonomy.
In the developing countries, autonomous revenue institutions, in particular customs, have been found to be more efficient and have better human and material resources than merged inland revenue and customs administrations.
Countries such as Mauritius have rolled back the merger of the inland revenue and customs administrations which has significantly increased the effectiveness of customs to provide best quality border security and control services amongst other functions including supporting revenue collection. For customs generating revenue is no longer the primary focus.
Customs is gradually moving away from being a revenue agency of the government to being “industry assistance” (in the context of trade facilitation) and “border security”.
This is the direction that Fiji needs to go having been on the inland revenue and customs merger experiment for the past two decades and arriving at where we are today where the customs department under the FRCS is burdened by revenue collection targets at the expense of effective trade facilitation and border security and control which could easily have nipped drug trafficking in the bud.
The epidemic of infiltrations of drugs and narcotics on to our shores has festered because the current setup of merged inland revenue and customs with focus and emphasis on revenue collection and revenue management under one authority is not suited to delivering effective border security and control.
Stating that change of direction is needed is not a knee-jerk reaction to the recent drug busts and seizures, but it is a long overdue process that should have been done ages ago when other countries started changing course and avert the ghastly crescendo of drug trafficking on our hands.
A re-orientated customs for border security and trade facilitation could have a clear and priority mission of protecting and facilitating legitimate trade much in the same as Australia’s Australian Border Force has its mission as “to protect Australia’s border and enable legitimate travel and trade”.
New Zealand Customs Service (NZCS) which calls itself “New Zealand’s gatekeepers” prides itself in its main purpose of stopping “any dangers, hazards and threats entering New Zealand — this includes everything from illegal weapons, objectionable material and drugs to dangerous people and hazardous substances.
New Zealand secure its border by focusing on high-risk goods and passengers and avoiding undue disruption to legitimate traders and travellers.”
NZCS also promotes international trade and collects Crown revenue. It is now time for Fiji to restructure FRCS to separate and re-orientate Customs to protect the borders more effectively as well as facilitate efficient international trade to the benefit of Fiji’s population, international reputation given the country’s high dependence on tourism, and the nomy at large.
■ BILL RAIKUNA is a former director of Fiji Customs and is also a customs expert under the UNCTAD project for the Pacific region. He is a representative to the World Trade Organisation in Geneva and also to the World Customs Organisation in Belgium, Brussels. The views expressed in this article are his and are not necessarily shared by this newspaper.