Proposed new customs regime a step backwards

THE Draft Border Management Agency Bill, if passed in its current form, will undermine the progress made in relation to customs management and negatively affect the economy, say industry associations, including the South African Association of Freight Forwarders.

The bill is being subjected to scrutiny in Parliament. It aims to prevent the smuggling of illicit goods and the trafficking of human beings and was published for public comment in August.

It is significant and far-reaching in its effect. It will overhaul the existing customs regime, which is provided for in the Customs and Excise Act 91 of 1964 and administered by the South African Revenue Service (SARS) commissioner. It will affect businesses, imports, exports, supply chain movement, retailers, wholesalers and individuals across the trade spectrum.

Despite its stated good intentions, the new customs regime proposed by the bill represents a step backwards.

After embarking on a carefully considered customs modernisation programme some time ago, SARS improved efficiency and facilitated trade through advancements such as digitisation and the use of container scanners.

Customs processes take into account the unique context of the South African landscape and are aligned with the World Customs Organisation Safe Framework of Standards. This regime includes mechanisms for combating illicit trade. SARS has been successful in co-ordinating its activities with those of other law enforcement agencies to combat illicit trade.

The new approach proposed by the bill fails to take into account the socioeconomic and geopolitical context of SA. As a developing country, SA cannot afford to impede the flow of goods via unnecessary additional regulation, particularly where such regulation is likely to be inefficiently managed.

The potential economic effect of the bill has not yet been properly considered by the legislature. The introduction of new and unfamiliar procedural requirements in relation to the import and export of goods will interrupt the supply chain and have a chilling effect on trade, which any developing economy can ill afford.

A complex supply chain consists of a minimum of 25 role players, all of whom will be affected by the drastic changes that the bill introduces. The economic impact will, therefore, be widespread.

The speed at which this process is progressing is additional cause for concern in that neither the legislature nor the trade industry has had sufficient time properly to consider the effect of the proposed changes. It is important that all stakeholders are afforded an opportunity to consider the bill and make comments to Parliament.

Industry associations feel that there has not been sufficient consultation or allowance for public participation in the process. They point to the lack of consultation with interested parties during the drafting of the first draft of the bill, a truncated comment period, the failure to publish an explanatory memorandum, the lack of operational detail included in the bill and the lack of visible engagement over submissions.

The impact of the bill is of considerable concern. It can only be hoped that the Department of Home Affairs takes cognisance of concerns raised by industry.

There is speculation that the bill could be introduced into Parliament this month. After it has been introduced by the minister of home affairs, it will be referred to the portfolio committee on home affairs and will be published for further comment. On account of the opposition to the bill, it will have to be published for further comment following its introduction into Parliament.

Subban is a partner in the tax practice at Bowman Gilfillan Africa Group’s Johannesburg office.

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