Statement on Doing Business Data Corrections and Findings of Internal Audit. Read our statement
Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology and webinar for more information.
Economies with the most efficient trading environments share common features. They allow traders to exchange information with customs and other control agencies electronically. They also use risk-based assessments to limit physical inspections to only a small percentage of shipments, thus reducing customs clearance times. Likewise, these economies tend to trade within customs unions or engage in other forms of bilateral and multilateral trade agreements, making the time and cost for complying with border formalities negligible.
Economies move goods internationally through seaports and land borders. While the handling of the shipment can change substantially depending on the type of border, efficient and cost-effective practices can be observed in both seaports and land borders. The tables below show the top performing economies by type of border.
Note: Border type is based on the most widely used border for trading the case study product-partner pair. Economies trading through ferry transportation are classified as land when there is no handling of the cargo at the border. Economies trading through ferry transportation are classified as seaport when there is handling of the cargo at the border.
Economies are ranked based on the average score of border compliance and documentary compliance for exporting or importing in each border category.
Allowing electronic submission and processing of information required by customs
Electronic systems for filing, transferring, processing and exchanging customs information have become important tools for managing flows of information in complex trading environments. The most advanced web-based systems allow traders to submit relevant documents and pay duties online. When implemented effectively, such systems provide long-term benefits: they save time and money while streamlining procedures, limiting direct interactions with government officials and reducing opportunities for bribery. Furthermore, the economies can benefit from customs electronic data interchange systems as they can help governments promote cross-border trade, combat fraud and track statistical information on foreign trade transactions.1 The key to success is the ability of an economy to adapt its regulatory framework to the new information technologies.
Across economies, regardless of income level, allowing electronic submission and processing of customs-related documents has been one of the most common and effective ways to reduce delays in the trading process. Today, traders can submit all trade documents electronically in more than half of OECD high-income economies with no need to provide hard copies. Lithuania, for example, reduced the time to complete exports customs clearance by enhancing its automated customs data management system, the Customs Clearance Processing System (MDAS), in September 2017. The enhanced platform allows the electronic submission and automatic clearance of export declarations and eliminates the need for exporters to visit customs offices to complete these procedures.
The exchange of customs data and harmonization of customs procedures are important pillars of many regions, and electronic data interchange systems can help facilitate the materialization of regional integration initiatives. In Central America, the International Goods in Transit (TIM) system harmonizes previously cumbersome procedures in a single document to enable the swift movement of goods across nine economies. At some border locations, this system has reduced clearance times for goods in transit by up to 90%.2 However, linking two or more information technology systems through a common interface is not always a simple process. Integrating Kenya’s Simba system with Uganda’s ASYCUDA++ through the development of the Revenue Authorities Digital Data Exchange (RADDEx) system has taken several years. Expanding this system to the rest of the East African Community was challenging.
Indeed, the full potential of digitalization and electronic data interchange systems is seldom realized immediately. Implementing these systems takes time and involves a change in operational practices, in training and, in some cases, in the work habits of staff. In August 2015, the Lesotho Revenue Authority introduced the Automated System for Customs Data (ASYCUDA) as a pilot. The new system, which became fully operational in 2018, allows for electronic submission of customs declarations and supporting documents. As a result, the document preparation and compliance time for both importing and exporting declined. Another example is Papua New Guinea. In November 2017, Papua New Guinea launched a live pilot at Moresby Port and Jacksons Airport to upgrade the customs software from ASYCUDA++ to ASYCUDA World. Throughout 2018, Papua New Guinea Customs Service consolidated the implementation of ASYCUDA World at the pilot sites and further rolled out the new platform to other customs offices in the country. The introduction of ASYCUDA World was supported by training sessions for both customs officers and trade operators. Since May 2018, the new system is fully operational and allows for the electronic submission of customs declarations and supporting documents, which saved between 2 to 3 days to traders.
Despite their associated benefits, the implementation of these systems faces challenges. Introducing an electronic system often requires governments to enact legislation on electronic signatures and transactions. Without appropriate legislation in place, the implementation of a new system can lead to redundancy and delays (such as, for example, requiring the paper submission of signed documents after they have already been filed electronically). Many economies in Sub-Saharan Africa and Eastern Europe and Central Asia have electronic systems but still require traders to submit hard copies of documents. Additionally, for small and low-income economies, the infrastructure and training costs of implementing such systems can be onerous and meaningful impacts for local traders may take time to materialize in practice. Examples of low-income economies that successfully implemented electronic data interchange systems include Burundi, Haiti, Sierra Leone and Tajikistan.
Launching electronic single windows
Increasingly, economies are taking a step further to connect electronically not only traders and customs officials, but all agencies involved in international trade through an online single window system. In the best-case scenario, the system allows traders to file standard information and documents through a single-entry point to fulfill all import, export and transit-related regulatory requirements. The single window then shares relevant information with all parties involved in trade, including private participants such as banks and insurance companies, as well as public agencies including immigration and vehicle registration authorities.
Economies show clear positive outcomes from the implementation of single window systems. The Korea Customs Service estimates that the introduction of its trade single window brought $18 million in benefits in 2010.3 Indeed, for Republic of Korea-based companies such as Samsung and LG—global leaders in the electronics industry—achieving rapid and predictable turnaround time is an important aspect of their competitiveness strategies. In Singapore, the implementation of a single window led to large gains in government productivity. The government established the world’s first national single window for trade (TradeNet) in 1989, bringing together more than 35 border agencies. Today TradeNet handles more than 30,000 declarations a day, processes 99% of permits in 10 minutes and receives all collections through interbank deductions.4
Because of these benefits, economies are increasingly interested in introducing single window systems of varying complexity. In November 2018, Indian customs integrated several government agencies into the online application system e-Sanchit operating under the Single Window Interface for Trade. Thanks to this initiative, all export document submissions were rendered fully electronic. In 2018/19, Saudi Arabia enhanced the Fasah electronic trade single window through the release of additional features, including advanced manifest declaration, unified online payments, truck management system and a module providing information on taxes and tariffs. In combination with other trade initiatives, the implementation of these new features helped decrease the overall time of documentary and border compliance for exports and imports.
Over time single windows have moved beyond national boundaries, encompassing entire geographic regions. In synchronization with national single window efforts, electronically integrated regional systems are on the rise. The Association of Southeast Asian Nations (ASEAN) Single Window (ASW) initiative aims to integrate the national single windows of ASEAN countries by allowing the electronic exchange of customs information and expediting cargo clearance. The regional single window is expected to reduce the overall cost of trading by 8%, with the largest savings arising from a reduction in documentation dispatch costs.5 The implementation of the ASW is being carried out gradually; member states are currently in the process of implementing their respective domestic ratifications and some have already attained positive results. For example, under the framework of the ASW, in January 2018 Malaysia introduced the electronic Form D–ATIGA, which is required for preferential treatment under the ASEAN Trade in Goods Agreement (ATIGA), reducing the time to comply with documentary requirements when importing from Thailand.
Despite the substantial long-term benefits, implementing a single window is not an easy undertaking. Due to the multifaceted nature of electronic interchange systems, national governments and international development organizations face numerous obstacles in coordinating the implementation of comprehensive single window platforms. Furthermore, cross-country comparability is complicated by the fact that different economies choose to introduce single windows of varying complexity.
Single windows may also suffer from various institutional and regulatory limitations that stem from conflicting interests related to technical standards, data harmonization and information sharing.6 Border operations, especially those managed by customs authorities, are legislated at the national level. As such, governments and development organizations must first convince different political actors of the need to integrate and modernize trade operations.7 Doing so is a significant challenge when implementing a national single window system, but even more so when implementing regional ones. The above-mentioned case of the ASW offers an illustrative example, as most ASEAN member states have their own customs regimes and relevant legislation in place, and that can be difficult to reconcile with new regional legislation.
The linking of agencies through electronic single windows is a complex process that requires extensive cooperation and coordination among multiple players, and it can take several years for new electronic platforms to become fully operational and used by the majority of traders. However, the long-term benefits, including improved revenue yields, the adoption of control risk management techniques, enhanced predictability, reduced costs and fewer delays substantially outweigh the implementation costs and the actual integration of single windows or similar systems.
Using risk-based inspections
Requiring imports and exports to undergo inspections—for tax, security, environmental, border control and health and safety reasons—is often necessary. How these inspections are carried out, including how cargo is selected for inspection, however, varies across economies. Inspections can be a serious obstacle to efficient and predictable trade when done with a heavy hand. Over the years, customs administrations around the world, working in tandem with other border control agencies, have developed systems for establishing risk profiles that allow them to perform physical inspections in proportion to potential risks of consignments. Investing in equipment is another way to help expedite the processing of cargo.
Many economies have adopted the use of scanners to limit the need to physically open containers. In some economies, however, inefficient use of scanners has led to an additional burden on traders, as customs agents often scan all containers, creating delays and incurring mandatory scanning fees on traders. Efficient use of scanners in conjunction with risk-based profiling can strike the right balance during inspection, contributing an efficient trading process.
Risk-based inspections—the norm in OECD high-income economies—are becoming increasingly common elsewhere. Traders in China are among those who are benefiting from the improvements in the inspection process through the adoption of a risk-based system. In September 2017, China implemented a national trade single window, which includes its own risk-management module. This risk-management module has enabled risk-based inspections and, as a result, the overall process of export and import customs clearance has become faster. Similarly, in December 2018, Oman integrated a risk-assessment system into the national Single Window, Bayan, to streamline customs clearance and physical inspections, reducing the time to comply with border requirements for imports and exports. Uzbekistan also launched a risk management system. Since March 2019, the system is working at full capacity with 4 operational risk channels, which reduced the time for registration and processing of customs declarations and cargo inspections.
Deepening regional cooperation
National economies face special challenges in competing globally due to the size of the domestic market, diverse trade barriers (including technical, physical and fiscal controls at the borders, information asymmetries and regional externalities) as well as transportation networks connecting with trading partners. These economies can accelerate trade through efforts towards increasing border cooperation agreements and reducing the number of checkpoints so that cargo can move freely—without being stopped for customs or other inspections—until it reaches its final destination. Deepening regional cooperation through such agreements may also lead to the creation of regional markets, generating economies of scale for local firms and increasing competition, increasing trade flows between cooperating partners, improving processes at the borders, correcting information asymmetries and regional externalities, and interconnecting transportation.8 As a result, general improvements in efficiency may translate into reduced costs and increased speed when trading across borders.
A paradigmatic example of regional cooperation is the customs union. More than 50 years ago, while the rest of the international community was negotiating the levels of tariffs and quotas, the European Union embarked on a grand experiment—the launch of a customs union. Within this customs union, there would be no customs duties at internal borders between the EU member states, there would be common customs duties on imports from outside the European Union as well as common rules of origin for products from outside and there would be a common definition of customs value.
While the EU customs union remains one of the best examples of trade facilitation between disparate nations, it is far from alone. Today, more than half the 190 economies covered by Doing Business are part of a customs union. However, not all customs unions are equal. Customs unions among OECD high-income economies (essentially, the EU customs union) perform substantially better than others, followed by customs unions in Europe and Central Asia, Sub-Saharan Africa and Latin America and the Caribbean.9
Other economies have deepened regional cooperation through the implementation of joint border crossings. For example, in recent years, several countries in the East African Community have adopted the concept of a one-stop border post (OSBP) which combines the border control agencies of two countries into one single facility, often eliminating the need to repeat clearance procedures on the other side of the border. In 2017, the Malaba OSBP, which is shared between Uganda and Kenya, became operational. The Malaba OSBP houses a number of government agencies from both countries in a single facility at the border, including customs officials. As a result of this cooperation, both countries experienced increased efficiency at the border. On April 7, 2018, the Integrated Check Post (ICP) Birgunj, a joint customs and border checkpoint between India and Nepal, was inaugurated. It became fully operational in June 2018. Customs procedures now occur at ICP Birgunj instead of the Kathmandu customs offices. ICP Birgunj is also equipped with the customs electronic data interchange system ASYCUDA World, has modern border infrastructure and more customs officials. Lastly and in part thanks to more advanced technology, border authorities at the ICP Birgunj conduct fewer intrusive inspections on export shipments.
Sparking competition by making private participation easier
Beyond customs formalities, private providers of trade services—such as customs brokers, transport companies and port services providers—all have an impact on the time and cost of trading across borders. Greater competition among trade service providers can lead to lower fees and higher quality of service. In 2016, the Russian Federation inaugurated a new Multifunctional Sea Cargo Complex at the Port of Bronka. Bronka is located in proximity to the Port of St. Petersburg, which has decreased its prices for port and terminal handling due to growing competition. Importers and exporters have, therefore, experienced a decrease in the cost of border compliance on merchandise going through the Port of St. Petersburg.
Not all reforms in the area of trade facilitation require heavy spending. Initiatives such as providing training, clarifying and publicizing the rules, holding regular meetings with traders on the clearance process and removing certain requirements or making them simpler can make a difference. For example, in 2018 Ukraine eliminated a requirement to provide a verification document from the State Service of Export Control for the import of automotive parts; it did this by removing automotive parts from the list of military goods that are subject to oversight and control by the State Service. Doing Business data show that Ukraine’s documentary compliance time and cost to import subsequently decreased by 72 hours and $50, respectively. In 2019, Ukraine further reduced the time to import by simplifying conformity certification requirements for auto parts. Similarly, China, since January 1, 2019, lifted a license requirement for imports of mechanical and electrical commodities, which helped reduce documentary compliance time when importing auto parts from Japan.
Upgrading trade logistics infrastructure
Inadequate infrastructure is one of the main burdens in international trade,10 and it can severely impact trade facilitation. The importance of infrastructure is most evident when considering the efficiency of ports—their ability to ensure timely cargo transfers is a vital dimension of their competitiveness. Efficient ports are not only technologically advanced—using robots and automated container handling—but also employ digital platforms, such as port community systems, to ensure the smooth and reliable transfer of information between all members of the seaport network. Efficient ports generate many economic benefits, including increased trade volume, lower trade costs, higher employment and foreign investment. Port quality impacts entire supply chains and even the economies of nearby cities.
Automation improves the reliability, predictability, safety and competitiveness of operations. Ports are land-intensive; automated cranes and vehicles in ports improve the productivity of stacking crane interchange zones, which allows for more efficient land allocation and use. Additionally, modern automated machinery is fast, economical and low-maintenance and it helps to avoid collisions and other physical damage. Singapore inaugurated the Pasir Panjang Terminal Building Gate 3 for containerized cargo within the Port of Singapore in September 2016. The terminal provides access to eight additional flow-through container lanes. Together with the expansion of the port, investments were made to improve port infrastructure and its automation. As a result, terminal handling processes at the port have improved and Doing Business data show a decrease in the time for import and export border compliance.
Furthermore, in the current global trade logistics environment, where the number of containers is rapidly increasing due to higher international trade volumes, competition among ports to dominate the container market continues to intensify. Ports are complex constructions and changes are not easy to implement. Ports are communities composed of numerous players, both public and private.11 Port authorities and customs typically constitute the core of these communities. Other entities include shipping lines, freight forwarders, customs brokers, and importers and exporters, all involved in conducting trade. As an example of improvements in this area, in April 2018, the Port of Luanda upgraded its port community system to Janela Única Portuária II, allowing for electronic information exchange between different agents, including the port, terminal operators and shipping lines. This upgrade follows the previous significant rehabilitation and upgrade of the Port of Luanda, including the expansion of terminals, addition of new berths and equipment. As a result, the terminal handling processes at the Port of Luanda port have improved, reducing the time for export and import border compliance. Another economy that has implemented a similar system is India. In December 2018, the Indian Ports Association launched the Port Community System PCS 1x, which serves as a single platform for all port transactions between public agencies, the private sector and banks. The PCS 1x system improved the time and cost to comply with border and documentary requirements in both Delhi and Mumbai.
Promoting efficiency in product-specific inspections
Border compliance takes longer in economies where the top export is an agricultural product compared to those that trade in non-agricultural products. The main reason for this difference is that most economies in the former group require product-specific inspections and procedures (such as fumigation or phytosanitary inspections). However, even among economies where the top export is an agricultural product, documentary and border compliance times vary widely. Compliance times for agricultural products subject to product specific inspections range from two to 168 hours. This variation suggests that it is possible to protect consumers and businesses while still facilitating (or at least not impeding) trade.
Economies exporting agricultural products span all regions and income groups, such as Norway among OECD high-income economies or Guinea-Bissau in Sub-Saharan Africa. Both Namibia and Australia, for example, require sanitary inspections and certificates for their top export product. However, completing border compliance procedures takes 120 hours for an exporter of fish in Namibia, while it takes only 36 hours for an exporter of meat in Australia. And completing documentary compliance takes 13 times as many hours for an exporter in Namibia (90 hours) as it does for an exporter in Australia (7 hours). An exporter in Namibia must wait to obtain and submit hard copies of documents from various government agencies. In Australia, by contrast, quarantine authorities work closely with both producers and customs authorities throughout the process, and most documents can be submitted electronically. What matters is not whether enhanced inspections and procedures are required but whether they are carried out efficiently.
Training and communication with trade stakeholders
Education and training facilitate the implementation of new policies as well as the development of the specific skills or knowledge required to make those policies operational.12 Training can target various staff levels—from senior to operational staff—and encompass different types of programs, including technical training on daily operations, training linked to the implementation of new processes or the training of new staff 13. Training can support the successful implementation of trade-related reforms by communicating relevant information about new programs and their requirements—simply knowing more about reforms could make government employees more likely to adopt them. Indeed, education and training are positively associated with reform implementation. Education and training can also improve communication, which is crucial for conveying pertinent information on new standards.13
A well-trained and educated workforce is equipped with the knowledge to perform their day-to-day duties as well as to increase the efficiency of the overall trade process. By developing workers’ competencies and skills, training can act as a catalyst for improved organizational productivity.14 The experience of the Democratic Republic of Congo highlights the importance of training as well as communicating changes as catalysts to trade reform implementation. In 2016, the country introduced a single window (SW) for trade, which began as a pilot. The following year the government continued the implementation of the SW, publishing information on new requirements on the SW website and providing training workshops to the private sector. The government also opened trade facilitation centers equipped with Internet-connected computers to assist and train users. By implementing the SW together with the accompanying training and communication, the Democratic Republic of Congo reduced document preparation time by 122 hours for exports and 42 hours for imports; border compliance time was also cut, by 219 hours for exports and 252 hours for imports, according to Doing Business data.
Doing Business data show that educating customs officials and customs brokers through regular training is positively associated with lower border and documentary compliance times. Training is also related to the successful implementation of trade reforms. Indeed, most of the economies that implemented trade reforms as captured in Doing Business provide regular training to customs clearance officials.
1 UNCTAD (United Nations Conference on Trade and Development). 2018. UNCTAD Toolbox: Delivering Results. New York: United Nations. 2 Sarmiento, Alvaro, Krista Lucenti and Aurelio Garcia. 2010. “Automating the Control of Goods in International Transit in Goods: Implementing the TIM in Central America.” IFC Smart Lessons, World Bank Group, Washington, DC. 3 Republic of Korea, Korea Customs Service. 2011. “The Embodiment of Business-Friendly Environment by KCS Challenges.” Seoul. 4 Singapore, Singapore Customs Service. 2007. Annual Report 2006/07. Singapore. Available at http://www.customs.gov.sg/. 5 USAID (United States Agency for International Development). 2012. “Asean Single Window– Potential Impact Survey.” Washington, DC: United States Agency for International Development. 6 Macedo, Leonardo C. L., and Flavio Augusto Trevisan Scorza. 2013. “Guichê Único (Single Window) e as negociações da OMC sobre Facilitação do Comércio.” In Organização Mundial do Comércio – Temas Contemporâneos. Santos, Brazil: Leopoldianum. 7 Grainger, Andrew. 2008. “Customs and Trade Facilitation: From Concepts to Implementation.” World Customs Journal 2 (1): 17–30. 8 Chauffour, Jean-Pierre and Jean-Christophe Maur (editors), 2011. Preferential Trade Agreement Policies for Development: A Handbook. Washington, D.C.: The World Bank. 9Doing Business database. 10 Lanz, Rainer, Michael Roberts and Sainabou Taal. 2016. “Reducing Trade Costs in LDCs: The Role of Aid for Trade.” WTO Working Paper, World Trade Organization, Geneva. 11 Wrigley, Clive, Rene Wagenaar and Roger Clarke. 1994. “Electronic Data Interchange in International Trade: Frameworks for the Strategic Analysis of Ocean Port Communities.” Journal of Strategic Information Systems 3 (3): 211–34. 12 Kroll, Alexander, and Donald P. Moynihan. 2015. “Does Training Matter? Evidence from Performance Management Reforms.” Public Administration Review 75 (3): 411–20. 13 McLinden, Gerard, Enrique Fanta, David Widdowson and Tom Doyle (editors). 2011. Border Management Organization. Washington, D.C.: The World Bank. 14 McKinnon, Alan, Christoph Flöthmann, Kai Hoberg and Christina Busch. 2017. “Logistics Competencies, Skills, and Training: A Global Overview.” World Bank Studies, World Bank, Washington, DC.; Elnaga, Amir, and Amen Imran. 2013. “The Effect of Training on Employee Performance.” European Journal of Business and Management 5 (4): 137–47.