Customs Reform Project

1. Arab Republic of Egypt Ministry of Finance Customs Reform Project 17-20 April, 2004 Presented by Adel M. Radwan Director of the Customs Reform Unit

2. Presentation Outline Customs Reform Project Overview of Project output and activities The Main Achievements The Next Steps

3. Diagnosis: Symptoms • High transaction costs for importers with negative effects on external competitiveness • Imperfect compliance with multilateral agreements and international conventions • Relatively high number of disputes between Customs and the trade community • Limited use of IT in different sites • Ineffective duties relief schemes and customs systems • Customs administration burdened with bureaucracy

4. Outdated legislative and regulatory framework Cumbersome procedures and high clearance costs for importers Diversity and complexity of duty relief schemes High average tariff rates and complicated tariff structure Inadequate IT resources and systems Outdated organizational structure, training strategy and staffing policy Diagnosis: Causes

5. Our Vision • Integrate Egypt into the global economic system through full compliance with multilateral and bilateral agreements • Create partnership between Customs and the trade community • Enhance private sector external competitiveness through reducing transaction costs

6. Conceptualization Phase Reform Principles • The legislative framework should be clear, flexible, and transparent • Ports should be gates rather than warehouses • The importer/broker should share responsibility with Customs • Selectivity/risk management techniques should be used in document verification and physical inspection • Post-release audit and severe sanctions should replace excessive controls • Customs should operate in a fully automation / paperless environment • Tariffs should be generally non-prohibitive and easy to apply

7. Project Preparation Phase Activities

8. Project Organizational Structure Steering Committee Minister of Finance AdvisoryCommittee Customs commissioner Supreme Committee for law Project Director Assistant Director Financial & International Cooperation expert Technical Secretariat Legislation IT Human Resources Procedures IC Tariff Policy Duties Relief/Exemptions Valuation E- COMMERCE Anti- Smuggling Infra structures

9. Customs Reform Project Project Cycle Direct/Indirect Benefits to National Economy Customs Reform Project spans a period of 3-4 years from late 2002 until 2005/2006. Post-Project Evaluation Implementation/Monitoring/Interim Evaluation Clearance Costs/Benefits to National Economy Preparation Conceptualization Problem Identification Cost of Clearance 2001 2002 2003 2004 2005

10. Customs Reform Project Reform Master Plan (Living Plan)

11. Customs Reform Project Role of the CRU IMF Ministry of Finance Technical Assistance/Coordination with Other Donors Ministry of Foreign Trade CRU EU Ministry of Transportation Financial/Technical Assistance (TEP-A, TEP-B, and TEP-C) Ministry of Industry Coordinate Other Ministries and Government Agencies USAID Financial/Technical Assistance (Assistance for Customs and Trade Facilitation (ACTF) Project) Implement Trade Community Monitor W B The world Bank

12. Concluding Remark Participation of all Partners and the Support of the GOE are the Keys to Success Government of Egypt Legal Experts/Customs Law Legal Committee Advisory Committee Trade Community Customs Commission /Project Team Donor Agencies and International Community

13. Implementation Phase Legislation Committee June 2005 Activities • New Customs Law • Customs Code of Ethics • Explanatory Notes for new law • Legal references for Procedures manuals • Review of inconsistencies and simplification of customs related regulations

14. Implementation Phase Procedures Committee June 2005 Activities • Operate the Customs Office in the MCTC on a pilot basis • Operate the Customs Office at Ein el Sokhna Port and test new procedures • Develop a risk management system • Develop post-clearance audit • Develop valuation database • Centralize cashier functions and develop electronic means of payment

15. Implementation Phase Exemptions and Special regimes Committee June 2005 Activities • Streamline temporary admission and duty drawback procedures • Issue relevant decrees to enhance duty relief schemes • Examine possible means to rationalize exemptions • Conduct an analysis of customs systems applicable to free zones

16. Implementation Phase Information Technology Committee Dec. 2005 Activities • Automate all customs procedures at all ports of entry • Develop regional interfaces to connect all ports of entry • Provide MCTC IT support • Provide Ein el Sokhna IT support • Centralize data entry and cashier functions • Establish call centers, kiosks, and video conference facilities • Launch a dynamic website and EDI systems

17. Implementation Phase Human Resources Committee Dec. 2005 Activities • Establish new departments and functions (e.g., risk management unit, post-release unit) • Review the current structure and consider consolidating logically related functions • Develop new incentives and promotion systems • Train MCTC staff and regular customs staff on new procedures • Develop the curriculum and facilities of the Customs institutes

18. Implementation Phase Tariff Policy Committee June 2005 Activities • Examine inconsistencies in the current tariff structure • Design alternative tariff structures • Study the impact of reducing tariff rates on revenues • Publish the integrated tariff on compact disks

19. Implementation Phase Valuation Committee June 2005 Activities • Adherence to the WTO Valuation Agreement • Valuation database • Trained customs staff • Trained Stakeholder

20. Implementation Phase Information Center Committee Oct. 2005 Activities • Develop system for Valuation database • Risk management database • Customs information available electronically

21. Implementation Phase Anti-Smuggling Committee June 2005 Activities • Inspection handbook • Intelligence gathering methodology • Redistribution of security resources • Database of enforcement actions

22. The Achievement by the CRU First Year IT Support to Modernized Ports Customs Web Site Customs Encyclopedia Valuation Manuals Pre-arrival release Exemptions Manuals Risk Management System Procedures Manuals

23. Workshops Quick Action teams Training staff in the customs valuation field Export encyclopedia Performance and programs balances system in the Egyptian customs Participating in developing Damietta

24. Interactive Integrated Tariff MFN Tariff Rates Preferential Tariff Rates Insert 10-Digit HTS Code prices Laws and regulations Restrictions and Prohibitions

25. Procedures before Reform in the Egyptian Ports 1 Importer premises Registry Record#46 E-Data Entry Through Customs Complexes Physical Inspection and competent controls 2 Advanced Center 3 Payment NO COORDINATION General Organization for export & import Control GOEIC Cashier Release of Goods

26. Procedures at modernized ports 1 Data entry by the Importer 2 physical inspection and Competent controls EDI* Front window port 3 GOEIC Customs Release of Goods E-PAYMENT THROUGH THE BANK One-Stop Shop * EDI: Electronic Data Interchange

27. Pre-arrival Process MCTC 3 2 1 Classification and calculation of duties Lodgment of declaration and presentation of documents Payment and review of release order Prior to the arrival of goods 4 5 Contact point at port of entry Arrival of Goods Release of goods physical inspection and Competent controls

28. (MCTC) Model Customs and Tax Center Regional Offices MCTC Customs Commission Sales Tax Department Income Tax Department Advantages Test new procedures (e.g., pre-processing of import documents and risk management techniques) Coordinate with Sales and Income Tax departments in post-clearance audits

29. Sohkna Port /MCTC Procedures Damietta Port Port Said Port Dekheila Port Alexandria Port Cairo Airport MCTC Sokhna Port Operational Short Term Medium Term) • Electronic linkages with the trade community and other agencies • Pre-processing of import documents • Electronic means of payment

30. Customs Web Site

31. Next Steps Publishing of Encyclopedia Activation of the Customs Web Site Model Customs Center (One stop shop) Modernization of Dammitta Port & Cairo Cargo Terminal Publishing of Manuals Clients Service

32. Thank You