The Role of Information Technology in Customs Modernization

The contributions of consultants Tony Mort and Alan Hall and of David Kloeden and Patricio Castro of the International Monetary Fund are recognized with gratitude.

Customs administrations today face a variety of political and administrative pressures and challenges. These include fluctuating workloads with static or declining resources, greater business expectations, and continuing pressures to meet often-conflicting government revenue, trade facilitation, social protection, and national security objectives. Moreover, customs administrations are increasingly required to integrate their systems and procedures with the sophisticated global logistics networks used by international trade and transport operators. To cope with these pressures and challenges, the international customs community looks to the applied use of information technology (IT) as a catalyst for improving organizational and operational efficiency and effectiveness. As a result, many modernization programs in the customs sector over the last decade have incorporated significant computerization components. Many customs administrations today use varying degrees of automation to support core customs functions such as goods declaration processing,revenue assessment, revenue collection, risk management, and management reporting.

This chapter is not designed as a technical guide for IT specialists, nor as a business process re-engineering guide. Rather, it summarizes the benefits of applied use of information and communications technologies (ICT) in the customs sector, and the important role ICT can play in the wider process of customs modernization and reform. The chapter discusses the advantages and disadvantages of nationally built ICT solutions and briefly presents the various off-the-shelf solutions that are presently on the market. It draws on some important lessons learned by a range of organizations, donors, consultants, and customs professionals, and emphasizes key issues to be considered when developing appropriate computerization strategies for the customs administrations of developing economies.

The first section highlights the importance of the use of ICT for effective and efficient customs operations. The second section focuses on the various components of a computerized customs management system. The third section presents the key points of a strategy for computerization of customs. The fourth section briefly describes the advantages and disadvantages of adopting national versus off-the-shelf customs management systems, and summarizes the major third-party products that are available. The final section contains operational conclusions. Where possible, case studies have been incorporated to illustrate points made.

The Role of Information and Communications Technology in Customs Modernization

While it is evident that IT is assuming an increasingly important role in modern customs administration, the priorities, expectations, experience, capabilities, and resources of individual customs administrations vary considerably. Beginning in the early 1970s, customs administrations of many developed economies began to recognize the significant advantages of using technology-based solutions to improve their operational efficiency. They designed and developed their own customs computer systems, tailored to meet national needs. Over the years such systems have been enhanced, simplified, and in some respects standardized in line with international best practices. They were adjusted over time to capitalize on changes in information and communications technologies. As a result, such countries have computer systems that reflect modern customs management practices such as self assessment, clearance on minimum information, deferred payment of revenues, an intelligence-led and targeted risk management approach to clearance of international consignments, and sophisticated post-clearance audit regimes.

The historical experience with ICT of many developing and emerging economies has been quite different and not without significant difficulty and, in some cases, high financial cost. Lacking the necessary financial and human resources and access to a well-established domestic IT market, customs administrations of many developing countries have been slow to take advantage of the full potential offered by the appropriate application of modern technological advances. Fortunately, this situation has changed over recent decades, partly as a result of the commercial availability of customs-specific computer systems, and the international donor community that has stepped up support to strengthen customs administrations. Yet, the technological infrastructure and support available in many developing countries lags far behind that which is available in more developed economies, and increasingly, behind the technology-intensive business practices of many international traders. Moreover, when automated...

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