27-10-2016, 11:55 AM
Study on the Challenges of Implementing Single WindowConcept to Facilitate Trade in Sri Lanka: A Freight Forwarder Perspective
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Abstract—Ports, airports and customs procedures are one of
the major bottlenecks in product supply chains of Sri Lanka.
Delays at border crossings and ports caused by lengthy,
complex procedures and excessive paperwork have created a
negative impact on trade mainly in terms of time and cost. A
Single Window is a one-stop facility that allows exchange of
information between all parties involved in trade, to reduce the
complexity, time and costs. This research was conducted to
identify the challenges that hinder the development of a single
window system in Sri Lanka. Qualitative approach was adopted
with a structured questionnaire distributed to 30 freight
forwarding companies in Sri Lanka. It was found that the Sri
Lankan system is not compatible with the single window
concept definitions. According to the Sri Lankan freight
forwarders, the most critical challenges of single window
implementation are “Lack of government support”,
“Inadequate coordination between Stakeholders”,
“Organization and human resistance to change”. The top two
critical challenges are strategic level challenges, which require
government and high-level strategic decision makers to actively
take their parts in the creation of political will and inter agency
collaboration.
INTRODUCTION
Sri Lanka has many opportunities in the field of
international trade because of its natural resources and
favorable geographic position in the Indian Ocean. Natural
resources and strategic position are advantageous but not
enough to thrive in the world market. Supply chains of the
traded products should be as competitive as other countries to
win orders in a situation where the businesses are very much
concerned about the shorter lead times and cost effectiveness.
The macroeconomic plan of the current government
expects the country becoming a logistics hub in the region,
which will help attract more investors to the country.
According to the 2012 Logistics Performance Index global
rankings, Sri Lanka has climbed up to the 81st position out of
155 countries. It is a better position than most of the other
South Asian countries, but indicates a wide gap between
front-runners Singapore, Hong Kong, and New Zealand and
the rest of the Asia Pacific region. Ranking at number 46,
India still leads the South Asian region.
Therefore, it implies that Sri Lanka has a long way to go to
achieve its logistics hub status. Sri Lanka must bring more
trade facilitating measures to overcome this issue. The single
window concept is one such good trade facilitative measure
due to its successful applications among many front-runners
in the trade world. As far as the definition of a single window
with respect to trade is concerned, UN/CEFACT
Recommendation number 33 defines Single Window as “A
facility that allows parties involved in trade and transport to
lodge standardized information and documents with a single
entry point to fulfill all import, export, and transit-related
regulatory requirements [1].”
Sri Lanka had made an attempt to establish a Single
Window type system in the late 90s. Since then, two attempts
Sri Lanka has made to set up Single Window type system had
not been successful [2]. However relevant authorities are
continuously making efforts to fully automate the system and
bring all the agencies under a one roof. But it is apparent that
the development of the single window happens at a slow
pace.
The objectives of this research are to:
1) Study about implementing the single window concept in
an international trade environment.
2) Analyze the compatibility of the Sri Lankan system with
the single window definitions.
3) Identify the challenges of implementing a single window
system to facilitate trade in Sri Lanka.
II. LITERATURE REVIEW
A. Single Window Concept
In most countries, companies engaged in international
trade regularly have to submit large volumes of information
and documents to governmental authorities. This information
and documentation often have to be submitted through
several different agencies, each with its own specific system
and paper forms. These requirements constitute a burden
both to Governments and to the business community
particularly in developing countries. Establishing a Single
Window facility is one means of addressing this problem.
It has been described that, „In a theoretical sense, a single
window can be described as a system that allows traders to
lodge information with a single body to fulfill all import or
export related regulatory requirements. In practical terms
single window environment provides one entrance, either
physical or electronic, for the submission and handling of all
data and documents related to the release and clearance of an international transaction. This entrance is managed by one
agency, which informs the appropriate agencies and direct
combined controls‟ [1].
B. Costs of Implementing a Single Window
The costs associated with setting up a Single Window
facility vary depending on the approach taken. In case of
government-financed Single Windows, these costs often are
part of the costs of a larger nationwide trade development
policy. Total implementation costs range from less than one
million US dollars to 50 million dollars.
According to [3], Establishment of (electronic) single
windows system is perceived as the most costly of the 12
Trade Facilitation measures which also takes the most time to
implement. Experts indicated that the least developed and
low-income developing countries would need at least three to
five years to implement a single window system, provided
they had adequate resources to do so (three to five years) [4],
[5].
C. Key Features of a Single Window
The UN / CEFACT brochure outlines the basic concepts
and elements of a single window which can be summarized
as follows [1]. Following features can be considered as
standards for any single window system.
1) A single authority
An entity that coordinates between all relevant agencies
and enforces all border related controls. For example, in
Sweden and the Netherlands, customs officers perform many
tasks based on assignments from other governmental
authorities.
2) A single system
The system serves as transaction hub and is integrated to
all authorities. Declarations and permits are received
electronically in a single application. It allows traders to
submit standard data only once and the system distributes the
data to the agencies that have an interest in the transaction.
3) An automated system
Through which a trader can submit electronic trade
declarations to the various authorities for processing and
approval of a single application. In this approach the
approved permits are transmitted electronically to the
sender‟s computer.
D. Operational Models
There is no unique model for a Single Window, as
operators adopt their systems to specific national/regional
conditions and requirements. In general, it has been noted
that countries, due to their priorities and readiness, and their
ability to engage key stakeholders, have implemented very
different forms of Single Windows.
E. An Evolutionary Development Model in Establishing
Single Window
It can be found a stage wise approach to implement single
window by [6]. This model can be used by policy makers to,
Assess the current development status of the country by
comparing two different stages in the model, and decide the
next stage as the future target for the stepwise
implementation.
Some economies choose to establish a limited form of
Single Window (SW), e.g. An integrated "Customs SW" to
streamline all Customs related transactions (Stage A). Some
countries went further and integrated the logistics service
providers within a major sea port or airport with the
CustomsSW thus creating an electronic exchange platform
called a "Port Community System" (Stage B). Stage D
normally includes the collaboration processes as of Stage B
(regulations) and C (port). Stage “E” is the most advanced
and describes about the integration of systems in a particular
region.
F. Challenges of Implementing a Single Window
According to [6], there are 10 challenges that must be
carefully addressed as following. They have classified these
challenges into 4 categories as stated below:
1) At the strategic level.
2) Single Window Vision Articulation and Political Will
Creating.
3) Stakeholder Collaborative Platform Establishment.
4) Business and Financial Models Formulation.
5) At the management & technical level.
6) Business Process Analysis and Improvement.
7) Data Harmonization and Document Simplification.
8) Service Functions (Applications Architecture) Design.
9) Technology Architecture Design including Technical
Standards and Interoperability.
10) Legal Infrastructure Institution.
11) Implementation level.
12) Information Technology Infrastructure and Solutions
Implementation.
13) Operation level.
14) Change Adoption and Operations.
G. The Sri Lankan System
According to [7], most of the large scale companies of Sri
Lanka were dissatisfied with the automation process at that
time as the automation process had not been fully
implemented and that many of the important agencies were
not linked to the system. Many companies agreed with the
fact that automation of document submission process was
good if fully implemented. Even today the condition is not
very different from that of 2009 where some traders still
submit documents manually.
It has been emphasized that, „Having an import/export
clearance process with proper connectivity is a major need of
the country today. The existing automated system in Sri
Lanka is a piecemeal system providing the capacity to only
lodge the CUSDECs (Customs Declarations) electronically.
Of over 30 agencies that are involved in the import/export
process, only the Tea Board is linked while Customs, BOI
and ports are partly linked. Measures need to be taken to link
all relevant agencies with EDI. Legislation should be
introduced in order to bring everyone under a single protocol.
Sri Lanka must take concrete steps towards reaching a single
window‟ [8].
III. RESEARCH METHODOLOGY
A. Data Collection
The qualitative approach was adopted to conduct this research. To achieve the first objective, a background study
was done using secondary data sources such as internet
articles, researches, and journals. The key secondary sources
of this research were the United Nations Centre for Trade
Facilitation and Electronic Business reports.
To achieve the second objective, both the primary and
secondary data sources were used. A pilot survey was done
using operational level and managerial level employees of a
freight forwarding company. Semi structured interviews
were conducted with three senior level managers of three
different freight forwarding companies and two directors of
the Board of Investments (BOI) and Sri Lanka customs, in
order to clarify the status of automation of import/export
procedures in the country.
To achieve the third objective, a questionnaire was
prepared and the survey was conducted among 30 SLFFA
(Sri Lanka Freight Forwarders Association) registered
freight forwarding companies. Sampling was done using
Simple Random Sampling technique. A questionnaire was
only given to managerial level employees.
Data Analysis
Key features of a single window identified during the
background study were compared to the Sri Lankan context.
Further the evolution model identified during the background
survey was used to assess the current status of Sri Lanka.
Descriptive statistics were used to analyze data in order to
achieve the research objective “3”. SPSS (Statistical Product
and Service Solutions) was used to perform
descriptivestatistics functions. Nine critical challenges were
ranked according to the mean and standard deviation using
SPSS.
Finally 9 critical challenges were categorized according to
the UNNExT (United Nations Network of Experts for
Paperless Trade) model and interpreted.
IV. RESULTS AND DISCUSSION
A. Analysis of the Sri Lanka’s Current Operating Model
as against the Single Window Concept
This analysis was conducted to achieve objective 2, based
on the information collected through interviews with senior
managers/directors of Sri Lanka Customs, BOI and freight
forwarding companies. As for the definition, a single window
system should have a facility for lodging standardized
information and documents with a single entry point [1]. The
current operating model does not integrate all the agencies
into a single system. Sri Lanka Customs, BOI, and Sri Lanka
tea board are the agencies that are connected to the current
EDI system. Currently, the Ceylon Tea Board is the only
regulatory agency linked to the EDI system, which allows tea
exporters to submit online documentation of blend sheets and purchase statements together with CUSDECs, and obtain
online approval from the Tea Board. This eliminates the need
for tea exporters to visit the Tea Board to process the required
documents. But there are more than thirty agencies that are
not connected to the current system.
Therefore, it is clear that Sri Lanka still does not have a
single entry point to fulfill all import/export related
documentation activities.
“Single authority” perspective describes about an entity
that coordinates between all relevant agencies and enforces
all border related controls [1]. Even Sri Lanka customs
possess the authority of enforcing border control activities; it
does not act as a coordinator between traders and regulatory
agencies. Instead, each of them acts as separate entities in
providing services.
“Single system” allow traders to submit standard data
electronically and only once and the system distribute the
data to the agencies that have an interest in the transaction [1].
Sri Lanka has an EDI platform which allows traders to submit
data electronically. But only a limited number of agencies are
connected to this system such as customs, BOI and Sri Lanka
tea board.
In a “single automated system” trader can submit
electronic trade declarations to the various controlling
authorities for processing and approval of a single
application [1]. In this approach the approved permits are
transmitted electronically to the sender‟s computer.
Compared to the other features of the single window system,
the Sri Lankan system is more compatible with this feature
“single automated system”.
The current automated system “ASYCUDA World” is a
web based system and allows traders to log into the system
using the internet. Once the trader input data into the system
fees, taxes and duties are computed automatically. However,
traders/agents still have to visit customs or BOI to submit the
documents physically for reprocessing, and to obtain
approvals. Thereafter, processing and procedures are the
same as the manual process, involving physical movement of
paper from one location to another. Another problem of the
automation is that all traders are not using the system, instead
some of them still use manual processes. Among them
majority are small scale companies.
Introduction of the Automated Cargo management System
is another automated system which is used by the port
authority. It tracks bill payments and online submission of
documents. The current system available covers online
acceptance of shipping notes and cargo dispatch notes by
shipping lines and Sri Lanka Ports Authority (SLPA), online
bill payments, and online submission of export bills by SLPA
to exporters or freight forwarders. This has resulted in a
reduced turnaround time, reduced lead times and an
accelerated cargo dispatch related to the import/export trade.
In addition, SLPA uses a terminal management system called
“NAVIS” which is also a web-based system. NAVIS enables
the exchange of information between SLPA and the agents,
including: container gate movements, loading/discharge
information, terminal performance, vessel departures, and
container loading/discharging orders, storage instructions
and bay plans. Bank of Ceylon and Peoples‟ bank has
connected with the customs/BOI and SLPA systems,
allowing traders to make e-payments. This is part of trade automation initiatives and they have plans to link private
banks to this system in the near future.
In addition to the Government initiative to automate the
trading process, the private sector, in the form of the Ceylon
Chamber of Commerce, has taken measures to facilitate trade
in the country by introducing “e-CO”, a web-based certificate
of origin (CO) application system. With this system,
exporters can submit applications for COs electronically.
This eliminates the need for exporters to physically collect
the application form, complete it and bring it to various
chambers for endorsement. Now, exporters/agents can access
and download a form and apply for a CO electronically,
reducing the time and money required to send in the
application form and supporting documents required for CO
authentication.
When considering the “inter agency collaboration” Sri
Lankan trade community is still lagging behind.
Communication gaps, hierarchical organization structures,
especially in government agencies are the major barriers to
build up inter agency collaboration. However, some
government agencies have integrated certain functions and
shared certain resources with each other. As an example,
customs and the Inland Revenue Department (IRD) share a
common database of (Value Added Tax) VAT payment
activities.
B. Analysis of the Sri Lanka’s Current Operating Model
As Against “Evolutionary Development Model in
Establishing Single Window”
United Nations Network of Experts for Paperless Trade
(UNNExT) in their report by [6] has proposed an
evolutionary model for developing a Single Window. The
model has been used to assess the current stage of Single
Window implementation and to decide on the next stage of
development in Sri Lanka
The stages of this model can be implemented parallel or
sequentially. When analyzing the Sri Lankan system, it
shows a parallel approach than a sequential approach. The Sri
Lankan system is closed to “Stage A”, but it is not fully
compatible with its features. Because the system is not 100%
automated and still requires physical document submission.
Stage “B” is not fully implemented as only the Sri Lanka tea
board is linked to the system. Stage “C” requires more
sophisticated IT infrastructure than the existing system. The
current port automation system has limited applications and
most of the documentation procedures are still done manually.
Stage “D” and “E” will be impossible to achieve until the country develops its system according to the requirements of
stage “A”, “B” and “C”.
Above analysis regarding the current system revealed that
even now the single window has not fully implemented in Sri
Lanka. The single window project is complicated due to the
many challenges. Some of them were identified through
literature survey [9], [10].
Three senior level managers of three different freight
forwarding companies were interviewed to sort out the most
critical challenges in the Sri Lankan context. The critical
challenges selected by those experts are mentioned below.
1) Lack of government support.
2) Complicated procedures and document requirements.
3) Budget and human resource constraints.
4) Organization and human resistance to change.
5) Inadequate coordination between Sri Lanka Customs,
other Regulatory Institutions and the Trade Community.
6) Laws and legal challenges, inadequate legal framework.
7) Lack of leading agency.
8) Lack of information and communication technology
(ICT).
9) Security issues (Due to centralized information sharing
and electronic documents).
Aforementioned 9 challenges can be noted as the most
critical challenges of implementing the single window
concept in Sri Lanka. With the ideas and explanations which
were raised during interviews and literature survey, above
critical challenges can be briefly explained as follows.
C. Lack of Government Support
Single window implementation is a national level project
which requires massive changes to the existing system and
huge investments. Therefore, it urges the government
intervention, especially in the areas of policy formulation and
financial investments. Most of the experts accept the lack of
government support as a critical challenge. According to
them, Sri Lankan government has mostly focused on physical
infrastructure development (ports, highways and airports)
than soft infrastructure development projects such as a single
window.
They emphasized that the government is the only party
who can change this system overnight by bringing an Act of
Parliament or making amendments to the existing rules. We
not only need the government permission, but also need the
government support to implement single window.
D. Complicated Procedures and Document Requirements
The current documentation procedures are complex and
require a large number of documents. Different agencies use
different formats in issuing licenses/permits. But the single
window system requires standard documents. Therefore, all
parties should agree to use a common format for a permit /
license and use only the data elements included in the WCO
(World Customs Organization) Data Model. Further, the
documentation procedures are very much complex. A single
document requires many approvals and it passes through
multiple channels before getting approved. To implement a
single window the procedures should be definitely simplified.
This has remained a greatest challenge.
E. Budget and Human Resource Constraints
Single window project needs huge investments and experts to implement and maintain the system. There are handfuls of
single window experts available in government agencies. We
may need to hire the foreign experts regarding this matter.
It‟s a great challenge to implement a system without
experienced human resources. On the other hand, most of the
employees in the trading community are not familiar with the
sophisticated IT tools. Particularly, small companies have
this problem. Budget will be a greatest challenge if the
government does not intervene.
F. Organization and Human Resistance to Change
This is common for both the regulatory agencies and
traders. Automation and single window systems can
eliminate unethical practices such as bribing and wastage.
Most of the government agencies are corrupted and
employees are sticking to those unethical practices. Today
the bribing has become an industrial norm. These people are
really against the single window system and will show a huge
resistance to change. On the other hand, some traders are also
not willing to change current practices. This is mostly valid
for small scale companies, where their resources are limited
and changes to the system can cause additional costs.
G. Inadequate Coordination between Sri Lanka Customs,
other Regulatory Institutions and the Trade Community
The single window system brings different organizations
under a one roof. Therefore, inter organizational coordination
is vital in a single window system. But it does not exist
among Sri Lankan trade community. Bureaucratic attitude
and mind-set of the government officials, hierarchical
organization structures and political agendas prevent the
development of collaborative approaches.
H. Laws and Legal Challenges, Inadequate Legal
Framework
Implementation of single window requires new policy
formulation which in turn urges for amendments to the
existing regulations or formulating new regulations. Sri
Lanka customs is still governed by the customs ordinance
which was set even prior to the independence. It does not
permit to implement several functions required by a single
window system. There are different agencies involved in
trade, which are governed by different ministers. Bringing
them under a single authority requires significant changes to
the existing laws.
I. Lack of Leading Agency
The leading agency is responsible for the management of
the single window implementation program. It is crucial that
the single window project includes a strong lead agency.
There is no agreement between government agencies as to
who should take up the lead role. Past two attempts of single
window implementation failed due to the private sector
representation as the lead role. Some argue that the Sri Lanka
customs should take up the lead role. But it has been accepted
among all stakeholders that is not proper for one stakeholder
to take the lead role in the process.
J. Lack of Information and Communication Technology
(ICT)
Even the Sri Lanka customs tried to fully automate the
current system, it has not succeeded. Because majority of small scale traders still uses manual procedures. They are not
armed with IT (Information technology) facilities or
employees who are capable of work with IT systems.
Some organizations are not willing to exchange
information through a centralized system. Most of the
organizations are not satisfied with electronic documents and
their minds have set to approve physical documents.
Information submitted by traders may include
commercially-sensitive information, trade- sensitive
information, financially sensitive information, etc. Legal
protections and constraints on use of such information are
necessary to prevent misuse. There is a higher risk of misuse
and abuse of information submitted and maintained in
electronic form.
The above mentioned 9 critical challenges were presented
to respondents who represented 30 freight forwarding
companies. They were given a five point Likert scale to rank
the importance of each challenge to implement single
window.
According to the freight forwarders, The most critical
challenges of which the mean is above 4 are “Lack of
government support” , “Inadequate coordination between Sri
Lanka customs, other regulatory institutions and the trade
community” and “Organization and human resistance to
change”. Finally 9 critical challenges were categorized
according to the UNNExT model (Table II). It was found that,
the top two critical challenges are strategic level challenges,
which require government and high-level strategic decision
makers to actively take their parts in creation of political will
and inter agency collaboration. Management and technical
level challenges are also noticeable among critical challenges
and need active participations from middle
management/technical personnel especially in business
process reform, document simplification and harmonization,
and interoperability. However operational and
implementation level challenges are less among the critical
challenges.
CONCLUSIONS AND RECOMMENDATIONS
The Sri Lankan system is not compatible with the single
window concept definitions, especially in aspects of Single
entry point, Single data submission, Single authority, and
single system. But it shows similarities to a single window
system in the aspect of “Automated system”. But all the
automated systems are not integrated into a single system.
Further, there are many agencies that do not connect to these
systems. Therefore the system lacks connectivity, integration
and centralization compared to an ideal single window.
It was revealed that,
The most critical challenges of which the mean is above
4.0 are Lack of government support (4.2), Inadequate
coordination between Sri Lanka customs, other regulatory
institutions and the trade community(4.13) and Organization
and human resistance to change(4). According to the
UNNExT (United Nations Network of Experts for Paperless
Trade) model, it was found that,
The top two critical challenges are strategic level
challenges, which require government and top management
attention.
Management and technical level challenges are also need
to be addressed with a special attention.
Operational and implementation level challenges are less
among the 9 critical challenges.
As revealed by this study, Sri Lanka has not fully
implemented the single window system. The current system
is lagging in aspects such as connectivity and integration.
Government should take necessary steps to rectify these
issues and accelerate the single window implementation
project. Political will creation, Inter agency collaboration and
change management could be the initial steps of such
approach. Actions should be taken to connect all the other
regulatory agencies to the customs automated system.
Linking all the government and private agencies
simultaneously might be difficult at the beginning. Therefore,
selected important stakeholders can be linked to the system at
the start. Others can also be linked with the system at a later
stage. Creation of a public private partnership entity to
initiate single window project may accelerate the
implementation process. Furthermore, the government
should take measures to introduce a clear trade policy and
changes to existing ones in order to improve trade facilitation.
Customs Ordinance is over 100 years old, having been
revised about 26 times since 1978; it is obviously inadequate
to accommodate the requirements of a single window.
Therefore, measures should be taken to make the necessary
amendments to customs ordinance.
The majority of the traders are not aware of the single
window concept and its benefits. Therefore, all the levels of
companies (small, medium, large) should be invited to
participate in the single window implementation related
discussion/conference at the national level. Further, Data
simplification/harmonization should be done based on
international standards (e.g. WCO Data Model).