A lot has happened in the six months since the Asean Customs Transit System (ACTS) went live. With renewed calls for integration, cohesion, innovation adn connectivity across Asean member states, we decided to catch up with some of the stakeholders for an update.
- Paul Mandl, Team Leader, ARISE Plus Programme
- Aivaras Pigaga, Lead ACTS IT Implementation Expert, ARISE Plus Programme
- Glyn Evans, Transit Adviser, Customs & Transport Expert, ARISE Plus Programme
What kind of feedback/results have you seen since the launch of ACTS?
Aivaras Pigaga: We had several movements in November 2020 from Singapore to Thailand, crossing through Malaysia. These were part of the initial live pilot operations by DHL Global Forwarding. Feedback from the freight forwarder was very informative and a number of issues were identified. Some of them were addressed while others are still being polished. However, overall feedback was very good and traders are looking forward to using the system on a regular basis.
Since then, a growing number of registered ACTS traders are preparing to begin live movements, and we are expecting interest from traders from Malaysia, Singapore, Thailand, Cambodia and Vietnam. Several issues impacting new movements have recently been resolved. These relate mainly to the bank guarantees, as well as some minor misalignments between the regional legal framework and national regulations of some of the participating ASEAN Member States.
Paul Mandl: Moving ahead, the ACTS should be further enhanced with support for processing of multi-modal consignments. This will lead to increased uptake of the ACTS by a broader range of transporters, freight forwarders and shippers. It will also be crucial to increase the current ACTS truck quota of 500 per country to at least 10,000, or with no limit at all. Without doing so, the full potential of the ACTS, especially in the multi-modal transport field, will not materialise.
The scheme for the processing of dangerous goods also needs to be accelerated. This will allow items such as lithium batteries that cannot be carried by air to be carried by road via the ACTS as soon as possible across ASEAN.
The ACTS can play a significant role in disaster relief and help in the fight against the COVID-19 pandemic by transporting relief and medical supplies under Customs control but without a guarantee, as it is provisioned in the ACTS.
What are some of the broad benefits that an efficient road logistics network can bring to the region? Have there been any instances where this has been leveraged already?
Glyn Evans: Developing efficient logistic services would have a pervasive and favourable effect on the ASEAN economies because of their usage in priority sectors and more generally throughout the economies. A study on Asean Logistics Development by the Asian Logistics, Maritime and Aviation Conference (ALMEC) found that:
- Logistics timelines can be improved through the introduction of faster modes, in particular, truck and rail.
- Benefits will be unrealised from enhanced infrastructure unless the regulatory environment is modernised. The removal of regulatory bottlenecks would have a significant impact by opening new corridors or routes in the region that have transport speed advantages over the traditional shipping lines.
- Development of regional trucking activities are likewise inhibited by transloading bottlenecks which add US$100-300 per container to the cost of transport, whilst transit fees cost around US$150 to 200.
Aivaras Pigaga: Another aspect of facilitated road transport in which the general public will emerge as a definite winner is green logistics.
For example, the US National Renewable Energy Laboratory (NREL) cites the hybridisation of the US's truck shipping fleet as one of the most effective ways to cut greenhouse gas emissions. Overall, increasing and encouraging electric, hybrid, and biodiesel trucking is an effective way of contributing significantly to the reduction of greenhouse gas emissions. Looking towards the future and increasing global use of electric, hybrid, and biodiesel vehicles, road transport is meant to become the greenest mode of transport.
Systems such as the ACTS offers reduced costs of trucking operations that will surely encourage freight forwarders and transport operators to use road-based transport as their preferred transport mode. In combination with green logistics, this will have a positive impact on the climate.
What are some of the foreseeable challenges and current observations around implementation, and the future plans for deployment outside of the original six countries?
Glyn Evans: ACTS has ushered in a new phase of regional cooperation and trade efficiency in Asean based on innovative strategies that have proved successful elsewhere in the world. In order for the new regime to work effectively, the full cooperation of all stakeholders will be essential. As with any new system, it is necessary to carefully manage the changes required, including winning hearts and minds.
It is worth noting here that adoption of the ACTS is optional. Thus, all stakeholders must work together to ensure that the package of new measures is attractive and as easy to use as possible, ensuring maximum take-up among the private sector.
Some of these new elements have caused challenges and teething problems while Participating Member States (PMS) adjusts their processes to match the commitments to trade facilitation they have made. Specifically, the movement of foreign trucks across neighbouring countries have met with obstacles and delays in the past. ASEAN Member States have signed a framework agreement to remove these obstacles, the ASEAN Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT). However, because of the COVID-19 pandemic, foreign trucks are not permitted to move across neighbouring countries. ARISE Plus needed to develop a workaround with the PMS that would allow transit trucks to be changed at borders, with the ACTS flexible enough to cater for this.
The ACTS also provides a regional guarantee valid in all PMS to protect the duties and taxes at risk, as goods being transported are free of duties and taxes. The benefit of this approach is to remove the need for separate guarantees or security deposits at each border of every country of transit and destination under a regional transport movement under the ACTS, thus saving time and money for the private sector. This system has been approved by various ASEAN banking associations. The challenge now is for the cost of these guarantees to be set at a reasonable rate to maximise adoption by the private sector.
In spite of these challenges, the progress made by PMS in implementing the ACTS has been considerable. PMS have developed, in conjunction with ARISE Plus, a set of simplified Customs and transport procedures that provide a standard, consistent and coherent environment for the practical operation of the ACTS. This provides private sector businesses with the certainty and predictability required for modern logistics operations. The associated computer system is advanced, effective and secure, providing a sophisticated, user-friendly umbrella for monitoring regional transit movements and combating the risks posed by prohibited goods.
Aivaras Pigaga: We are living in the information age. This brings about ever increasing volumes of information as well as new trade and private sector needs and requirements. All entities along the supply chain are challenged to adapt new business models, techniques and processes to enable a smooth transition into a digitalised supply chain management. It is now no longer enough to just collect the information, but also important to be able to manage it effectively and efficiently.
Without adequate automated digital environments, it is humanly impossible to deal with the increasing trade and information the trade sector submits to government authorities effectively and efficiently. Simplifying procedures and regulatory requirements is welcome, but governments have to maintain adequate amount of control as well to be able to ensure safety and security of the public and secure revenue collection. With an increasing amount of trade and information to manage, this is only possible through introduction of smart regional interconnected and automated IT systems that do 99% of work required to maintain control based on automated procedures and risk management and at the same time provide facilitation sought by the private sector.
Therefore, all entities along the supply chain are challenged to adapt new business models, techniques, and processes to enable a smooth transition into a digitalised supply chain management. The private sector is also moving forward and looking for opportunities beyond borders. With the private sector being quick to adapt to opportunities in other regions, Customs and transport agencies are under increasing pressure to simplify and speed up government procedures related to clearance and control of movement of goods.
The ACTS is currently operational in six ASEAN Member States in the North-South transit corridor - Thailand, Malaysia and Singapore - and East-West transit corridor - Thailand, Cambodia, Laos and Vietnam.
Depending on business needs, Brunei, Indonesia and Philippines will be able to join the ACTS, building upon existing software, procedures and regional legal framework. The IT infrastructure of ACTS may be expanded by adding these countries to the ACTS secure communication network. The movement of goods between island states such as Indonesia and Philippines will need to include an element of sealed trucks being transported by sea, usually by roll-on/roll-off ferry services.
All modes of transport could potentially benefit from the use of ACTS. ARISE Plus has carried out a feasibility study into using ACTS to manage the movement of goods by rail, sea, air, inland waterways and rivers. This approach could also be adopted for multimodal consignments.