CUSTOMS PROCEDURE - Simplification of processes

Chongqing Customs to ease cargo flows
By Raymond Duan
Chongqing 

Customs officers at Chongqing municipality have been simplifying procedures and creating convenient channels for cargo flows in anticipation of ballooning traffic in the coming years.
Ma Zhongyuan, director-general of the Chongqing Customs District and a deputy to the National People’s Congress, said during a recent NPC session that Chongqing has adopted measures to streamline Customs clearance for the convenience of supply chain operators so as to help them cut costs and speed up the flow of cargo, capital and Customs documents.
The measures include advanced clearance and Customs-to-Customs transfer, localised declaration but coastal port release, and one-time declaration, one-time inspection and one-time release of cargo.
According to officers with the Chongqing Customs District by introducing this mode of advanced clearance and transfer between Customs offices, it enables inland enterprises to shorten their clearance and taxation period by 20-25 days.
Once the overseas-bound cargoes enter the Customs zone at the Lianglu Cuntan Free Trade Port Area, officers go through all the local Customs formalities and forward the cargoe to Customs offices along the coast, where the cross-border procedures are finalised before the cargo heads overseas.
Localised declaration but coastal port release became a reality because of cooperation among the 23 Customs ports across the mainland to provide a convenient service to enterprises.
For qualified enterprises under the Chongqing Customs administration, once their shipments go through Customs declaration procedures at Chongqing, the cargo is released upon inspection to the offices at coastal ports. Exporters do not have to provide any downpayment for taxes weeks earlier to coastal port agencies as was done before. And the cargo can be directly forwarded toward destination upon double checking of documents on computers by the coastal Customs ports.
Enterprises in Customs areas, namely the Lianglu Cuntan Free Trade Port Area and the Xiyong Comprehensive Bonded Zone, can apply for one-time declaration, one-time inspection and one-time release. Such procedures include declaration, initial check, acceptance, inspection, release and transfer to another Customs office.
The major benefit for foreign trade companies under this new system is a saving in costs, said Yan Zhu, general manager of Chongqing Tianzhuhang Import and Export Trade. “Importers could store the cargo in the warehouses in the free trade port area and pay the charges upon leaving, which would lower capital costs and ease the burden of credit loans.’’
Customs officials at Lianglu Cuntan area say the move has encouraged businesses from neighboring provinces to relocate at the Chongqing free trade zone. More than 30 percent of foreign trade goods handled at the Lianglu Cuntan Customs office are from outside Chongqing municipality; the percentage was one digit before the office officially went into operation a year ago.
Moreover, Chongqing Customs has been agile in applying information technology to speed up cargo flow. Each container entering and leaving the yard at designated zones will automatically form a basic account in the computer system to be matched at checkpoints with related information.
Exporters and importers do not need to get their cargo checked during Customs eight-hour working hours. The loading of exports, launch of shipping and unloading of imports are allowed to go through approval procedures via the Customs automation system at the free trade areas. This means that cargo owners and shippers, forwarders and carriers can decide what time they want their cargo checked instead of waiting for Customs officers. Once out of the Customs area, the cargoes are monitored by satellite tracking systems on their way to the vessels.
With the deployment of more information technology products, the Customs at Lianglu Cuntan area are extending their services to paperless declaration and bar code checks. Last year, the Customs office at Lianglu Cuntan area handled 45,000 sets of documents and enjoyed a 100 percent rate of container matching.
Chongqing has also been promoting its coordination not only with the districts, but also with coastal ports as well as European counterparts. Thanks to cooperation with Belgium and other European Customs, Chongqing has been designated as the first trial port in inland China for the China-Europe trade to make the route more cost-efficient and transparent.

INDIA _ EFFECT OF PORT TARIFF CUT

Two of India's private terminals post losses after tariff cuts 

Two of India's earliest private container terminal projects at Jawaharlal Nehru port near Mumbai and Tuticorin port in Tamil Nadu, both owned by the Union government, have started making losses on the back of tariff cuts, reported The Mint.

On 1 March, the Tariff Authority for Major Ports (TAMP) asked Nhava Sheva International Container Terminal (NSICT) to pare rates by 27.85 percent when the firm asked for a 30 percent raise.

NSICT is owned by Dubai-based global port operator DP World. It is one of the three container-loading facilities at JN port, India's busiest container gateway.

PSA-Sical Terminals, a firm running a container terminal at V.O. Chidambaranar at Tuticorin, is 62.5 percent owned by PSA International, the world's second biggest container port operator. It has also been hit by rate cuts.

The two terminal operators say the tariff cuts would reduce their revenue earning capability and position them as loss-making units.

The royalties these firms are contractually-mandated to pay the government-owned ports on each container handled at their respective terminals have exceeded the revenue they earn from each container.

Both these contracts followed the royalty model that was in vogue when the government flagged off a port privatisation programme in 1997. The terminal operator had to pay a certain royalty, specified in the contract on each container handled at the terminal, to the government-owned port.

Both PSA and DP World were done in by the peculiar nature of the contract-royalty rates, which were low in the first 10 years of the contract and then rose rapidly over the remaining period of 20 years, making it difficult to run the terminals profitably in the face of rate cuts.

The union government-owned ports now follow a revenue-sharing model for port privatisation contracts.

The bidder willing to share the most from its annual revenue with the port wins the contract.

According to the terms of PSA's contract at Tuticorin port, the royalty per loaded standard container was US$1.9 in the first year of operations. In the 30th year of operations, in 2028, it would reach $96.37 for a loaded standard container. PSA-Sical currently charges its customers around $39.08 for handling a loaded container.

PSA pays $42.13 as royalty to Tuticorin port on each loaded container handled at the terminal. This will rise to $46.34 from 15 July this year.

In the 14 years since starting operations, PSA made three attempts to raise rates for the services provided at the terminal; but, each time, the tariff regulator slashed rates-by 15 percent in 2002, 54 percent in 2006 and 34 percent in 2008 which PSA did not implement by securing stay orders from the Chennai high court.

It is operating the 450,000 standard container capacity-a-year terminal at rates approved in 1999, when it started out on a 30-year contract.

NSICT has been a little luckier. It managed to win some tariff increases from TAMP in the first 15 years of operations.
DP World handles some 1.4 million containers at NSICT every year, more than double the original designed capacity of 6,00,000 containers.

Its royalty increases progressively from 89.09 US ents for one loaded standard container in the first year of operations in 1998 to $104.41 per container by the 30th year, in 2027, according to contract terms.

NSICT was earning $46.62 on each container handled at the terminal.

But, after the 1 March rate cut, it can charge customers only $33.63 per container.

It pays a royalty of $41.28 per container to JN port. This will rise to $43.94 per container from 3 July this year.

Between 2005 and 2006, TAMP cut rates at NSICT cumulatively by 25 percent. The latest blow came on 1 March.

Besides, the port policy that prevailed in 1998 allowed the royalty fully paid by the firms to the port as an item of cost while setting rates.

But, in July 2003, the shipping ministry altered this policy and allowed only a partial pass-through of royalty into tariffs, limiting the extent of pass-through of royalty to the maximum quoted by the second highest bidder in the auction.

Both DP World and PSA declined to comment.

"Global firms are keen to participate in India's port projects by bringing new generation technology and much wanted capital," said Samir Kanabar, partner, tax and regulatory services at Ernst and Young. "So it's important to have a consistent and sustainable policy framework that scales up to international standards."

Agility Logistics Expansion in Malaysia

Agility sees trucking, warehouse operations driving growth

By DAVID TAN
davidtan@thestar.com.my

GEORGE TOWN: Agility, a public-listed logistic company in the Kuwait Stock Exchange and Dubai Financial Market, expects its overland trucking and warehouse operations in the Malaysia to spearhead the growth of its subsidiary, Agility Logistic Sdn Bhd, this year.

Agility chief executive officer Morten Damgaard (South-East Asia/Malaysia) said this was due to the improvements made in the highways and land routes connecting Indochina, Thailand, Singapore, and the rising cost of fuel, which made air and ocean transportation expensive.

Agility's trucking and warehouse business in Malaysia generate more than 40% of the subsidiary's 2011 revenue.

“Besides better connecting infrastructure, there is also improvements in the customs services at the borders,” he told a press conference on the launch of Agility's new 60,000 sq ft warehouse in Bayan Lepas by Penang Chief Minister Lim Guan Eng.

Agility CEO (SEA/Malaysia) Morten Damgaard(left) and Agility Penang Branch manager Ali Ahmad at the press conference

Agility also has three warehouses in Kuala Lumpur, two in Johor, and one in Malacca, comprising about 600,000 sq ft of warehouse space.

“We are getting a lot more interest from our customers to transport their goods by land, which is one of the reasons why we moved to a larger warehouse,” Damgaard said, adding that Indonesia, Malaysia, Thailand and Vietnam were the key markets in the Asean region driving growth for the logistics industry.

“In Asia, China and India are still the top two drivers of growth for the logistics business.

“The commissioning of the facility in Penang underpins Agility's emerging markets growth strategy and is a testament to the successful expansion of our contract logistics business in Malaysia and the Asia-Pacific region,” he said.

Meanwhile, Lim said according to Frost Sullivan, the logistics industry in Malaysia was expected to experience a year-on-year growth of 10.3% to reach RM129.9bil in 2012.

“The logistics industry in the country is projected to grow at a compounded annual growth rate of 11.6% to touch RM203.7bil in 2016,” he said.

Agility Logistic Sdn Bhd's new warehouse in Bayan Lepas.

Employing more than 22,000 employees in 550 offices across 100 countries, Agility's annual revenue is around US$6bil.

Air Turbulence

Published: Friday May 11, 2012 MYT 4:28:00 PM

Rafidah: AirAsia, AirAsia X, MAS collaboration crucial

PETALING JAYA(Bernama): All airlines in the country must be able to face challenges when the Asean open sky policy comes into force in 2015 and therefore, collaboration efforts between AirAsia, AirAsia X andMalaysia Airlines (MAS) is important, said AirAsia X chairman Tan Sri Rafidah Aziz.

"If airlines do not strengthen now, through what ever way, there will be problems. This is why AirAsia and AirAsia X is willing to continue looking at possible collaboration with MAS," she said on Friday.

She emphasised that the collaboration had nothing to do with the share-swap.

"It is about cutting cost so that we can pass the efficiencies to consumers. We have agreed at the board level to sign a memorandum of understanding (MOU) to continue pursuing this collaboration as long as it does not violate any anti-trust law globally and bring benefits to us," she told a press conference after the Malaysian National Co-operative Movement (Angkasa)'s 41st celebration.

Following the reversal of the share swap deal, AirAsia, AirAsia X Sdn Bhd and MAS, have entered into a supplemental collaboration agreement (SA) to explore areas of mutual-need to realise savings and boost efficiencies.

The SA would focus on specific areas of collaboration while continue to comply with all relevant anti-trust laws.

Under the SA, the airlines have identified key areas for collaboration, which would result in efficiencies and cost savings, which among others, includes procurement, aircraft component repairs, training initiatives and technical and operational efficiency.

Additionally, the airlines will also continue working to further identify and evaluate opportunities to collaborate on a broad range of areas both at operational and strategic levels.

To push forward with the collaboration initiative, the three parties also signed a MOU to cooperate on two initial areas, joint procurement and aircraft component maintenance, support and repair services.

Of Malaysia's Fiscal Control

Malaysia's Lack of Fiscal Self-Control KUALA LUMPUR, May 10 — Malaysia’s lack of fiscal self-control could push up its borrowing costs and limit its ability to respond to a global economic crisis, said the former chief of one of Asia’s top economic think tanks. Prof Datuk Mohd Ariff Abdul Kareem, who formerly headed the Malaysian Institute of Economic Research (MIER) and is now with the Global University of Islamic Finance, said there were signs the country’s credit ratings were under pressure, and without a budget surplus, Malaysia could find itself short of options during times of crisis. He also noted that the country has grown accustomed to debt, and reported budget deficits in 47 years but surpluses in only seven. “Malaysia lacks fiscal discipline,” said Mohd Ariff at the launch of an economic report by the United Nations Economic and Social Commission for Asia and the Pacific (UN Escap). “It (Malaysia) is so used to having fiscal deficits. If there is a global crisis, Malaysia is not equipped to handle it. There is no space. If there is a surplus, there is a large space.” He said that part of the problem was that the government’s operational expenditure was “over the roof”. “The government needs to raise tax revenue and reign in expenditure,” he said. “There are already signs the country’s credit ratings are under pressure.” A drop in Malaysia’s sovereign grade by credit ratings agencies would make it more expensive for the country to raise money. Mohd Ariff said, however, that the country was not on the verge of bankruptcy although its debt-to-GDP ratio of nearly 54 per cent was just under its 55 per cent limit. “The debt is largely domestic and less vulnerable to external shocks,” he said. He warned, however, that the ratio could shoot up to 100 per cent by 2020 if present overspending is not reversed. The Najib administration had pledged to trim the chronic federal budget deficit as part of fiscal reforms to make the country more competitive. The Budget deficit was cut from seven per cent in 2009 to five per cent last year. The government aims to reduce the deficit further, to 4.7 per cent this year. UN Escap said today that Malaysia is looking at slower growth as regional economies take a hit from the deterioration of the global economic environment, particularly in Europe. It added that the world was in the second stage of the global financial crisis, with a sharp deterioration in the economic conditions largely due to the euro zone debt crisis and uncertain US economy. The commission estimated that a sovereign debt default in Europe or the breakup of the euro zone monetary union would result in a new world crisis that could lead to a total export loss of US$390 billion over 2012-2013 and reduce Asia-Pacific growth by 1.3 per cent. The agency projected a growth rate of 4.5 per cent for Malaysia this year, compared to 5.1 per cent last year and 7.2 per cent in 2010.

AIRLINK Bimp-Eaga

Palawan and Balikpapan next on MASWings' list

Published on: Thursday, May 10, 2012

Kota Kinabalu: MASwings plans to fly two new routes, namely Kota Kinabalu-Puerto Princessa, Palawan and Kuching-Balikpapan, under its second phase of expansion to the Brunei, Indonesia, Malaysia and Philippines East Asian Growth Area (BIMP-EAGA) region.

This is apart from upgrading the existing Tawau-Tarakan thrice-weekly flight services to daily services effective July 1 and introducing a Coral Triangle Charter Flight for divers to world-class dive spots in the State, Philippines and Indonesia within the Coral Triangle (Celebes Sea).

These follow the encouraging response received from its first three destinations in BIMP-EAGA, namely Tawau-Tarakan, Kuching-Pontianak and Kota Kinabalu-Bandar Seri Bengawan, where altogether it has recorded a load factor average of 60-65 per cent. Its CEO Datuk Captain Mohd Nawawi Haji Awang, who announced this, said they expect to start flying the new Kuching-Balikpapan route, which would be thrice weekly, by the end of October.

"We are in the process of seeking approvals and clearances from the Philippine Government for the KK-Puerto Princessa route Éif everything goes well, we plan to start this new route by the end of October," he said, adding they are all very excited with these new developments.

They are also looking at aircraft utilisation aspects and adjusting timing and so on in preparing for the changes to the Tawau-Tarakan flight service schedules. The company might also increase the number of its aircraft if the need arises.

Mohd Nawawi said this at a press conference in conjunction with the MASwings BIMP-EAGA Golf Challenge 2012 at the MAS administration building in Kota Kinabalu International Airport (KKIA), Wednesday.

He said the Coral Triangle Charter Flight plan is still at a proposal stage, adding MASwings needs to have collaboration with the Malaysian, Indonesia and Philippines tourism authorities in introducing this package for divers to come to the world-class dive spots within the Celebes Sea.

"We plan to have scheduled charter flights for divers at the three world-class diving spots, each in the respective country, under one package," he said, adding they plan to have this on a weekly basis.

According to the plan, divers would first fly to Sabah where they would be brought to Sipadan island and after three to four days they would proceed to Davao in Philippines and then to Manado in Sulawesi, Indonesia.

"This is very much in the planning stage with the Sabah Tourism Board (STB) leading the processÉwe have set a six-month timeframe for this to materialise," he said.

The tourism authorities of the other countries concerned are also excited about the plan, he said.

Mohd Nawawi also commented on MASwings achievement on being named the Best MH Auxiliary Business Subsidiary Platinum Award winner Tuesday, outshining the other Malaysia Airlines business subsidiaries.

"This is something the Sabah and Sarawak communities can reflect upon because it shows that the company which has nearly 100 per cent of its staff from Sabah and Sarawak can really make it happen," he said, adding it also shows that MASwings is truly the community airline for the people of Sabah, Sarawak and BIMP-EAGA.

The company has 1,300 staff, of whom about 90 per cent are from Sabah and Sarawak, and Mohd Nawawi also pledged to bring in jets in its fleet of aircraft once its second phase of expansion has successfully achieved its objective by next year.

MASwings carried over 20,000 passengers within several months of flying to the BIMP-EAGA destinations.

Meanwhile, Mohd Nawawi said some 200 golfers from the BIMP-EAGA region are expected to take part in MASwings' inaugural golf tournament that will tee-off at Eastwood Valley Golf and Country Club Miri, Sarawak, on May 27.

Besides reinforcing its presence and entrance into the BIMP-EAGA region and marking the beginning of MASwings' involvement in staging and organising an event of grand scale in the said region, the friendly tournament is also for the Miri city's anniversary celebration.

The tournament provides three different categories - open individual, team event and VIP/guest category, he said, adding champions of the tournament will carry MASwings BIMP-EAGA Golf Challenge 2012 trophies, MASwings hole-in-one prizes which include 10 business class tickets on MASwings destinations, lucky draws and novelty prizes.

He said MASwings has also reintroduced its Golf Escapade promotion that covers extensive prestige packages for golfers all over the world.

It is to help promote golf tourism within the region.

The package will create the opportunity for business golfers to travel and play golf at an attractive price within Sarawak, Sabah, Brunei and Indonesia.

Customers would enjoy a return flight, hotel accommodation for three days two nights or two days one night stay with daily breakfast and return transfer.

Interested golfers can make their booking online via MASwings official website www.maswings.com.my.

The booking options are made convenient for golf enthusiasts when selecting their preferred courses, destinations and hotels.

Malaysian Shipping - Cabotage

Cabotage to develop domestic shipping: Bakri

Published on: Thursday, May 10, 2012

Kota Kinabalu: Deputy Transport Minister Datuk Abdul Rahim Bakri said the Cabotage Policy is maintained because it is recognised by the World Trade Organisation (WTO) as being of strategic importance to a nation.

He said this when replying to Senator Datuk Maijol Mahap and Senator Pau Chiong Ung in Dewan Negara.

He said when the policy was implemented in 1980, many countries around the world had already been applying it.

He said the Government implemented the policy to develop the nation's domestic shipping sector and also to achieve various objectives, namely:

- To abolish the country's dependence on foreign vessels which all this while has been contributing to the outflow of the nation's foreign currencies due to huge payment in the form of fraud and insurance payment

- To develop the nation's shipping sector to enable those involved to become players in the business of shipping either regionally or internationally

- To develop the shipping sector that is of a strategic dimension to the nation and part of the defence and security system where vessels could be utilised in case of crisis or emergency

However, Abdul Rahim stressed that the policy is very liberal and does not prevent any foreign vessels that wish to berth in the ports in Sabah and Sarawak to bring goods in or out.