The irking story of high costs of doing business in the East African region is slowly changing to high returns, thanks to the implementation of the Single Customs Territory (SCT).

At the bottom line is the execution of the Customs Union Treaty that seeks to promote cross border trade and attract investment into the enlarged regional market with minimal formalities in customs clearance.

The Director for Taxpayer Services and Education at the Tanzania Revenue Authority (TRA), Richard Kayombo said in an interview that the system started with few goods and the number is progressively being increased to full-fledged.

Kayombo also said that some of the goods that were assessed during the piloting period include rice, maize, sugar, neutral spirits, cigarettes, petroleum products, wheat, salt, edible oil and pharmaceutical and cosmetic products.

“The story has changed in many aspects. For example, we currently talk of three-day travel from Dar es Salaam port to Kigali and only three blocks up to the Rwanda border,” he said.

He said also that at the first point of entry, depending on the level of risk, customs officers from the destination country, who are posted at the first point of entry, can subject the goods to physical examination before release.

He added, the system has called to an end cheating and dumping of transit goods into the local market because the cargo clearance goes together with the payment of all taxes.

Customs declarations are made electronically and processed and released by the authorities from the country of destination prior to loading of goods and release from the port.

Under the system, the process and documentation are done in the country of destination before the consignments are cleared and released at the port of entry.

With the SCT, about 70 per cent of the cost due to former bureaucratic customs operations will be slashed resulting into price cut as well as making the region more competitive for potential investors, an opportunity for more job openings.

For his part, TRA Deputy Commissioner – Trade Facilitation and Procedures Patrick Mugoya said that by creating a single customs territory, partner states can enjoy economies of scale with a view to supporting the process of economic development.

“Unlike in the industrialised world, economic integration in the EAC region is not just for the purpose of trade per se, but as a vehicle for bringing about faster economic development,” he said.

Trade related aspects including the simplification and harmonisation of trade documentation, customs regulations and procedures are fundamental factors which are seriously taken into consideration in order to put conducive customs clearance formalities.

Also, the valuation of goods, tariff classification, collection of customs duties, temporary admission, warehousing, cross-border trade and export drawbacks are important aspects in order to have single customs territory.

The challenges for which are being worked out by experts from the East African member states include the complexity of systems interfacing as well as the use of customs bonded warehouse.

Others are the slow pace of the cross border government agencies and regulators to adopt SCT systems and fear job loss by freight forwarders.

It is from this context that EAC partner states have been working out to eliminate internal tariffs and non-tariff barriers in order to facilitate formation of one large single market and investment area.

The objective behind the move is to liberalise intra-regional trade in goods on the basis of mutually beneficial trade arrangements as well as enhancing domestic, cross border and foreign investment in the community.

The implementation of a single custom territory goes hand in hand with the initiative of putting infrastructures for the one stop border post.

Efforts to have all the infrastructures for the one stop border posts have reached an advanced stage, the move that will facilitate the smooth implementation of the single customs territory for easy movement of goods and services at the very minimal cost.

The system seeks to facilitate trade in the region, reduce the cost of doing business as well as eliminate dumping of goods in countries of transit in order to protect industries and jobs.

According to Mugoya the system applies for the maritime goods coming into the EAC region and the intra-regional trade.

Therefore, the system will improve efficiency and reduce the cost of doing business having intention of not only getting rid of barriers which have been hampering trade, but also reducing the cost of doing business within the region.

In another move, TRA has challenged freight forwarders and warehouse operators to capitalise on the Single Customs Territory (SCT) among the East African member states.

Local clearing and forwarding agents as well as traders were skeptical about the new system and had wanted the process delayed until businesses are supported to become more competitive.

“Clearing agents need to look at this as an opportunity for business expansion because the system will remove trade tariff barriers, duplication of time-consuming and costly processes and corruption,” Mugoya said.

Source: IPP Media

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.