Doing business on an international scale can mean a lot of things for a company. For starters, it can reflect the organization’s expansion and its increased ability to tap into other suppliers or distributors. Then, there’s also the matter of dealing with tricky paperwork on customs and trade, especially across different countries.
Each country in the Asia Pacific has a different set of policies regarding international trade, customs, and taxes.
For example, a reference guide from PWC notes that importers may be eligible to apply for tax duties refund within a four-year lodging period in Australia. Meanwhile, in China, they only permit the application of tax duties refund within the year the payments were made.
Another example that PWC shared is the difference between each country’s import and export procedures. For example, in South Korea, they assign a Unipass, complete with a unique customs registration number to the company. Meanwhile, in Australia, importers and exporters must register in the Customs’ Integrated Cargo System or ICS using their Australian Business Number or ABN.
Due to such differences, the slightest mistake, even the completely unintentional ones like filling out the wrong forms and having inaccurate cargo information, can result in complications for a business. It could cause fines, shipment delays, taxation problems, and even seizure of goods.
As a result, more and more companies have started investing in having their in-house customs house broker (CHB). Essentially, a CHB helps with various tasks, such as acting as an intermediary between an importer or exporter and a government organization. CHBs also handle the processes needed to secure FTA certificates of origin and address trade embargoes and trade regulations concerns.
The other increasing trend which I have witnessed in the last 5 years or so is the creation of Regional Customs and Trade Compliance roles based in Singapore, covering APAC. These are critical roles which can heavily influence/impact the business numbers.
To help us learn more of the critical values that customs and trade compliance functions can provide, I reached out to Maria Koh, our guest contributor for this Expert Insights Column.
I asked her:
What are the Top 3 values in your view that the Regional/Global Customs and Trade Compliance function can bring to the table in line with business goals at large?
Here is her response:
Maria Koh
Senior Manager, Global Trade Compliance
BD
- Cost Optimization
For the most part, customs trade compliance professionals who are hired into the supply chain organization are expected to deliver monetary savings into the network. It is not difficult to realize savings in the area of FTAs, however, this requires a thorough follow-through to ensure its compliance and continued eligibility. Companies who think that this can be outsourced at a project level, are often faced with ongoing customs queries which they are unfamiliar with, thereby jeopardizing the preferential trade status. Global trade function offers continuity to cost avoidance and is also readily available to discuss other potential cost optimization opportunities such as deferred payment schemes, bonded warehousing, and appropriate tariff engineering, etc.
- Risk Mitigation
Next, risk mitigation to avoid supply chain disruption. How can you ensure you have an acceptable “origin”, “hs classification”, “valuation”, at a local country level with approved licenses that allow you to clear customs smoothly and defend any queries that arise on a day to day basis? This is a challenging task, not only in navigating through corrections to avoid being penalized on historical errors but also in establishing governance to which often can be viewed as a trade-off to an efficient supply chain. For example, the introduction of an additional customs system to control import and export transactions. Therefore, it is highly encouraged for companies to have professionals to influence and highlight risk exposure that could be a result of non-controlled processes.
- Alignment and Leverage Expertise
Having a GT function allows companies to work on standardizing the compliance trade processes that can be aligned with expectations of various internal functions and across multiple regions. He/ she can leverage best practices and learnings that can be adopted by various countries in a consistent manner. It also helps in developing comparative KPIs to continue to drive process improvement.
Navigating through the different policies concerning customs and trades around the APAC countries comes with various scales of challenges. As a result, various organisations have started establishing their customs and trade compliance functions or hiring subject matter experts.
As Maria pointed out above, companies can benefit from cost-optimization, risk mitigation, alignment and leverage expertise. As we see more and more emphasis on this function, we will most likely observe additional competitive advantages in the next few years.
Again, our team at The Supply Advisory would like to express our heartfelt gratitude to Maria Koh for sharing her expert insights on the topic. Thank you so much, Maria!
Stay tuned at The Supply Advisory Blog for our upcoming expert insights and exciting discussions on anything related to supply chain management and procurement.
Ananya Sinha Roy is the Director at The Supply Advisory (a division of Datasearch Consulting), a leading executive recruitment firm specialising in Procurement & Supply Chain.
You can view the The Supply Advisory website or contact them directly at info@supplyadvisory.com for a more detailed discussion.