By YOURI KEMP
Tribune Business Reporter
Frustrated brokers have blasted Customs’ new system as “a dinosaur that has set us back 20 years”, resulting in lost business and a near five-fold increase in the time required to complete entries.
Multiple industry operators told Tribune Business that the department’s electronic single window (BESW) initiative, branded Click2Clear, has thus far failed to deliver on any of the benefits that were promised as part of an initiative to bring Customs and The Bahamas’ cross-border trade into the 21st century via the embrace of technology.
Several have described the platform, which was rolled out two months’ ago on October 1 for all seaborne freight coming into New Providence, as a “real rough” adjustment and a “giant step back from the old system”.
Among the brokers’ major complaints are that, prior to the system’s implementation, they were informed that import shipments would be immediately released once due taxes (VAT and duties/excise tax) was paid on the declaration.
This was intended to speed up the clearance of goods at the border, benefiting Bahamian merchants, wholesalers and other importers through reduced supply chain delays and associated logistical costs. However, in practice, this is not happening as Customs is still insisting on checking consignments prior to their clearance even if taxes have been paid. “Customs can’t let go,” one source said.
Other issues include “significant delays” to the replenishment of companies’ performance bonds with Customs even after due taxes are paid, and problems processing shipments where VAT waivers are required. The latter is understood to have added an extra business day to processing/clearance times alone.
With both brokers, importers and Customs still “trying to learn” the new system, some added that “the real challenge” is the fact that Bahamians were not properly educated on how the clearance process has in effect been reversed. While taxes were previously paid at the end, after Customs finished its verification process, they now have to be submitted at the start.
Kenneth Gibson, chief executive of Five Star Brokers, told Tribune Business: “It’s been rough. Real, real rough. You know it’s a learning curve and the real issues that we are really having is the fact of us not getting the support from Customs.
“For example, we have clients that have concessions, and.... Customs is now taking their time in terms of processing it, citing that there are people ahead you and you have to wait. But with high-end projects, time is money and most times the processing times, for example, I have entries in here from last week.”
“We had a meeting with the Customs Comptroller (Dr Geanine Moss) and her team, and they said they would address it, but we are still having the same issues. If anything were to happen where you would need support from Customs after 5pm in the evening, dog eat your lunch,” Mr Gibson added.
“The other thing that we face is that the way the program is written. They have it where, as a broker, the clients who I process have to come back to me in order for me to supply them with an update as far as what the next step is in the process.
“You know, if I have 50 people in front of me and I’m trying to make money from these 50 persons, the 50 ones from yesterday I have to still look in their face because Customs are sending them to me to check the system to see if their entries can be processed. The Comptroller said that they will rewrite programme so the client can directly be advised as to what stage they are in the process.
“Customs told me they would be back with us ‘shortly’, but you know how that is. It has been two weeks since we had that meeting with Dr Moss and her team, and we have heard nothing yet,” Mr Gibson continued.
“Because of the hiccups now, I don’t even want to take my customers’ money because there is no clear path in terms of timeframe from when to start and when to finish. Some people, when I tell them, ‘Listen, I cant take you money. I prefer for you to come back when you have registered’, I don’t ever see those people any more. I have had five or six of them a day walk away from my building. I’m losing $500 to $1,000 a day.”
A November 8, 2019, letter sent by Christina Taylor, general manager at Pinder’s Customs Brokerage, to the firm’s clients details the specific challenges all brokers and importers have had with the new Customs system.
“One of the largest proposed benefits of clearance on BESW was that the process would be automated,” the letter, seen by Tribune Business, states. “It was stressed to us repeatedly in the training sessions with Customs that once taxes were paid for a declaration, shipments would be (essentially) instantly released, so that goods could be picked up and delivered very shortly after payment.
“It was stated that the process we used to call entry checking would occur as post-auditing – officers would do their checking/auditing of declarations days/weeks after a declaration had been paid/released/delivered. This is not what is happening so far.
“Instead, for standard, non-expedited shipments, we have been instructed that we must first pay the taxes and fees for the Declaration, then wait for Customs to perform the entry checking step before the shipment can be released to be picked up. As I mentioned above, we were told that this checking would be done in a post-audit. This has caused tremendous delays in processing shipments.”
Ms Taylor added that “significant delays” were also being experienced with the clearance of “expedited shipments”, such as cargos of perishable foodstuffs, which which were previously dealt with using Customs form C19. Now, an expedited release form and processing fee has to be submitted to the new system, with Customs’ approval again required before the import shipment can be collected.
“Again, this was not how BESW was presented in the years leading up to it,” Ms Taylor wrote. “One of its primary benefits was the speed with which goods could be cleared and released – expedited or not.
“Expedited Releases for FCL (full container load) shipments produce even further delays. We cannot submit (and then pay for) the follow-up declaration (for duty/taxes) until Customs officers have performed their container examination and submitted their report in BESW. This is critical because it means your bond is not being replenished in a timely manner.”
Bond sums were also not being restored when Customs duties/taxes are paid, as “the declaration must be processed by officers in a different department of Customs. We have seen significant delays as a result of this”.
“A further source of delay occurs when a shipment requires VAT to be waived. This is not an automated process – it requires approval from a very small number of officers – so each and every shipment requiring VAT to be waived incurs a delay of at least one business day,” Ms Taylor continued.
“There are several other parts of the process that remain challenging because they are out of our control. This includes delays in receiving manifest numbers (we cannot submit any declarations until the shipping lines provide these numbers). Also, we have found that in a significant number of cases, declarations have been incorrectly rejected. This requires us to them resubmit and wait for approval.
“We know that they were incorrectly rejected because we resubmit the exact same declaration and then it is approved. We find that this has happened, in particular, with most of the multiple-declaration shipments (some dutiable items, some concession items) that we have processed.”
Neither Customs’ Dr Moss, nor Marlon Johnson, the Ministry of Finance’s acting financial secretary, responded to multiple Tribune Business calls and messages seeking comment before press time.
K Peter Turnquest, deputy prime minister and minister of finance, acknowledged the issues when contacted by Tribune Business as he returned to this country from Europe. “All I can say about it is we’re aware of the complaints and are working through it, and will hopefully sort it out in short order.”
The Electronic Single Window (ESW) is a key component of the Government’s efforts to modernise and digitise critical public services. Besides improving border revenue collection, and helping to crack down on tax evasion, fraud and related crime by identifying high-risk shipments and importers, the system was also hailed as a means to improve the speed and efficiency of cross-border commerce.
Apart from aiding the proposed World Trade Organisation (WTO) accession, its electronic platform was designed to play a key role for an economy that is almost totally reliant on imports for everything it consumes. However, the delays and confusion in the immediate aftermath of implementation threaten to bottleneck retail/wholesale supply chains at the worst possible time just before Christmas, when import volumes tend to peak amid merchants’ rushing to stock up.
Another Customs Broker, speaking on condition of anonymity, said: “I could add about ten paragraphs about a program that was probably written decades ago and somehow sold to us. Every broker agrees it has set us back 20 years.
“It is like using a dinosaur where you repeat steps, where it cannot tell you which items you enter came from what invoice to balance against, where it repeatedly asks the same question over, and it cannot even allocate the dock for the release station when you put the vessel name in, pro rate freight or even accept a duty free code against an item.
“You have to make one entry for dutiable items, one for duty-free concession items, one for excise tax concessions, all for one bill of lading. What took us five hours to produce an entry for now takes three days,” they added.
“Whoever bought this never sat down to see how it worked. It’s a dinosaur that is dropping the ease of doing business hundreds of times lower, and the country’s ease of doing business status will reflect it. It cannot pro rate even simple things like sales tax. It must have been written decades ago by someone who loved repetition and did not have a grasp of making more than a one-item entry from one supplier. I had to laugh recently when I saw Lynn Holowesko worry that we had lost a point (in the World Bank rankings). One point? We will be down hundreds on the next survey.”