Annual Report 2015 Highlights : World Customs Organizations

About World Customs Organization

Established in 1952 as the Customs Co-operation Council, the World Customs Organization (WCO) is an independent intergovernmental organization whose primary mission is to enhance the effectiveness and efficiency of Customs administrations worldwide.

As the only intergovernmental organization specialized in Customs matters, the WCO established its headquarters in Brussels in 1952, and currently represents 180 Members across the globe at all stages of social and economic development. As the global centre of Customs expertise and the voice of the international Customs community, the WCO provides an ideal forum for Customs administrations and their stakeholders to hold in-depth discussions, exchange experiences, and share best practices on a range of international Customs and trade issues.

WCO Mission Statement 

The WCO provides leadership, guidance and support to Customs administrations to secure and facilitate legitimate trade, realize revenues, protect society and build capacity. 

WCO Vision Statement

Borders divide, Customs connects. Dynamically leading modernization and connectivity in a rapidly changing world.

WCO Values 

WE are a knowledge-based and action-oriented organization. We believe in transparent, honest, and auditable governance procedures. We are responsive to our Members, stakeholders in trade, and society. We capitalize on technology and innovation.

Major Highlights of Annual Report 2015

• More than 8,40,000 Customs officers around the World.
• 13.3 Percent of head of Customs are Female
• Composition of Customs Revenue : 43.47% custom duties, 24.93% General Custom Duties,16.66% special consumption taxes
• More than 60% of Customs Administrations use custom-made automated clearance systems
• 45% of Customs Administrations are embedded within a ministry 28.3% are Revenue authorities 25% are Customs agencies
• 610 million Customs declarations excluding postal items and express consignments
• More than 40% of Customs Administrations use Single Window systems

Each year, the WCO opens its doors to hundreds of representatives from Customs administrations, other government agencies, the private sector, associations, and universities keen to discover more about the Organization. Such visits allow the Organization to showcase the diverse activities and programmes underway and to foster important links with institutions vital to the world of international trade and Customs.for detail follow the following link.

Source : Annual Report 2015 of World Customs Organization

Customs Environment Scan 2015

Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. World customs organization is scanning the customs environment for 2015.

The 2015 Customs Environmental Scan includes political, social, environmental, and administrative developments during 2014 that directly or indirectly related to Customs.

Macroeconomic Indicators

International trade slows
The World Trade Organization (WTO) reduced their forecast for world trade growth in 2014 to 3.1% (down from the 4.7% forecast made in April 2014). “International trade grew by only 2.8% in 2012 and 3.2% in 2013 in dollar terms, even as global GDP grew by 3.1% and 3.2%. When measured in terms of volume, trade is still growing faster than the world economy, but by a decreasing margin. Having soared from 40% of the world’s GDP in 1990 to a peak of 61% in 2011, trade has fallen back slightly to 60%, the same level as in 2008” (The Economist, 13 December 2014).

Peak Trade
Some economists think the slowdown in international trade growth is structural, and have accordingly accorded the term peak trade to describe this trend.

Major economies.
The US economy continued to strengthen with GDP growth of 2.4% in 2014 and unemployment rates under 6%. The European Union continued to feel the effects of deflation, unemployment exceeding 11%, and anemic economic growth. Japan introduced more fiscal stimulus to help prime economic growth. India and China both had economic growth of approximately 7.5% in 2014.

Rise of the US dollar.
The US dollar (USD) experienced a sharp appreciation against other currencies, particularly the Euro and the Japanese Yen. The USD rose to 1.19 Euro in January 2015, the highest in nine years. This will result in US exports becoming more expensive while European and Japanese exports will be less expensive. The rising USD may also have an impact on revenue collection for Customs administrations; depreciation of major currencies against the USD may improve Customs duty collection in these countries.

Oil prices plummet
The plunge in oil prices will have economic, fiscal, and geopolitical impacts. Countries that receive a substantial amount of Customs duties from oil imports may experience downward pressure on their overall revenue collection. Reduced oil prices will see a consequent reduction in transport costs, which may encourage trade. On the other hand, volatile oil prices have been identified as discouraging trade.

Oil exporters
may experience a decline in national income. Countries which consume a significant amount of oil may experience new opportunities for allocation of the ensuing savings previously spent on fuel. Decreased oil prices are harming the potential of new extraction techniques such as fracking (shale gas) that generally cost more than conventional oil production.


Trade Agreements

WTO Trade Facilitation Agreement (TFA).
With the recent adoption of the TFA’s Protocol of Amendment, the TFA is back on track. While implementation will likely take many years in developing countries, the process will positively impact donor funding for Customs reform and modernisation.

Free Trade Agreements (FTAs) or Regional Trade Agreements (RTAs).
FTAs as a whole continue to increase. For countries signing FTAs, this will impact the level of revenue collected. According to the WTO, “as of 8 January 2015, some 604 notifications of RTAs (counting goods, services and accessions separately) had been received by the GATT/WTO. Of these, 398 were in force. These WTO figures correspond to 446 physical RTAs (counting goods, services and accessions together), of which 259 are currently in force.” (WTO website, 2015).


There are currently two major RTAs being negotiated. The Transatlantic Trade and Investment Partnership (TTIP) is a proposed FTA between the European Union and the United States. The Trans-Pacific Partnership (TPP) is a proposed trade and investment agreement which currently counts Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam participating as negotiating partners.

Euroasian Economic Union (EEU).
The EEU, which succeeds the Eurasian Customs Union, became operational on 1 January 2015. The EEU Members are Russia, Kazakhstan, Belarus, and Armenia with Kyrgyzstan scheduled to join in May 2015. EEU Members have lifted some internal Customs barriers and harmonised some procedures. The agreement focuses on the free flow of capital, goods and services, and workforce throughout a common market with an estimated output of $2.4 trillion, comprising more than 170 million people.

Trade in Information Technology.
In late 2014, China and the US reached a deal which could lead to a proposed treaty on trade in information technology among a coalition of willing WTO Members (The Economist, 13 December 2014).

Tax revenue
Revenue Sharing.
The process in which one country collects the duties owed to another country will continue to have implications for Customs. In some regions, where Customs revenue still accounts for an important share of the national budget, this revenue sharing concern is one of the major obstacles to regional Customs integration.

Political, Social, and Environmental Influences
Security.
Due to acts of terrorism and violent extremism, several governments moved to increase data collection for security purposes, such as requiring the submission by airlines of API and PNR data.

Narcotics Smuggling.
The international trade in illegal narcotics continued. Several countries in Latin America are softening drug laws. Two US states (Oregon and Alaska) and one city (Washington, DC) joined Colorado and Washington State in introducing legalisation of recreational and medicinal marijuana. This trend is important for Customs given that marijuana is one the most significant drugs in terms of seizures.

Cross-border e-commerce.
Cross-border e-commerce is increasing at an astonishing rate around the world due to a combination of factors such as continuously advancing internet technology, economic development in developing countries, and expansion of express delivery services and mobility of labor force. In particular, increases in cross-border e-commerce in Asia are noticeable. Cross-border e-commerce accounts for 10 to 15 percent of total e-commerce volume, depending on the region. By 2025, Asia may account for some 40 percent of the cross-border volumes and Europe may account for about 25 percent, followed by North America at 20 percent. A dramatic increase in cross-border e-commerce impacts Customs administrations in terms of revenue collection, supply chain security, and allocation of Customs resources.

Open data and “democratic knowledge
The social demand on public sector transparency is increasing, including in the fields of taxation and trade. Some administrations have launched or are launching initiatives to share data and policy simulation engines with the general public. Some experts and policymakers (i.e. EU, UNCTAD, and the World Bank) are advocating for the exploration of firm-level data to support reflection on trade and Customs policies. The concept of “firm-level data” is also increasing. Customs administrations maintain crucial databases (ACS) related to international trade and will be asked to contribute.

Impact of Ebola.
To halt the spread of the virus, the countries most affected by the Ebola virus disease implemented quarantines in areas where risk of infection is high while neighboring countries imposed restrictions on the movement of people and goods, including border closures. These measures, in turn, have reduced internal and regional trade, transport, and tourism. In particular, it is anticipated that there has been great damage to informal trade, which experts estimate ranges from 20 to 75 percent of GDP for West African countries.

Wildlife smuggling.
Many endangered species, such as elephants, rhinos, tigers, and jaguars, face extinction in the near future due to the illegal trade in wildlife.

Tobacco Control
Customs administrations and other revenue agencies continued to collect billions of dollars annually in taxes on tobacco products which are used to fund many government services. Evidence shows that tobacco taxation is a core tool in reducing the prevalence of smoking, and thus reducing tobacco-related diseases such as cancer, heart disease, stroke, bronchitis and emphysema. Approximately 6 million people were killed globally in 2014 by cigarette related diseases.

A growing number of countries (Australia, Ireland, UK, and France) have adopted plain (standardized) packaging of cigarettes. Preliminary data is being reported from Australia since the passage of its plain packaging law in December 2012. The Australian Bureau of Statistics reported that the December 2014 quarter showed a 2.9% decrease in tobacco consumption and a 12.2% reduction from December 2013 to December 2014. Australian Customs and Border Protection reported in its most recent annual report (2013-2014) decreases from 2012-2013 to 2013-2014 in several illicit cigarette trade indicators, including the level of tobacco seized (down from 183 to 178 tonnes); the number of cigarettes seized (down from 200 to 147 million of sticks); and duty evaded (down from 151 to 139 million Australian dollars).

Climate Change.
2014 was the warmest year on record. 9 out of the 10 warmest years ever came in the last decade. Atmospheric carbon dioxide (CO2) concentrations, which were 280 parts per million (ppm) in the pre-industrial era, are now 400 ppm. Extreme weather events due to human induced climate change are increasing, necessitating fast Customs clearance of natural disaster relief goods. A recent agreement between China and the United States commits for the first time both countries to emission reductions.

Administrative Influences
Corruption.
Customs corruption continues to be a problem as evidenced by NGO and media reports. The G20 has placed corruption on its agenda for discussion. The WCO continues to promote performance measurement contracts (PMC) as a tangible measure for reducing corruption.

Organizational risks to Customs.
Several Customs administrations and tax authorities are merging into revenue authorities in Eastern Europe. This follows the major wave of the establishment of revenue authorities in Africa in the 1980s and 1990s following advocacy by the IMF. Small countries frequently merge two fiscal authorities in order to save administrative costs.

Source : World Customs Organization

Quake opened the Road to Transformation

More than eight thousand people were killed in the April 26 earthquake measuring 7.6 Richter scale has shattered much of the central part of Nepal and left over more than twenty thousand people injured and 0.5 million people homeless. We have not faced this type of great disaster since 1934 AD. The loss, damage and destruction wrought by the current earthquake have impacted the government and people of Nepal severely.

This unprecedented calamity has struck the country just ten year after the great political revolution of 2062/63 BS and country has some signs to hope. We are proud to our achievements, strong against exploitation and long patience to get new constitution. A country that was never colonized  has long been isolated, but its history and fate enter wined with the India and the other powerful countries. We feel it and know it should not be this way, we know things should be different. 

So much of the discussion has been about the emergency effort, about food and water, now it’s starting to shift to long term planning. It’s time to think  how to provide shelter to those left homeless by the quake is becoming urgent with the approach of the country’s rainy June/July where the central hemisphere’s upper belt is often battered by floods and landslides. Second, we will need to explore options for low-cost housing, rehabilitate physical infrastructure and reinstate schools and health posts.The question is how Nepal can recover and be built back better than it was before.

This catastrophe presents an opportunity. What are we going to do is to contribute to realizing a new vision for Nepal ? There is something like a clean slate now. Physical infrastructure of the Nepal state has collapsed.  Physical infrastructure can be rebuilt; the more difficult task will be to continue building the human infrastructure and capacity of Nepali state. It will take a lot of money, creativity and vigilance and sustained commitment to rebuild Nepal.

Governance

Nepal is a poor country long plagued by governance issue.  Nepalese Bureaucrats and leaders were long been blamed on their corrupted and traditional thinking.  Nepal needs to improve governance by empowering the bureaucrats and leaders. There is a hope that this could happen. The government need space to lead but and this includes the ability to plan and execute budgets (under close scrutiny, of course). Doing so will require talented and accountable manager.  The leader having diamond like leadership characterstics definitely can lead the country in this difficult situation and can be conductor of people's hope .

Diaspora

Perhaps no country sends as large section of its workforce abroad as Nepal. The Diaspora has always been one of the Nepalese economy’s most solid pillars; official remittance inflows to Nepal reached 28.8% of GDP in 2013, which makes Nepal the third largest remittance recipient in the world. Migrants remitted an estimated US$5.9 billion to Nepal in 2014.. Now it is time to fully tap the skills and the resources of the Nepali Diaspora in the reconstruction effort.

Business Environment

Prior to earthquake, investment in Nepal was on the upswing. There was also growing interest in promoting tourism. Empowering people and promoting self-sufficiency by developing entrepreneurship through local levels is the key to sustainable development. I sincerely hope that business and tourism opportunities will rebound.

Diplomacy

Nepal as “yam between two boulders” has also been facing lots of problems because of inefficiency in diplomatic dealings. Both India and China are emerging economic superpower in coming years. Major concern must be maintenance of balanced and fruitful economic diplomacy to gain from emerging economic powers. Big markets are at doorsteps. There is some opportunity for Nepal as a landlocked country.

In addition to this, Nepal need to coordinate the global aid is essential. Different countries are interested to join reconstruction effort of Nepal. Of course, they have some interests but coordinating them tactfully by Nepalese leaders is essential.

Indubitably, we are severely affected, but we have to accept that creation and destruction are the Will of the Almighty. Natural disasters like earthquake, floods, landslides and lightening are frequent, causing colossal physical damages and losses of human lives.But the challenge now is to transform this devastation into an opportunity for development. We have unique opportunity to get right. Now the challenges is to make sure we are never in this situation again. It is difficult to think about long term recovery given all the present suffering. Yet if we are to build a better Nepal, we must. The reality cannot be changed, but a better future can be built through our positive mindset. Once the mindset of Nepalese changes, everything on the outside will change along with it.

After Ten Year : "The Development must overshadow Grief" in Nepal.

Monetary Policy 2014/15 Highlights

Nepal Rastra Bank has been adopting monetary policy the objectives of maintaining price and external sector stability, financial stability and facilitating high and sustainable economic growth, increasing financial access, control inflation, maintain external and financial sector stability, utilize credit in the productive sector and expand financial access.

The monetary policy for 2014/15 has been formulated based on the analysis of domestic economic outlook as well as changes in international economic situation. Likewise, the selection of monetary policy stance and instruments has been made consistent with the objectives and priorities undertaken by the government budget for 2014/15.Certain major concern areas of NRB in current monetary policy are interest rate stability, rein inflation at targeted level, maintain external stability, encourage merger of BFIs, financial sector stability, promoting credit to productive sector, financial service expansion, financial literacy and increase financial inclusion, managing the excess liquidity created by remittances. Following are major provisions on monetary policy 2014/15.

NRB has announced contractionary monetary policy with the objective to control the credit flow to unproductive sector because of excess liquidity created by remittances in the financial market. As per policy provision, there will be provisions to sanction sufficient fund from banking sector to achieve targeted economic growth. Major highlights of monetary policy 2014/15 are:

Failed Economic Development of Nepal

Economic development is a process whereby an economy's real national income as well as per capita income increases over a long period of time. Following figure represents the percapita GDP of Nepal, which shows its not much increase during long period of time.

Economic development, as it is now generally understood, includes the development of agriculture, industry, trade, transport, Tourism, power resources, etc. It, thus, indicates a process of development. The sectoral improvement is the part of the process of development which refers to the economic development. In context of Nepal, sector wise growth during FY 2013/14 is as follow:

The structure of Nepalese economy has been changing gradually. Contribution of agriculture and industry sectors to GDP showed a declining trend while that of services sector showed the opposite.

Innovation in Financial System

Financial system of Nepal has characterized by the excess liquidity with systematic weakness. There is sharp remittance growth and slower deterioration of trade balance leading to a record balance of payment (BOP) surplus. Sharp and higher than anticipated remittance inflow has expected to drive service sector growth particularly wholesale, retail and social services. Industrial activity is likely to remain lackluster owning to structural constraints including irregular supply to energy, difficult labor relations and modest level of public capital spending. Every participants of financial sector are well aware about this type consumption and foreign employment led growth would not be sustainable as of investment led growth.

Financial system which represent all market participants including service provider, receiver, regulator need to think about the right alternative approach to manage excess liquidity to get rid out from this type of affirmative problem. Remittance is like anti-psychotic drug, in any day patient forgets to take drug then mental disorder with negative effects. Same as, in any day there is discontinue on remittance inflow in Nepalese economy the economic problems will multiply with social unrest.

The financial sector in particular banks must have to think alternative ways to manage anti-psychotic drug like financial resources that banks get from abroad to maintain order in economy. Observing current scenario innovation of financial product is extremely essential in banking and financial sector to manage remittances. For that purposes, especially banks must have to engage on identification of possible productive investment sector through research and development activities.

Creativity is the art of expanding possibility. Whereas, innovation is the ability to confine the creative ideas and make them turn into reality to achieve successful performance. Creative peoples and organizations must think “out of the box” while the rest of others barely realize that they are in the box. This is right time banks must reflect their creative approach that their function is not only accepting the deposits and advancing the loan by innovating new products. Besides regular tasks, banks must perform as well-built agent for change and development of the country. Banks can play major role for nation building especially developing nation like Nepal. In the developed economics, different types of financial products were developed to inject and multiply the funds but Nepalese banks are still reluctant to change from their regular tasks and  even unable to utilize the collected funds in proper way. It is not time to blame all the problems toward politics and get out from it. If safe landing behavior continues in financial system, Nepal will always lag behind and difficult to compete in future world market economics.

Innovation of new financial product is difficult job where most of the population is uneducated and depends on remittance income from abroad. Building a suitable channel of funds and its proper utilization at identified sector needs trust and support from all participants of financial system. For effectively and strategically manage excess liquidity central bank of Nepal (NRB) have to develop the new instruments with accomodative monetary stances. In the mean time, NRB should care about the volume of private sector credit growth and its quality. Once innovative financial product has developed and excess liquid money utilized then creation of new jobs in the economy which will ultimately reduces the problem of rising unemployment and foreign employment in unproblematic way.  Government should also need to set the policy to tackle these issues. Whereas corporate houses and banks must practice ethical, corporate governance practices with inclusive approach. By the effective performance of financial system only the strategic thinking of government “Graduating to developing country status by 2022 AD” will easily achieved. 

Social Progress Imperative

Social progress Imperative (SPI), an American Non profit organization published their report on April 2014 (Social progress Imperative Report 2014). They define social progress as "the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential". They Measures the society’s progress on major three dimensions they are Basic Human Needs, Foundations of Well being and Opportunity with four components of each dimension. 

These indexes highlight the very different strengths and weaknesses of individual countries.
The top three countries in the world in terms of social progress are New Zealand, Switzerland, and Iceland and bottom three are Burundi, Central African Republic and Chad are bottom three whereas Nepal stands at 101th position (Nepal Scorecard) out of 132 countries. The Social Progress Index provides evidence that extreme poverty and poor social performance often go hand-in-hand.

Social progress Index yields insights such as economic development alone is not sufficient to explain social progress outcomes and some aspects of social progress are more highly correlated with GDP than others.

In context of Nepal, as the government’s investments remains comparatively low, the country have to struggle to sustain its economic growth and social progress. In a country of haves and have-nots progress will never be truly inclusive until the public and private sectors works together to tackle the issues head on. The agriculture dominated country having around 1/4^th of total GDP contribution by remittance sector exporting labor and economic growth is almost stagnant since decade expectation of better result is not worthy.

Over the last year, the Social Progress Index have been adopted as an official measure of national performance by the government of Paraguay and already is guiding public and private investment choices there. In Brazil, social entrepreneurs and businesses have adopted the index as a tool to understand community needs and inform interventions to advance social progress.

Measuring social progress will guide us in translating economic gains into social progress, and advancing social and environmental performance in ways that will unleash even greater economic success. So in Nepal also such indexes are essential to adopt by government while setting the policies for the sustainable growth with social progress immediately that are utmost necessary to address the imminent problem.