Implementing a Flagship e-Clearance Platform

by Salem Saeed Al Romaithi, Executive Director, Technical Affairs Sector, Abu Dhabi General Administration of Customs

Abu Dhabi Customs has a vital role to play in achieving the government’s objective to deliver world-class smart services and move forward on the journey towards smart transformation. To fulfil this aim, Abu Dhabi Customs embarked on a project to replace the legacy manual customs clearance process with an entirely electronic e-Clearance process based on the concept of a single window. This was a huge undertaking: in 2013 alone, Abu Dhabi Customs processed USD 36bn of non-oil based international trade, with 1.2 million customs declarations and customs revenue of USD 681m.

Project background and objectives

Prior to implementing the innovative e-Clearance process, clearing agents manually input shipment data and submitted documentation manually at the customs office counter. They made the relevant customs payment in cash or cheque, and received a customs slip which would then allow goods to be released. This created a huge administrative overhead to input and store data, process customs payments and clear international imports and exports, with high costs and long delays in processing goods, which was not conducive to encouraging to the level of growth Abu Dhabi anticipates to develop its profile as a world-class location for international trade.

To overcome these challenges, Abu Dhabi Customs developed an innovative and ambitious project blueprint to achieve the following:

• Implement electronic collection operations for Abu Dhabi Customs claims through facility accounts to all dealers, to replace payments made through customs centres.
• Automate internal accounting entries with the Department of Finance.
• Automate the reconciliation of collections through Abu Dhabi Commercial Bank (ADCB).
• Migrate to electronic issuance of documents, shorten the documentary & collection cycle, reduce errors and minimise customs processing time as far as possible.
• Protect documents and instruments from loss and damage, and archive customs documents electronically to permit easy access at any time.
• Provide an audit trial of all financial and operational transactions.

A project of this scale and complexity is a major exercise in change management, and involves a number of internal and external stakeholders. We brought our strategic partners together to define new processes from end to end, with a view to leveraging innovative technology and secure, seamless integration between participants in the clearing process, such as between clearing agents and Abu Dhabi Customs, and between Abu Dhabi Customs and ADCB, to achieve a ‘Single Window’ for customs clearance. We designed and developed a new system for clearance agents and Customs personnel, and worked with ADCB to create a host-to-host connection between Abu Dhabi Customs and the bank (Box 1).

[[[PAGE]]]

Outcomes and benefits

We had anticipated that the project would take around one year to roll out across all 14 customs centres but ultimately we were able to implement and realise the benefits in six months. As a result, we now have a standardised customs process in line with best global practices and World Customs Organization (WCO) rules. There are clear benefits to the new process for all participants. Clearance agents no longer need to attend a customs office and the process of submitting documentation electronically, paying customs charges and receiving confirmation is virtually instantaneous. Ninety per cent of goods are cleared without delay as they are classified as ‘green’ through the risk engine. The customs clearance process is very convenient and user friendly, with multi-channel access (i.e., payment via ATMs, smart deposit machines, mobile banking, point of sale machines etc.), 24/7 service, and post-paid and pre-paid accounts.

From an Abu Dhabi Customs perspective, we have also cut our costs and administration requirements significantly, whilst also reducing the risks associated with collecting, processing and transporting cash. We have been able to close two sections at Abu Dhabi ports, and transferred 16 cashiers and revenue auditing personnel to more engaging and valuable roles. Previously, we operated 16 cash collection locations, which proved difficult, particularly as we then needed to arrange for the transport of cash and manual reconciliation of incoming amounts. Today, customs charges are paid electronically to a central account with ADCB which is reconciled automatically, eliminating paper and cash, and providing better control. Furthermore, a standardised accounting approach has facilitated easier reporting and auditability as well as reconciliation. Electronic archiving avoids the risk of loss or damage to documents, allows us to refer to them when necessary and saves the cost of scanning, printing and the associated infrastructure.

Environmentally, the project has delivered valuable benefits. Looking at one of Abu Dhabi’s 14 customs centres, Khalifa Port, for example, which is 80kms from Abu Dhabi with an average of 60,000 customs declarations each year, we have estimated that e-Clearance has avoided 9.6m kms of travelling distance by eliminating the necessity for the clearing agent to go to Customs, reducing carbon emissions by 2.7 billion g (based on 291 g/km). Agents no longer need to spend time travelling or queuing at Customs, and make additional savings on transport costs.

The response from importers, exporters and clearing agents has been very positive, and we have been able to deliver a far better and more responsive service to internal and external customers.

Ensuring success

There were a variety of reasons why the project was a success and could be completed in around half of our original project timeline. We engaged key stakeholders upfront and went through a series of workshops to define processes and co-ordinate feedback. We implemented two ports as pilot projects – Zayed Port and Khalifa Port, which enabled us to test and refine processes and gain support from stakeholders. On completion of the project, we conducted a series of evaluation workshops and surveys, which demonstrated almost 100% satisfaction with the e-Clearance process.

The project was staffed by dedicated teams at Abu Dhabi Customs and ADCB to ensure that the project was suitably resourced and to ensure continuity and momentum. A helpdesk was also available to answer queries and address issues during the pilot and subsequent project phases. We took a disciplined approach to project management throughout, with monthly steering committee meetings involving senior management from Abu Dhabi Customs, ADCB and key stakeholders.

We were fortunate in being able to engage the services of our IT team at Abu Dhabi Customs and the bank’s expert resources to help develop a solution and process map that met the need of all stakeholders and could be delivered without delay.

Wider implications

Abu Dhabi Customs’ innovative e-Clearance project has transformed the whole process of customs clearance to an entirely electronic process, and eliminated paper and cash. Not only has the Department achieved demonstrable savings on top of revenues of USD 760m, but processing time has been dramatically reduced from hours or days to almost zero for 90% of transactions. As a result, the project has been instrumental in enabling the Department to progress the Abu Dhabi Strategy 2030, increasing Abu Dhabi’s competitiveness in international trade, improving revenues, and ensuring the optimal allocation of resources.

The implications of this flagship project extend beyond the borders of Abu Dhabi, and indeed the UAE and wider GCC. The Abu Dhabi Department of Economic Development’s (ADDED) Competitiveness Office recently issued its ‘2016 Doing Business Report’ in collaboration with the World Bank which covers six indices. Abu Dhabi was ranked #1 across the region for ‘Trading Across Borders’ index. As a result, our project is a global blueprint for e-Clearance and smart practices in both the public and private sector, demonstrating the improvements that can be made in areas such as governance, financial and process efficiency.