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Deep-sea port needed for delta region to boost logistics

The recommendations are published in the position paper released by the European Chamber of Commerce Myanmar (EuroCham) in June as part of EuroCham’s annual White Book.

The publication highlighted the need for Myanmar to establish deep-sea ports in order for the country to realise its geographical advantage and become a logistics hub in Asia. Despite the expansion of Yangon International Airport and upgrade of Yangon-Mandalay Highway, Myanmar’s logistics industry is still plagued by insufficient port capacity, a non-transparent valuation process and inefficient customs clearance system.

Members of the advocacy group include Maersk Line Myanmar, Santa Fe Mobility Services, Dextra Transport, Damco Logistics Myanmar, Kuehne + Nagel, Rhenus Myanmar, Royal Haskoning DHV, Myanmar DHL and CMA CGM.

Sea port in delta region needed

The position paper noted that the lack of port infrastructure and congestion present a significant constraint for sea trade and called for the establishment of a deep-sea port at the delta region.
“The existing facilities of ports are questionable for the traders as there have been serious port congestion problems at the terminals in the past.

“For the time being, the current main terminals are all river terminals which means that shipping lines are unable to bring in larger-sized vessels.

“Currently the maximum size that can call at the terminals are 167 metres LOA [length overall of the vessel] for Yangon City Terminals and 200 metres LOA for Thilawa,” the publication stated, adding that terminals Thailand and Vietnam accommodate approximately 320 metres LOA.

The advocacy group called for the development of a deep-sea port at the delta region with a special economic zone (SEZ), from which well-connected roads branch out to major cities.
“The feasibility study for the location of this deep-sea port should be validated by a neutral party within 12 months. The inclusion of a clear timeline for implementation is recommended,” it said.

Non-transparent valuation process

A top concern in the industry is the absence of a clear and standardised policy regarding the valuation process, according to the white book. Price checks depend entirely on the customs officers.

“Price valuations rely heavily on internet prices published on websites such as Alibaba and Amazon, which mostly are retail prices and thus sometimes lead to over-valuation,” it stated.
The advocacy group labelled disagreements over the value tags as “a recurring matter between the officials and the importers”. It went on to say that some traders adopted informal approaches such as bribing the officers to avoid price raises, and that time-consumption and informal payments are difficulties traders encounter.

Under the table payments remains an issue despite the Myanmar Automated Cargo Clearance System (MACCS) being in place. This is because the system remains a manual process and depends on face-to-face interactions with officials. In some cases, the current valuation process takes a month or more to complete.

Confusion in the administration also causes problems.

“Additionally, it must be pointed out that the Customs Department [under the Ministry of Finance] does not follow the same process of value assessment as the Ministry of Commerce and Trade at the time of import/export license applications [Ministry of Commerce Notification No. 74/2016].

“As a result, there are frequent discrepancies in the values approved by the two ministries causing further discrepancies and complications,” the publication stated.

Conceding that its suggestion will be a prolonged one, it recommended the implementation of the World Trade Organisation’s General Agreement on Tariffs and Trade (GATT) transaction value concept: the customs value of the imported goods shall correspond to the actual transaction value.

“Myanmar is a member of the World Trade Organisation and has signed the valuation agreement in 1995. A five-year implementation grace period was granted, subsequently followed by another two-year extension period which has seen little progress since,” the white book noted.

According to the advocacy group, transaction prices shall refer to the actual price paid or payable by the importer as a result of the sale by the supplier, hence the actual market value is equal to customs value. The concept places responsibility on the importer to truthfully declare correct and accurate values at the time of importation.

The publication explained that the suggestion will allow shipments to be processed quicker through customs upon arrival and enable bona fide importers to have the benefit of paying duties and taxes in line with the actual values, avoiding the situation of being overcharged.

“On the basis of various documents and sources, such as invoices, L/C’s, bank transfers, insurance certificates, Form D’s and others, as well as the importer’s own systems and processes, customs can verify whether the values declared amount to the transaction value.

“Post-clearance auditing becomes more important and takes on a greater role,” the white book added.
In addition, the provision of thorough training to customs officials, importers/ exporters, customs brokers and other stakeholders will be essential, together with the revision of the legislative and regulatory frameworks.

Customs working hours and gate-in of containers

The position paper called for the extension of customs’ operating hours and recommended that containers should not be allowed to gate-in before the customs clearance process is complete.
The current working hours for customs are 10am to 5pm. The advocacy group said this causes congestion and high logistics costs. Additionally, with the implementation of the daytime truck ban in force since 7 December 2016, most cargoes reach the terminals during night time.

It also suggested that the customs department should perform its duties 24 hours.

Current practices in Myanmar require the gate-in of containers into the terminals prior to the commencement of the customs clearance process. The position paper argued containers should not be allowed to gate-in before the customs clearance process is over. This change will reduce congestion in the terminal areas and encourage customers to start the customs clearance process sooner, which will help streamline vessel operations because all gated-in containers are ready for loading.

Commenting on the white book, Tomoaki Yabe, managing director of Thilawa-based Daizen Myanmar, said that he largely agrees with the policy recommendations. He told The Myanmar Times that logistics businesses often hear from their customers that “doing business in Myanmar was more costly than expected” and logistics cost is one of the factors.

“Lack of infrastructure and regulatory constraints both contribute to the high logistics cost in Myanmar when compared with other ASEAN countries,” he explained.

He specifically highlighted the lack of clarity in valuation process and the impact of the truck ban.

“The taxable assessed value is usually higher than invoice value leading to increased duties and fees.

“Truck ban in Yangon leads to increased trucking cost since the number of trips a truck can do in a day is limited,” he explained.

Earlier this year, Daizen became the first firm in Myanmar to receive their Bonded Non-Resident Inventory Program license, and hence was the first bonded warehouse company in the country. By having bonded warehouses, goods can be taken out of the ports before going through the customs clearance process.

Yet, according to Mr Yabe, bonded warehouse is only permitted in Thilawa SEZ.

“Outside the SEZ, some warehouse operators may want to apply for a bonded license but cannot do so because no relevant regulation exists.

“No bonded warehouse regulation means increased congestion at the port, leading to a longer clearance process and extra cost incurred such as detention and demurrage charges,” he said, adding that customs are in the process of drafting the regulation for bonded warehouses outside SEZs.

John Hamilton, country manager of CEA Projects Myanmar, told The Myanmar Times that the Yangon-Mandalay Expressway, currently closed to all semi-trailer vehicles, should be open to trucks.

Source : Hellen Shipping News

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