Jamaica Customs – The Dreaded Agents – Are They Really? – How Did We Get Here??

What side of the coin are you perching on?  Are you the importer, the customer, the agent?  Are the concerns one of the same?  How could customs be allowed to function in this manner for so long?  Who is really being facilitated here?  From where I am standing for the last 12 years or more many importers have been affected severely by customs fees and charges.  Have we forgotten the small business owner who is in the retail trade?

With a sliding dollar that no administration has managed to stabalise for any length of time for real recovery to take place.  This reality is daunting.  Imports is and still remains the major source of revenue making up 60% of our productivity on the Roc.  Simply put without losing my audience that likes to receive their information as simple as possible.  Livelihood for most Jamaicans is derived from some form of importation.  Either direct or indirect.  So what has fueled customs to operate in this fashion for so long?

We cannot have charges and taxes that are so excessive that we become less competitive to the region.  This will open the door towards corruption where the very same agency who is bolstering collections in one hand.  The other hand turns a blind eye to in house corruption where desperate people, the importers will revert to desperate measures in order to ease the burden off their investment.  To eliminate those practices, you must have prices that are competitive forcing importers to willingly pay the charges and duties because paying them will be far less than seeking alternative measures.  Adjust the root and the vines will respond accordingly.  We are in a global space, not lickle Jamaica a try fi rob peter fi pay paul.  This idea that seems rampant in our leaders thinking that if you increase, increase, increase, then all will be well is rubbish.  In one breath you are encouraging Jamaicans to become skilled entrepreneurs and the reality is goods and services is where it is at.   What kind of competitive edge can one hope to have much less maintain, when our customs is hell bent on crippling the livelihoods of those whose bread and butter relies on the very same business of goods and services?  Our approach signifies that we are prepared to out price ourselves from a sector and that must change.  All is affected by the way customs conducts business from the one man operator to the micro and macros business operators.  No one is above or below when it comes to ensuring that their bread will indeed have butter, and so the doors to back deals will always be tempting.  Who do you blame?

A lot of scream is being heard re a system called ASYCUDA?  Change is inevitable no denying.  However, who were the players engaged alongside customs in the initial phase of launching this database?  Freight forwarders, brokers, any shipping personnel, telecommunications representatives?  How is it at this stage, can there be concerns re confidentiality of customers personal details, respective companies client listing, pricing etc?  Come on, this sounds like basic school operations.  It says alot about collective approach and our belief system towards collaboration when necessary as opposed to every man fi himself until the obvious gets out of hand.


Customs crisis!

Fears that Jamaica could lose revenue to other countries which charge less

BY VERNON DAVIDSON Executive Editor — Publications davidsonv@jamaicaobserver.com

(Jamaica Observer) Sunday, October 30, 2016   45 Comments

 REECE… CAF rates have not changed

Jamaica Customs Agency’s apparent single-minded focus on raising revenue is said to be stifling businesses, leading to growing concern that the island could lose a significant chunk of shipping and logistics revenue to other countries, particularly Panama, where rates are half those being charged here.

At the same time, the agency has been asked by the finance ministry to explain why it has not yet provided justification for charging Customs Administration Fees (CAF) at twice the maximum designated by the Cabinet in 2013.

Finance Minister Audley Shaw wrote to Commissioner of Customs Major Richard Reese recently after it emerged that Reese had not responded to a November 17, 2015 query from then Financial Secretary Devon Rowe.

Rowe, in that letter, had said that it was brought to the attention of the ministry that the CAF being charged was $2,500 per piece, up to a maximum of $40,000.

 

“This is in contravention to Cabinet decision #29/13 dated July 29, 2013 which provides for $2,500 per piece, up to a maximum of $20,000. Please provide an explanation for this digression by November 20, 2015.”

On October 20, the Jamaica Observer, acting on complaints from shippers about the fees, as well as the Automated System for Customs Data (ASYCUDA) system, sought to get a response from Reese.

At the time, he said he was overseas, but acknowledged that “CAF rates have not changed” but are “being reviewed”.

He directed the Observer to e-mail questions to Karlene Henry and Patrick Chambers at Customs. The questions were sent the following day. Six days later, having not received a response, the newspaper resent the questions, but up to press time yesterday there was still no response.

Earlier this month, a highly placed source in the shipping industry confirmed to the Sunday Observer that representatives from a number of foreign shipping lines serving Jamaica, as well as local entities, met with Shaw at the end of September to air their concerns.

“We had about 10 entities, including Kingston Wharves, Montego Bay Airport, all of them had the same complaint that the facilitation and growth of the logistics side is being stifled by the commissioner,” said the source, who spoke on condition of anonymity.

In August this year, Reese told journalists that Customs earned net revenue of $44.136 billion for the first quarter (April to June) of the 2016/17 financial year.

This, he said, surpassed the agency’s target of $2.183 billion or 5.2 per cent.

Reese said that when compared to the first quarter of financial year 2015/16, Customs recorded growth in net revenue collection by 13 per cent or $5.120 billion, up from $39.016 billion in 2015.

He said that major tax items, including Import Duty, General Consumption Tax and Special Consumption Tax performed positively relative to the targets for the quarter and prior year.

“At the end of June, collection in respect of Import Duty was 5.4 per cent above the target, while General Consumption Tax and Special Consumption Tax were 9.35 per cent and eight per cent, respectively, above the targeted collection,” Reese said.

“He’s excellent at collecting revenue, nobody can fault him for that, but what it is doing is stifling the growth of business,” our source said.

According to the source, when goods are taken off a ship in Jamaica and sent to the free zone for inspection, the charge is $20,000 per container. “By the time everything is done, that container is ending up costing $50,000 for Customs alone. That’s nearly US$400 more than it costs to take it off the ship and put it back on. To load and discharge a container doesn’t cost US$400. It’s lower in Panama,“ he said, pointing out that the cost there is US$45.

A flow chart of the costs for the movement of cargo from the port to the economic free zone in Panama obtained by the

Sunday Observer shows that the total charge amounts to US$620 compared to US$934 in Jamaica.

The source also confirmed complaints from shippers that ASYCUDA – the web-based system designed to transform Customs to a paperless operation through the use of electronic documents – was allowing competitors to see each other’s information.

“Agents have been putting this to the Customs since February and they haven’t fixed it. But guess what, since the meeting in September, it has been fixed, but let’s see if it’s permanent,” he said.

Last week, another industry source told the Sunday Observer that, while the system was not showing such data now, other problems have surfaced and meetings have been taking place to find solutions.

That second source, responding to Reese’s recent interviews in which he spoke of Customs’ revenue increases, and the success of ASYCUDA, said the commissioner “is patting himself on the back a little too hard”.

“On one hand he has fulfilled one of the requirements of the Government — to collect revenue — but all he’s done is replace one computer system with another one,“ said the source.

“The entire implementation process has been handled poorly. ASYCUDA is allowing competitors to see each other’s information, despite Customs saying they have fixed the problem. Now, customers have very little confidence in Customs to keep their data confidential,” said source who also spoke on condition of anonymity.

“While people are willing to co-operate and support changes at Customs, it has become apparent that the great thrust at Customs is to raise fees. Customs has not been transformed, it is the same old organisation with a new computer system and a new designation — executive agency. The transformation that needs to take place to air and sea freight business has not taken place.”

 

 

 

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