Abstract
Having reviewed and rejected the ASYCUDA software package -- a decision reinforced by the negative experience of other countries in the region -- the Government of Jamaica decided to develop customized software for the Jamaica Customs Department. Fiscal Services Limited (FSL), a government-owned information technology company, was assigned the task. After successful implementation of core functions, the World Bank has joined in providing loan funding to add enhancements and to complete the customs modernization process. Application Context The Jamaica Customs Department's responsibilities include facilitating the importation of goods into the island and the collection of government revenue at the points of entry. The processing of imports had been primarily manual, with a paper-based system at its core. The system involved shuffling large amounts of paper through many sections, most of the time using the Customs Brokers as the carrier. There was an inability to reconcile cash collected with the entries processed, as there was no linkage even when the entries were keyed into the computer system later. This was fertile ground for fraud, inconsistencies, and an absence of accountability. Management became almost ineffective as any new measures introduced to bring operations under control was seen as another bureaucratic layer being added to frustrate importers, while initiatives to facilitate trade became threats to revenue collection. The system was so labour intensive that Customs struggled to maintain adequate staffing levels due to combinations of budget constraints, personnel dismissed for corruption, and the increasing Human Resource needs as trade volume increased. Customs administration had very little data available to support its decision making process; and the data the was available generally was untimely and of questionable accuracy. A New Approach When Ministry of Finance and Planning (MoFP) decided to begin the modernization of Customs, a study of existing processes and requirements commenced. The analysis covered all the functional areas of Customs and helped to prioritize those that would have the greatest impact on efficiency. It was decided to have the import entry data captured at the point of lodgement, with the entry linked into a new collection system. Accomplishing that would allow the computer system to move the electronic entries easily among processing sections, including collections, and effect a paperless import entry processing system. While developing the Customs back-end entry processing system would be a challenge in itself, the real difficulty was the development of an application that would reside on the importer's computer and capture, validate, and submit the C78 customs entry electronically. This new system, called the C78 Electronic Entry Lodgement System, would be designed to: - Capture entry data, calculate duties and other taxes, and validate the entry;
- Lodge the entry electronically by connecting seamlessly to the Customs Automated Services (CASE) website, and initiating the file transfer;
- Receive lodgement confirmation or lodgement rejection with detailed error analysis;
- Print C78 and other related forms and reports.
CASE would ensure that the entries submitted from the comfort and convenience of the Customs Brokers' offices were fully validated and lodged, thus providing the platform to expedite the processing of shipments. Entries could be easily reconciled against the collection received via the integrated Customs Cash Remittance System at Customs locations. The implementation of an e-payment component soon would be made available so that through CASE, Customs Brokers could both lodge their entries and pay duties over the Internet. Statistics could be gathered easily and distributed to government agencies and trade organizations; management reports monitoring of the operation would be readily at hand to aid in effective decision making. Implementation Challenges The challenges experienced were many. They varied in degree among Customs Brokers, Customs Officers, and telecommunication services. Each had a critical effect on a successful implementation; and all had to be coordinated for their interaction effects. The Customs Brokers were a particularly difficult group, as many felt that their competitive advantage over each other would be diminished by the changes in their interaction with Customs. They also feared technology, many using it for the first time. Others, while somewhat familiar with technology, did not utilize it for mission critical functions. Reactions ranged from organized protest to sabotage. Among Customs Officers the changes often were opposed for monetary reasons. The new system would eliminate the need for overtime, as they had to process paperwork well into the evening to keep up with the volume of entries coming in on a daily basis. Others benefited from private arrangements with brokers. Telecommunication services also presented two significant obstacles: - Many Customs Brokers required additional phone lines for access to Internet Service Providers (ISP). As it turned out many of the lines could not be made available due to physical infrastructure deficiency in certain areas.
- It proved difficult to access ISPs during peak hours, and the timeliness of response to relay email messages proved problematic. This was true initially as in the early stages we moved entries and acknowledgements via e-mail.
However, as time progressed, and with the backing and determination of the Ministry of Finance, the availability of telephone lines increased. FSL moved from e-mail based communication to an on-line web application, and Customs by then understood the seriousness of the effort. FSL assembled a technical team to assist Customs Brokers with installation of PC's, training, application software usage, and connectivity to the Internet. In addition a customer service center with special hot lines were setup to resolve problems quickly. Benefits and Costs The cost of the project to this point is approximately US$5.5 million, which includes the overall requirements analysis, the development of software suites, data communication equipment and computers. While the Government of Jamaica had funded all of this, there remains a considerable amount of work yet to be done. A World Bank loan, along with government counterpart funding, are currently being utilized to develop and implement E-manifest, Online Release, and Warehouse Control. The most important element is the administrative reform, including the organizational and process changes that are taking place. All of this is being built on the foundation of the initial software suites that were successfully implemented. Recently, there has been a steady increase in revenue collection, despite little or no economic growth in the country. At this point, our determination as to the reasons for this increase is inconclusive, but we noticed that although the number of transactions has remained constant or trending down slightly, revenues have increased. The Customs Brokers have come to appreciate the convenience and increased speed in processing an entry. In contrast to lodgements being limited to Mondays to Fridays 9:00 a.m. - 4:00 p.m., the new system permits lodgements 24 hours per day, seven days a week. Brokers are also gratified that processing of an entry, which previously took two to three days, on average, is typically done in three to four hours. (This does not include "fast path," which is immediate, for those who qualify, requiring only duty payment.) Now 98 percent of entries are submitted electronically, with 95 percent of the brokers on-board. Customs overtime has been drastically reduced and can be completely eliminated once the Customs reforms are fully implemented. Customs supervisors are now better able to monitor and distribute the workflow, thereby achieving greater efficiency. Inconsistency and errors in duty calculation have been totally eliminated. Changes to tariff rates and other fees are quickly and accurately accommodated. Reconciliation of payment is now provided on demand. Management and activity reports are all easily generated and made available through the implementation of Data Warehousing tools. Collection points require fewer cashiers, yet long queues have been eliminated. The cashiers now have only to select the entry and collect payment, without entering large amounts of transaction details. Key Lessons A less traumatic implementation could have been realized if there had been a commitment to reform the Customs operation at the beginning of the computerization effort. That mandate is required to effect the re-engineering process that must occur to ensure maximum benefits from a new system. It is also imperative that an extensive awareness program and sensitization of the stakeholder is undertaken early in the process, and followed through the project's life. Customs must take ownership and control of the project. In our case, the MoFP and FSL took on that role, but were not nearly as effective as Customs might have been. Customs needed management with working experience in a computerized Customs operation, and ideally experience in the transition process. That certainly would have reduced fears and helped in their ability to orchestrate the change management process. Case study author: Lorenzo Grant, Fiscal Services Limited, Jamaica
Date submitted: June 11, 2001 |
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