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Welcome Dinner Reception hosted by HICA for the APEC SCCP Seminar on the WCO Immediate Release Guidelines

24 April 2001

The Role Of Customs In The New Economy

Ladies and Gentlemen,

I wish to thank the Hong Kong International Courier Association for inviting me to the Dinner Reception this evening, and allowing me the opportunity of meeting with this distinguished gathering of experts from fellow APEC Customs administrations and our business partners from the express cargo industry. I must first add my personal welcome and wish you all a fruitful and enjoyable stay in Hong Kong.

The New Economy

In the past decade, innovations in information technology have prompted what MIT's Lester Thurow calls the Third Industrial Revolution. The application of IT is accelerating the transformation of the global economy which had already made quantum advances with steam and electrification in the past century. We are now achieving greater efficiency over a broader range of issues at a speed that is not before seen in the evolution of human history. 

The "New Economy" is no longer just a cliche for Internet mania or dot com frenzy. "New Economy" now refers to a new architecture where high productivity methodologies have been adopted for the conduct of electronic commerce across all sectors of the economy. Against this new frame of reference, it is just natural and reasonable for the business sector to expect all the benefits that should come with the New Economy, including better efficiency, greater competitiveness and higher productivity. 

Customs - Trade Facilitator And Guardian Of The Community

Customs, in its facilitation role, is one of the critical links that helps the trade achieve these benefits. The business sector expects Customs to be responsive to their needs. They want simplification of procedures, efficient processing of shipments and predictable sets of rules and regulations. They expect Customs to help them achieve "just-in-time" deliveries so that there will no longer be stock accumulation, prolonged warehousing, and outdated models. They also want to minimize any unexpected loss of time so that they can beat their competitors in launching their products in the consumer market. 

It seems quite a handful, but it is consistent with Customs' expanded role to help the trade realize these objectives, and this is what we have been doing in Hong Kong. We recognize that the traditional role of Customs as an enforcement agency has expanded considerably in recent years. Customs are emerging prominently as a business partner to industry players. We are fully committed to building a strategic partnership with the industry, and helping to maintain the competitive edge of the local industry. We are not the impediment that is often associated with Customs. We are the 21st century facilitator. 

Having said that, we remain mindful of our traditional enforcement role as the guardian of the community. We are the gatekeeper tasked with the responsibility of guarding against any illegal activity that might bring damage to the well being of our society. We are a law enforcement agency with a specific control mandate, and the integrity of our system relies on that control. That is something which we will not sacrifice at any cost. 

Customs' Challenges In The New Economy

Customs are bound by our twin roles as both trade facilitator and guardian of the community. We have to find the proper balance between these parameters, and in the new globalized economy, we have to find new ways to discharge our duties. Electronic commerce, efficient procedures, cybercrimes, fraud, and transnational crimes are but a few of the new challenges that impact on our work today. 

To function effectively, Customs administrations can no longer remain isolated entities, away from the societal context. We need to build bridges with other agencies and business partners. We need to strengthen ourselves through organizational reforms, through the proper use of information technology, and through strategic alliances with our counterparts around the world and with the business sector in achieving optimal win-win solutions. 


There are no simple and easy solutions to the new challenges facing us today. We need to construct a battery of measures that will suit our specific needs, and I would like to share seven ideas with you this evening for the sake of discussion.

Reviewing and Revising Procedures

First of all, we need to earnestly and continuously review and revise our procedures. We must realize that the traditional Customs control methodology can no longer cope adequately with the challenges arising from the new globalized business environment. In order to maintain a high degree of compliance whilst facilitating the rapid movement of goods and passengers, Customs procedures and systems must be simplified, harmonized, and improved so that the right balance can be achieved. 

Customs administrations will also have to conduct thorough process re-engineering to enhance their operational efficiency. There is the imperative need for us to strengthen risk management, update control methods, and adopt best practices in order not to impede the trade's business needs. Procedures must also be re-examined and revised on an on-going basis to reduce further any possible interruption of the legitimate trade.

Introducing Modernization Programmes

Secondly, we need to introduce suitable modernization programmes into our work. Given the rapid development of technology, changes in business practices and growth of multinational enterprises, Customs need to keep pace with the business sector with the introduction of modernization programmes. The objectives of modernization should seek to enhance operational efficiency, reduce operating costs, promote customer service quality, update professional knowledge and techniques, meet changing business needs and maintain compliance.

Modernization must be multi-dimensional, and its scope should be wide enough to cover legislation, control systems, operational strategies, organization structure, equipment, information technology, technical skills, and management techniques. 

Flexible Deployment of Resources

Thirdly, we need to deploy our limited resources flexibly. The current working environment for Customs administrations is a fast changing one. New demands and challenges, created by new technologies and business modalities, are constantly impacting on our enforcement priorities. Given the economic difficulties that we have been facing in the past few years, new resources have not been forthcoming to help us cope with the dawning of the New Economy. In most cases we have even been asked to reduce cost. In fact, I feel quite fortunate that the Finance Bureau in Hong Kong is only demanding a 5% reduction in my budget over three years in terms of savings. 

So we are faced with the problem of changing priorities and diminishing resources. We can no longer rely on timely expansion to deal with the new issues. We have to make do with what we have left. In the event, we need to build up the capacity of adjusting our work focus quickly in deploying our limited resources to best meet the changing circumstances and demands. We need flexibility and responsiveness, and not just quick fixes. We need multi-tasked formations which can respond to surfacing issues of high priority. To prepare ourselves properly, Customs administrations should be alert to the outside world watching out for emerging trends, spotting on-coming challenges, standing ready to equip ourselves properly and meeting these challenges head on. 

Developing Human Resources

Fourthly, we need to develop the quality of the limited human resources that we have been alloted. It is obvious that legislation, systems and procedures need to be enforced and implemented by competent, professional and dedicated people. The commitment, devotion and integrity of staff are particularly important to an organization in tackling challenges, making changes and introducing reforms. 

Human resources need to be developed on a continuous and long-term basis with a view to promoting and enhancing staff's qualification, professional ability, management techniques, morale and integrity. In this respect, well planned programmes with an eye on the future for staff training, career development and integrity promotion are essential to the well being of any administration.

Implementing E-Customs

The fifth idea is that we need to begin implementing E-Customs. The development of electronic commerce is an integral part of the New Economy. In order for the business sector to successfully take part in the New Economy, there must be appropriate corresponding support by government for electronic commerce development. As far as Customs are concerned, we must be familiar with the development of the latest technology so that we could adopt the appropriate tools for facilitation and compliance purposes. 

Another important objective of going electronic is for Customs administrations to move away from a labour intensive operating mode, and for Customs officers to "do more with less" in a reality of diminishing resources, by exploiting fully the advantages that technology can offer. 

Adopting International Instruments on Simplification and Harmonization of Customs Procedures

The sixth idea is that we need to adopt international instruments on simplification and harmonization of Customs procedures. With the active involvement of the World Customs Organization, modern Customs instruments tailored for electronic commerce in the digital era are readily available. The revised Kyoto Convention prescribes international standards for Customs practices for trade facilitation. The Harmonized System Convention, though an older instrument, contributes significantly to standardizing the classification of commodities for trade declarations. The G7 cargo data set aims to minimize and standardize cargo data required for Customs clearance. The proposed Immediate Release Guidelines for Clearance of Consignments by Customs should help to establish proper procedures to facilitate delivery of cargoes, including express cargo. 

Customs administrations should seek to adopt these instruments which contribute to the objective of simplifying and harmonizing Customs procedures in an international context.

Forming Strategic Business Partnership

Lastly, we need to form strategic business partnerships. Customs cannot work effectively alone or just among ourselves. We need to work in partnership with the business community. Through dialogues and cooperative arrangements, Customs and business can seek to enhance mutual understanding and cooperation. As a result, the business sector will enjoy greater predictability of Customs procedures, while Customs will be reciprocated with timely cargo information. We will learn to better meet each other's needs and expectations. It can be a win-win solution for us all.

Strategic Partnership

The business sector has a thousand legitimate reasons to urge Customs administrations to adapt to the new business environment. This is also the best opportunity that Customs have been given to adjust ourselves to a new economic construct that is borderless and skill-based. We should seize this opportunity in building up a strategic partnership between government and the business sector. In so doing, we are leaving behind the models of days gone by, shutting down the old, and adopting the best possible solutions in bringing prosperity to our communities.

Thank you.

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