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Logistics and Supply Chain Management Enabling Technologies Annual Conference (English Only)

22 March 2011

Following is the speech delivered by Commissioner of Customs and Excise, Mr Richard Yuen, today (March 22) at the Logistics and Supply Chain Management (LSCM) Enabling Technologies Annual Conference:

Ladies and gentlemen,

Good morning. Thank you for giving me this opportunity to talk about the role of Customs. I think many of you believe that you know what the Customs does. But I can assure you that the Customs and Excise Department in Hong Kong in particular is probably the most misunderstood department in Government.

Many ordinary citizens often mistaken us with immigration, because in Chinese going through immigration is also called ?謚???螞€?or ?謓ing through the customs gate??

In fact, in these days with the introduction of the Red and Green Channels for customs clearance, you seldom have a chance to interact with a Customs Officer ??unless of course you have something to declare or something to hide.

Since we don???have import tax for goods entering Hong Kong and we have excise duties on only a few items including cigarettes, hard liquor and petrol, most of our work in terms of customs clearance is to deal with cargoes. This is particularly so given that we have the largest air cargo centre and one of the largest container ports in the world.

If you look back at the history of Customs, you will probably realise that Customs is perhaps the second oldest profession in the world. To many people, customs was there and many believe it is still there to frustrate trade. So, trade must exist before customs and since trade began with civilisation, we will give the honour of the oldest profession to you ??the logistics trade.

According to a publication by the World Customs Organization, the first and oldest customs tariff was engraved in a Customs Wall at Palmyra in the Syrian Desert in 137 A.D. It shows that Customs originally existed to collect tax and money from desert traders and many believe it is the only work customs does. Those who are familiar with Chinese history will know that the most famous customs gates are along the Great Wall. ?銡€uyongguan(????, Jiayuguan(??????? just to name a few. These combined military and customs outposts testify to Customs??traditional role in helping to protect the integrity of the border and the safety and security of the community.

Given that Hong Kong is a free port, the Customs is mainly responsible for intercepting dangerous goods, illicit drugs, enforcing licence control on goods like pharmaceutical products and endangered species, and collection of accurate trade statistics by ensuring the prompt and proper trade declarations made by our traders.

The undertaking of these responsibilities requires Customs to carry out inspection on cargoes at the point of entry and exit. Naturally those in the logistics industry would see us as an obstruction to trade. But when we think of it, Customs and the industry share the same objective and the same interest. A safe and secure border and a safe and secure port is not only important to protecting society, it is equally important to doing business and maintaining Hong Kong as an international trade and logistics hub.

What???important is how to strike a balance between enforcement and facilitating trade. Everyday, we have 800 flights; 1,200 ships; 600,000 passengers and 43,000 vehicles coming into and out of Hong Kong. Just like all other modern day businesses, Customs around the world has been taking advantage of the advent of technology, especially information technology, to simplify the work process and to help improve the efficiency and effectiveness of customs clearance.

In Hong Kong, for many years now we have made it a mandatory requirement for trade declaration and manifests for sea and air cargoes to be submitted electronically. It does not only save the cost of the industry but also enables us to do advance cargo clearance, so that goods that have not been selected for inspection can go through Customs without stopping when it arrives or leaves our port and airport.

For a long time, we have difficulty encouraging cross-boundary goods and container vehicles to migrate to the electronic mode. This difficulty has largely been due to the unique situation in Hong Kong in that many of our cross-boundary trucks are owned and operated by individuals or small companies. They neither have the IT knowledge nor the human and financial resources to convert to an electronic platform. But the rapid evolution and popularity of the internet in recent years has brought about a big change in culture and we believe time is now ripe for us to move the land mode of transport to the electronic age.

We are very pleased and encouraged to have the support of the trade and the operators to launch the Road Cargo System (or ROCARS for short) last May. The successful launch of ROCARS means that in November this year, cargo data for cross-boundary will have to be submitted through the internet and in advance (at least 30 minutes ahead). The new requirement, welcomed by the trade, allows Customs to perform advance cargo clearance, and unless the goods are selected for inspection the vehicle can pass through our four land control points seamlessly without the need and the time spent at the control point for customs risk assessment.

ROCARS does not only bring time and cost saving benefits to cross-boundary goods vehicle and container truck operators. More importantly, the long-awaited migration of the land mode of transport from the manual to the automatic system will provide us with an electronic platform to introduce other initiatives to facilitate inter-modal transport and further enhance the efficiency and competitiveness of the Hong Kong logistics industry.

We are pleased that with the support of LSCM, we successfully launched the Inter-modal Transhipment Facilitation Scheme (ITFS) for air-land and sea-land transhipment cargoes in November last year. With the rapid growth of the volume of transhipment cargo going through Hong Kong - many coming from air or sea and transported into Shenzhen by cross-boundary container trucks or vice-versa - we often receive complaints from the industry that the same consignment of cargoes could be subject to inspection twice ??one at the airport or the port and another inspection at the land control point. The uncertainty hampers the efficient operation of the logistics industry, especially for those providing a just-in-time delivery service.

Through a tripartite partnership scheme between LSCM, private vendors and Customs, we are now able to provide in the market specially designed and easily available and affordable cargo security and monitoring systems that combines the electronic advance cargo information (e-ACI) concept and new technologies like e-lock and GPS. These new technologies do not only give the forwarders and logistics companies the ability to track and locate the cargoes on the move. They can also give us the assurance that the cargo has not been tampered with when it goes through land transport in Hong Kong. In return, we can offer those participating in the scheme an assurance that, in normal circumstances, the cargo after leaving the airport or seaport will not be subject to another inspection when it goes through the land control point into Shenzhen.

The importance of these and other initiatives lies not only in providing facilitation for the trade and enhancing the efficiency and effectiveness of customs clearance. They also help the logistics trade to have a better understanding of the work of Customs and our responsibilities in protecting society and the integrity of Hong Kong???trade system, so that through better understanding and mutual assistance, we facilitate the moving of cargoes smoothly and seamlessly through Hong Kong???port while ensuring dangerous goods and substances cannot enter Hong Kong and criminal syndicates cannot use Hong Kong as a base to smuggling goods into the Mainland.

I would now like to take a few minutes to talk about our new Authorised Economic Operator or AEO programme. The AEO programme is a concept promoted under the World Customs Organization???Framework of Standards to Secure and Facilitate Global Trade. The objective of the AEO programme is to encourage Customs and the logistics trade to build partnership, so that Customs can focus on intelligence and inspection of high risk cargoes and minimise unnecessary delay to the trade. Through this programme, we will work together with the participating companies and encourage them to use e-seal and GPS technologies to enhance their internal control and monitoring system to ensure that their cargoes would not be tampered with during transhipment. Those companies with AEO status will enjoy special customs clearance facilitation like advance cargo clearance and a minimum chance of their cargoes being detained by Customs for inspection at the control points.

Ladies and gentlemen, these new initiatives demonstrate the great importance that we attach to our relationship with the logistics industry. We firmly believe that we should do all we can to assist and facilitate your operation. To do so, it is also important for the industry to understand our role as Customs and our concerns. We believe that through a strong partnership between Customs and the logistics industry, we can help each other to do a better job and continue to build on Hong Kong???strength as a trade and logistics hub for the benefit of Hong Kong people. The development of new technologies will go a long way to facilitate our work. But like all good business partnership, it is trust, respect and mutual assistance that count most.

Thank you.

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