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IMPORT - EXPORT PROCEDURES IN JORDAN

Final Report

Bureau for Private Enterprise U.S. Agency for International Development

Prepared for:

Prepared by:

Sponsored by:

The Ministry of Planning, Jordan and USAIDl Jordan

Charles A. McCue Arthur Young 55 Almaden Blvd. San Jose, CA 951 15 (408) 947-5500

Private Enterprise Development Support Project II Project Number 940-2028.03 Prime Contractor: Arthur Young

December 1988

TABLE OF CONTENTS

VII .

VIII .

INTRODUCTION ............................. SCOPE OF PROJECT ......................... IMPORT-EXPORT PROCEDURES. EXECUTIVE OVERVIEW ....................... 1 SUMMARY OF STUDY FINDINGS ................ 4 PRIORITIZED LIST OF RECOMMENDATIONS ...... 13 STATEMENT OF PROJECT CHRONOLOGY ............ 25 INITIAL INTERVIEWS

A . General .............................. 26 B . Private sector ........................ 27 C . Public sector ......................... 32 D . Comments on interviews ............... 35 INVOICE VALUE INCREASES BY CUSTOMS. HISTORICAL DATA .......................... 36 A . Aqaba transit ........................ 37 B . Aqaba other .......................... 38 C . Aqaba re-export ...................... 3 9 D . Aqaba Free Zone ...................... 40 E . Aqaba local sales .................... 41 F . Aqaba consumption. including .

temporary imports .................... 42 G . Amman consumption. including .................... temporary imports 43 H . Total declarations for consumption.

including temporary imports .......... 44 I . Total of all declarations ............ 45 J . Comments on historical data for

invoice value increases ............... 46

IX . NUMBER OF DAYS FOR CUSTOMS CLEARANCE. HISTORICAL DATA .......................... 47 A . Aqaba declarations. transit .......... 48 B . Aqaba declarations. re-export ........ 49 C . Aqaba declarations. Free Zone ........ 50 D . Aqaba declarations. bonded ........... 51 E . Aqaba declarations. for auction ...... 52 F . Aqaba declarations. consumption.

including temporary imports .......... 53 G . Amman declarations. consumption.

including temporary imports .......... 54 H . Total of all declarations ............ 55 I . Comments on historical data

for clearance declarations ........... 57 X . NUMBER OF DAYS FOR CUSTOMS CLEARANCE.

"LIVE" DATA .............................. 58 A . Alia declarations. consumption.

including temporary imports .......... 59 B . Aqaba declarations. consumption.

including temporary imports .......... 60 C . Amman declarations. consumption. .......... including temporary imports 62

............ D . Total of all declarations 63 E . Comments on tfliveft data for

clearance declarations ............... 64 F . "Liveff data report ................... 65

XI . NUMBER OF DAYS TO OBTAIN IMPORT & EXPORT ................ LICENSES. HISTORICAL DATA 75 Export

Import

licensing.

licensing.

data

data

and

and

comments

cormnents

QUESTIONNAIRE

A . Statement of comments ................ 82 B . Comments by descending

number of occurrences ................ 90 C . Import licensing. comments ........... 92

Export 1 icensing . comments E . Import clearance for consumption. ............................. comments 94 F . Export clearance. comments ........... 97 G . Import clearance for temporary

imports and exempt. comments ......... 99 H . Number of comment occurences

by agency ............................ 100 I . Product categories ................... 101

XI11 . RECOMMENDATIONS FOR SIMPLIFICATIONS. BY RESPONSIBLE AGENCY .................... 102

XIV . PROCEDURES. REGULATIONS. FLOW CHARTS. FORMS. QUESTIONNAIRE RAW DATA. AND SAMPLE RAW DATA ARE AVAILABLE IN ARABIC FROM MINISTRY OF PLANNING ......... 120

INTRODUCTION

In response to complaints from the business community that Jordan's import-export procedures are cumbersome, the Government of Jordan has formed a Steering Group representing the Ministry of Planning, Customs, Central Bank, Chamber of Commerce, Chamber of Industry, and Ministry of Industry and Trade.

The purpose of the Steering Group is to develop recommendations for reform and simplification.

To help the Steering Group, the Ministry of Planning has requested USAID AMMAN to assist in locating and funding the services of a consultant in the field of ~mport-export procedures.

The consultant chosen for the project is Mr. Charles A. McCue, a partner and Director of Customs Practice of Arthur Young United States.

The consultant visited Jordan twice, the first time from June 29th, 1988 for approximately 3 weeks, and his second visit commenced from November 8th to November 2Ilth, 1988.

SCOPE OF PROJECT

The three tasks within the scope of the project are:

1. Examine current procedures and regulations governing import-export procedures in Jordan. This task includes import-export licensing and import-export clearance of goods.

2. Identify problems experienced by the Jordanian business community in dealing with import-export procedures.

3. Develop recommendations to reform and streamline the import- export procedures.

There was a verbal instruction given June 29th to also examine duty drawback and re-export.

Note: Very few regulations were available to the consultant in English; thus, task (1) "examine reg regulation^....^^ was accomplished only to a limited degree.

IMPORT-EXPORT PROCEDURES, EXECUTIVE OVERVIEW

The major aspects of the import-export process, are:

1. Obtaining an import license.

This license is obtained at the Department of Trade within the Ministry of Industry and Trade. Prior to the November 6th implementation of the import ban on certain items, approximately 75% of all licenses were issued on the same day they were applied for. There are certain goods which require approval of other agencies, and in some of these instances the process can take longer than 1 day. Approximately 95% of all licenses are issued within 4 days of the application. This later processing time is based on pre-November 6th data.

There is a fee for the import license which is 5% of the import value. It should be noted that neither temporary nor duty drawback imports are subject to the licensing requirement and are, therefore, not subject to this additional 5% expense. This is a tangible benefit to the importer of goods who subsequently exports the goods as part of a Jordanian-made product.

2. Obtaining bank guarantees in lieu of certain payments for duties and/or for import licensing fees.

When duties are not payable upon importation, such as temporary and drawback imports, a guarantee must be obtained from a commercial bank to cover the amount of the duty should the product be sold in the domestic market. The cost of the guarantee is 5% of the contingent liability.

Clearing the imported goods through Customs.

Typically this process is done on behalf of the importer by a broker for a fee of approximately 20 JD. The process can be very time consuming, especially if agencies other than Customs are involved. Data shows that only 23% of imported goods are cleared within 2 days and one-quarter are cleared within 6 days. The remaining 52% can take up to 8 days, with a small percenatge taking as much as several months to be cleared through the import process.

Assuming a 2 day clearance period to be acceptable, the data shows that approximately 77% of the imported goods are delayed. Of these 77 percentage points, 43 percentage points are caused by agencies other than Customs, 31 percentage points are caused by the importer and/or the broker, and only 3 percentage points are caused by Customs.

It appears that 20% of all delays are caused by the current sampling and testing procedures carried out by the Department of Standards within the Ministry of Industry and Trade.

4. Temporary and drawback import clearances.

There has been a recent change to the drawback regulations which resulted in many improvements for the exporter. With the new regulations, the name l1duty drawback1' is really a misnomer because duty is not paid at all if the import is subsequently exported.

The following table summarizes the major differences between a temporary import and a drawback import:

Item Temporary Drawback Import Import

Import license No No

Guarantees 2 1 (for Customs (for Customs)

& lic fee)

Additional tax Yes No

Multiple imports, blanket guarantee Yes

Eligible to import exempt goods with no fees No

Transfer goods into local market without prior approval from Customs No

Sell into local market and buyer exports without paying duties No

Transfer material from one factory to another No

Maintain duty rate at time of import if sell into local market No

5. Obtaining an export license.

Optional

Yes

Yes

Yes

Yes

Yes

The data shows that 100% of the export licenses are issued on the same day they are applied for. ~dditionally, 69% of the license applications are approved within the same building at the Ministry of Industry and Trade.

6 . Obtaining bank guarantees f o r secur ing t h e payment by t h e expor t customer.

This is no t a requirement f o r Jordanian e x p o r t e r s s e l l i n g by means of Letters of C r e d i t ( L C s ) ; however, it is cons idered t o be a ve ry onerous requirement by t h o s e no t us ing L C s . Under t h e c u r r e n t system, t h e e x p o r t e r must p o s t a guarantee , i n t h e amount of 1 0 % of t h e expor t va lue of t h e goods, t h a t t h e expor t customer w i l l pay f o r t h e goods. I t is p o s s i b l e f o r a Jordanian expor te r t o have goods s p o i l e d i n shipment t o t h e expor t customer, and he can t h u s l o s e t h e goods, t h e 1 0 % d e p o s i t , p l u s t h e c o s t of t h e guarantee .

7 . Clear ing t h e exported goods through Customs.

This p rocess is u s u a l l y completed i n i day, a l though it can t a k e longer i f o t h e r agencies a r e involved.

This execu t ive overview has n o t covered exempt, i n t r a n s i t , bonded, o r Free Zone t r a n s a c t i o n s . The t i m e c o n s t r a i n t s d i d n o t permi t any s u b s t a n t i v e examination of t h e s e t y p e s of t r a n s a c t i o n s .

SUMMARY O F STUDY FINDINGS

There a r e s e v e r a l problems of major p r o p o r t i o n s invo lv ing t h e p r i v a t e and p u b l i c s e c t o r s i n t h e import-export procedures . ~ d d i t i o n a l l y , t h e r e a r e s e v e r a l problems of a medium propor t ion and many of a minor p ropor t ion involv ing t h e p r i v a t e and p u b l i c s e c t o r s i n t h e import-export procedures .

I t is cons idered t h a t t h e m a j o r i t y of t h e problems can and should be r e so lved i n t h e s h o r t t o medium term ( w i t h i n t h e next s i x months) , and t h e remainder of t h e problems can and should be r e so lved i n t h e long term ( s i x months t o one y e a r ) . Two p o s s i b l e important excep t ions f o r r e s o l u t i o n w i t h i n a yea r a r e : t h e problem invo lv ing t h e changes i n import i nvo ice v a l u e s ; and, t h e problem invo lv ing t h e l a c k of t r u s t between t h e p r i v a t e s e c t o r and Customs.

The major problem a r e a s r e l a t i v e t o t h e 7 s t e p s o u t l i n e d i n t h e I ' import-export procedures , execu t ive overview1' a r e a s shown on t h e fo l lowing 7 pages.

OBTAINING AN IMPORT LICENSE (STEP 1)

AND

OBTAINING AN EXPORT LICENSE (STEP 5)

1. There are too many agencies other than the Ministry of Industry and Trade involved in the prxess of obtaining import and export licenses.

There are approximately ten (10) agencies, other than the Ministry of Industry and Trade, which may be involved in the licensing process. Some of these agencies have more than one department involved.

Licenses should be required only for a limited number of products. There should also be "one-stopI1 service provided by the Department of Trade. To achieve the latter, there should be a delegation of authority given to this department for all of the approvals that are required for both import and export licenses. This recommendation also covers the next problem.

For further data, discussion and recommendations, please refer to Section V of this report.

2. The process of obtaining import and export licenses is too bureaucratic.

Note: Problems (1) and (2) evoked a total of 236 comments in the questionnaires which is a significant percentage (19%) of the total comments in the 800 questionnaires received from the private sector.

Whether or not these two stated problems are really problems is very subjective. The data shows that 100% of the export licenses are approved on the same day they are applied for and that 69% of the export license applications are processed at the Ministry of Industry and Trade within the same building.

The data also shows that 76% of the import licenses are approved on the same day they are applied for and that 93% of the import license applications are processed at the Ministry of Industry and Trade within the same building.

These two issues are included here as major problems in deference to the questionnaire response. However, it is believed that the large percentage of license

applications which are processed on the same day they are applied for, within the same building, really casts doubt on whether or not these issues are a major problem or just "aggravationlI items.

Both of the licensing problems would be greatly alleviated if there is a significant reduction in the number of imported and exported goods requiring a license, and if there is a "one-stopw service provided by the Department of Trade.

It should also be noted that subsequent to the November 6th import ban on certain articles, the reaction of the importing public was to anticipate further bans; and consequently, the applications for import licenses has greatly increased. This situation has currently resulted in applications being delayed.


OBTAINING BANK GUARANTEES-IMPORT RELATED (STEP 2)

AND

OBTAINING BANK GUARANTEES-EXPORT RELATED (STEP 6)

1. There are too many separate guarantee requirements, and the logistics of obtaining these guarantees is time consuming.

2. The major problem is the added expense to the importing and exporting communities for the guarantee fees.

Two major improvements that would provide immediate relief for the quantity of guarantees and the cost of guarantees would be: institute an annual bulk guarantee to cover the total estimated liability of the importer/exporter for the year; and, make the rates more reasonable so that they more accurately reflect the default rate of the community as a whole and the default rate of the individual company. The current perception is that the banks are making an unreasonable profit. This study did not cover the latter aspect.


CLEARING IMPORTED GOODS THROUGH CUSTOMS (STEP 3)

1. Customs increasing the values of import invoices.

This issue evoked the largest number of responses (14% of the- total) in the questionnaire. This is a very complex issue, and it is considered as a major problem from two different points of view. Customs agrees that they increase most invoices, but (they say) only because there are valid reasons such as: importers using F.0.B pricing versus C.1.F pricing; importers using currency exchange rates which understate the Dinar value; and, the import invoices being lower than the standard prices suggested by the data files maintained by Customs. The private sector believes that while some increases are justified, a lot of them are not.

The data shows that only 4% of import invoices are not increased, and approximately 47% of the invoices are increased in value by 1% to 10%. This magnitude of increase in the values appears to verify the Customs viewpoint regarding the use of F.0.B pricing and minor currency fluctuations. Customs should take immediate steps to reduce the need for these routine increases. This could be achieved by establishing official exchange rates that would be filled in by Customs and by considering all invoice values to be F.0.B unless the importer/broker provides proof to the contrary at the time of presenting the clearance declaration.

The key question is, how many of the invoices (49%) that are increased by more than 10% in value, are justified increases? This question does not have a definitive answer. However, based on some very detailed questioning of several Customs officials, and by the admission of several members of the private sector, it is concluded that a significant proportion of this 49% is justified.

The very high duty rates provide a "built-in1# incentive for importers to keep the dutiable values low, sometimes at the expensive of the truth. It is considered that the most effective way to promote correctly stated invoices is to increase Customst ability to determine the correct pricing and to make the importing community aware of Customs capabilities. The approach is threefold:

(A) Training the valuation personnel in the range of world market values (there are no absolute values) of commonly imported products, and ensuring that they have access to pricing information from databases, commercial attaches, etc. This could include using international inspection service companies to provide Customs with prices from their very extensive data bases.

(B) Requiring importers/brokers to provide price lists and other pertinent documentation at clearance; and

(C) Strictly enforcing penalties in the case of repeat offenders.

It is critical to'note that improvements must be made to the system to reduce the proportion of the increases which are not justified. In this regard, it would be useful to senior management in Customs if they regulariy reviewed a statistical summary of invoice increases. This would, on a current basis, give them the ability to readily identify such important facts as: which importers are regularly having their invoices increased; which officials are levying the most increases: which products are being increased: which exporters and countries of export are regularly having the values of their goods increased; and, in general, it would provide a good management tool.


There is a very noticeable lack of trust between the private and public sectors. This is especially true of the relationship between the private sector and Customs.

The private sector acknowledges that there is a significant amount of rule breaking by members of its sector, but it also acknowledges that there are many members of the private sector who do not break the regulations. These members resent Customs treating them all as rule breakers.

Customs has a great deal of factual evidence proving that there is a lot of rule breaking practiced by the private sector. As a result of this, Customs appears to have adopted an attitude that most transactions are the subject of rule breaking by the private sector.

Without question, there is a significant polarization between Customs and the private sector. Although this might never be fully resolved (after all there is a natural adversary relationship in all countries between importers/exporters and the Customs), the present situation must be improved in order to promote efficient import-export procedures.

While the solution to this problem will involve many different actions, a significant step that can be taken immediately is to establish a forum for a regular dialogue between Customs and the private sector.


3. The import-export clearance procedures are too complicated.

In addition to the historical data verifying that there are several aspects of clearing goods which complicate the procedures, a physical review of the process reveals that there are many times when it takes real perseverance by the importer/broker to successfully import into and/or export from Jordan.

The major complicating factors are: licensing; bank guarantees; clearance declarations which can routinely require more than twenty (20) signatures; an inordinate amount of sample taking and testing; and, approximately 90% of imports being done at Aqaba, while the major public sector infrastructure is in Amman.

These complications could be considerably reduced by: reducing licensing requirements; providing "one-stopI1 services at the Ministry of Industry and Trade and Customs; and, delegating more authority from Amman to the various Customs Houses.


TEMPORARY AND DRAWBACK IMPORT CLEARANCES (STEP 4)

AND

CLEARING EXPORTED GOODS THROUGH CUSTOMS (STEP 7)

1. There is a perception in the exporting community that their type of business is different from that of companies which import for domestic trade or consumption. There is also a recognition that the Jordanian economy can be improved by exporters increasing exports of goods with Jordanian material and value added content. Exporters believe that these 2 items should merit their community some extra considerations from the public sector for all aspects of the import-export procedures.

2. Certain members of the public sector are also very aware of the importance to the Jordanian economy attributable to the exporting community's activities, expecially if these activities can be carried out with as little interference from the public sector as is reasonatiy possible.

3. The problem is that the public sector has experienced many abuses by the exporting community in its use of preferential items (duty free temporary entries, etc.); and the lack of trust, as discussed in previous paragraphs, tends to come to the forefront and has an influence on the transactions.

Recommended solutions to this problem have been discussed in previous paragraphs.


Although the subject of computerization is not included as part of the project scope, it would be remiss not to comment on this. The Customs Department and other agencies involved in the import-export procedures are in the process of starting to implement various computer systems. Based on some brief observations, it appears that there is not an integrated approach being taken by the various agencies.

There is a concern that without the correct coordination between the agencies, there will arise a situation wherein the agencies will not have compatible hardware and/or software and it will not be possible to send information of mutual interest from one agency to another. This would then result in either a very inefficient use of the computer systems or, just as expensive, a need to redesign systems.

There may be a project in place to manage this issue. If not, then it is strongly recommended that such a project be considered.

RECOMMENDATIONS FOR SIMPLIFICATIONS IN THE IMPORT-EXPORT PROCESS

The simplification recommendations are listed in order of priority in the following 12 pages. Also, they are listed in order by the various agencies that-are involved in the recommended simplifications. This latter list is on pages 102 through 119.

The first aspect of improving the import-export procedures that should be examined is the lack of trust between the public and private sectors, especially between Customs and the importing-exporting community. The first 11 recommendations are directed at reducing this lack of mutual trust.

1. Customs should establish "reliabilityv1 factors for import and export clearances by using the "track record1@ of foreign suppliers, foreign countries of origin, importers, brokers, and product types. A mathematical model can be constructed which combines the various criteria, and an enquiry of the computer (or even of a manual list) will indicate to Customs what level of inspection the imports should receive. With this system, many of the imports will not be inspected at all (using this method in the United States results in 85% of imports entering the country without any Customs involvement other than processing the paperwork). This reduction in the inspection of many routine imports will also result in: the entire import process being less complicated; the importers being treated with more respect based on their documented good ntrack recordu; and, more Customs manpower being freed up to concentrate on the processing and inspection of imports with low reliability factors. This system can be achieved with a low level of computerization, or even manually.

This system will encourage mutual trust between Customs and importers; and as a result, the importers with good track records will be treated more efficiently, and the other importers wishing to receive the same treatment should improve their procedures so as to get on the good reliability list.

A separate project could be established for the implementation of this type of systen.

2. Customs should establish a forum for regular dialogue between the public and private sectors. This could be accomplished by forming a special IvOperations Committeevv which would consist of members from senior management of Customs, Ministry of Industry and Trade, the importing/exporting private sector, and the brokers syndicate. This committee should be involved in monthly meetings to review such items as: pending changes in the regulations; problems being e>:perienced as a result of current legislation; special projects; and, planning improvements for the future.

13

3. Customs should promote the elimination of many "aggravationM items, including some items which are imposed by other agencies. Some of these "aggravation'l items are:

Review the fine that is imposed when the waybill does not match the commercial invoice with regards to shipping point ;

Do not automatically treat commercial samples as suspect of being diverted to the local market. Even minute quantities of commercial samples are subjected to testing and the complete onerous import process;

Review the need to ship samples from Aqaba to Amman for a radiation check. These checks shculd be done at Aqaba;

NOTE: Customs states that radiation checks are now performed by them at their laboratory in Aqaba, and only those products failing the test are sent to Amman for further testing.

The lack of authority for Customs at Aqaba to approve temporary imports;

Eliminate the fee of 150 fils per ton to the Ministry of Agriculture. This is not just a matter of the money, it also concerns time (e.g., the fee must be paid in Amman; thus for the importer of 1 ton in Aqaba, it is necessary to go to Amman).

Eliminate the practice of fees for live and dead animals. Customs should incorporate this fee into the duty rate. This would also save a double inspection.

Liberalize the current minimum of 500 tons for use of the Aqaba refrigeration facilities. Recommend expanding the fee structure to handle smaller shipments.

Address import procedures for spare parts. Customs appears to always be concerned that the imported part will not be used as a spare part but will be sold in the market, thus evading duty.

Re-evaluate current procedures that permit Customs to lock facilities (subject to production tax) after 1 shift. This practice restricts factory owners to 1 shift and can be dangerous in the case of fire if Customs has the only key.

Address country of origin certification issues for small foreign towns that do not have a Chamber. It can be a problem for Country of Origin certification.

Do not penalize brokers for making reasonable mistakes in classifying products under the new Harmonized System. 14

Customs should change the current reward system whereby Customs employees share a significant percentage of the fines and extra duties imposed when an importer/exporter loses a ttcase.tl An alternative would be to put all of the extra revenue into the Treasury and then use these extra monies to provide salary increases to the diligent and competent Customs employees.

This would provide an incentive for all Customs employees, not just those who have an opportunity to share in "caseM money, and it would also eliminate the direct association between punishing the private sector and rewarding the public sector.

This system would also discourage Customs from trying to entrap importers into signing a document stating that the imported article is a certain classification, when Customs knows it is not, and then Customs institutes a I1caset1 and the importer is fined. The Customs official then gets a reward, and the perception of Customs by the public is tarnished.

5. Senior Customs manaqement should communicate to Customs employees interfacing with the public that their function is a vital part of establishing efficient commercial practices. They should be made aware that all unnecessary delays and added expenses to the importing/exporting community will eventually become an extra burden that the Jordanian consumer will have to bear.

6. Customs should enforce procedures to eliminate the very common practice of importers/brokers using incorrect exchange rates and F.0.B pricing instead of C.1.F pricing. This will remove the perception of unjust invoice increases for approximately 47% of the incidences.

7. Customs should provide training to valuation personnel on world price ranges (there are no absclute world prices) for commonly imported products. Also, these individuals should have access to pricing data bases and other sources which will enable them to efficiently establish reasonable values for imported products. When the importing community knows that the valuators are competent and aware of world pricing, they will be careful to correctly state invoices and this will result in trust being earned by both sides.

NOTE: Dr. Rima Khalaf enquired about information on international companies that specialize in inspection and verifying prices. There are many different opinions regarding these companies, and while they can perform a valuable function, it is the importer that ultimately bears the added expense. As suggested by ITC's Mr. Alain Chevalier, Jordan could request competitive bids to provide pricing data. In this regard, there are two points to be noted: international prices are very dynamic and can vary significantly over short time 15

periods; and, the referenced agencies specialize in ensuring that importing government agencies are not paying inflated prices. The latter is the opposite of the problem being experienced in Jordan.

8. The Minister of Finance should promote the establishment of an wombudsmanl~ function under the jurisdiction of an agency outside of Customs (perhaps under the Justice Department). The ombudsman (an independent referee) would review cases of unreasonable treatment of the importing/exporting community by the agencies involved in the import-export process.

9. Currently importers-exporters have to provide the following guarantees:

A. That the duty and license fee shall be paid on temporary imports that are sold in the domestic market;

B. That the duty shall be paid on drawback imports that are sold in the domestic market; and,

C. That the value of exported goods will be paid by the export customer.

The standard, non-recoverable charge is 5 % of the value of the guarantee. The high cost of guarantees could be reduced by allowing importers-exporters to post interest bearing bonds as surety for payment of duties, license fees, etc.

10. Customs should sponsor joint seminars and training sessions with the private sector. This will assist in establishing mutual respect.

11. The brokers should significantly raise their standards by self-regulation and education. Some actions that could be taken are:

A . Promote the establishment of academic and practical education at the universities and/or technical institutes in the fields of freight forwarding, import-export regulations, and brokerage;

B. Promote the establishment of brokers operating out of a properly equipped office, instead of standing outside of the Customs Houses with a briefcase soliciting business;

C. Obtain training from experts in classification using the Harmonized System. Do not depend on the Customs to do this. The classification of imported products is supposed to be done by the broker before presentation of clearance declarations. It is understood that brokers are reluctant to include classification numbers on the declarations because Customs can penalize them if the classification is incorrect. Customs should change this practice.

D. Do not delay import clearances by accumulating several declarations to be processed at the same time.

12. The requirements for import and export licenses should be eliminated with the exception of a limited number of products and possibly countries. Should the fees from these licenses be an important revenue item, then collect these same fees at the time of import or export.

NOTE: The import licensing system currently exists to provide a means for controlling imports. The system dates back to 1976, with its precursor originating in the 19301s. It is considered that there is no longer a need to enforce the prohibition of imports by means of an import licensing process, and that this control can be achieved by self-enforcement:, supported by formal notices to the importing community. Importers failing to heed the notices would carry the risk of having prohibited imports being refused import clearance.

13. The signature requirements for all of the other agencies and the departments within the Ministry of Industry and Trade, with the exception of the license issuing department, should be eliminated for the products that are determined to require the retention of the licensing requirement.

This can be done by giving the necessary authority to the license issuing department and providing it with guidelines that are currently being used by the other agencies and departments in the Ministry of Industry and Trade (e.g., list of products required to meet Jordanian standards).

14. There should be llone-stopll services at the Customs Houses. Customs should have control over the various agencies at the Customs Houses and these individuals should be authorized by Customs to handle most transactions without having to refer to a headquarters function. In most cases, the importing/exporting community should have to deal only with Customs at the port.

15. Customs should reduce the number of signatures on the Customs Declaration to the following:

A. Registration (1 signature), including any other functions done by the current first four signatures.

B. Inspection (1 signature), including the two-step process that the inspector currently performs by signing twice. Eliminate the practice of a manager signing to allocate an inspector and an appraiser.

C. Valuation (1 signature), including the two-step process that the evaluator currently pert~rms by signing twice. Eliminate the routine signature of the Chief Evaluator and have his signature only on Customs Declarations that

require a higher level of authority. The regular evaluator should be trained sufficiently to handle most of the valuation issues, especially with assistance from a new group of experts employed by Customs (e.g., the textile engineers).

D. Other agencies (1 signature), including the functions of agricultural marketing signature currently required and the three signatures required for samples taken by Agriculture, Health, and Department of Standards.

E. Approval (1 signature) of sample after it has been approved at the Customs House or other facilities. This would include signing for receipt of the radiation test results.

F. Classification (1 signature). Elirlinate the routine signature of the classification auditor. Customs does a 100% check at headquarters.

G. Payment of duties (1 signature). Eliminate the other two signatures currently required.

H. Final clearance (1 signature) instead of current two for final approval and clearance of the goods.

NOTE: Since July, the signatures have been reduced by four.

16. Due to the importance of promoting exports, Customs should appoint a senior member of the department to assist in solving the day-to-day problems experienced by exporters. The availability of this assistance should be made known to the exporting community.

The role of this senior Customs "expc.zt facilitator" should be as broad as possible within the context of all import-export procedures. There are, of course, other requirements for improving exports which would not be within the scope of the facilitator, some of these being: tax incentives; marketing assistance; export sales financing; education on the product needs of export markets; and training on how to establish joint ventures.

Some items of assistance that could be provided by the facilitator are:

A. Form and chair a small (no more than 10 members) group of succesful exporters, with representation from the major types of export businesses. Meetings should be held once per month, with the location being alternated between each of the members facilities.

B. At the first meeting determine a priority listing of the import-export procedures, which &re directly under the control of Customs, that can be improved. A secondary

list should be made of the import-export procedures, which are not under the direct control of Customs, that can be improved. It is very important that these lists be representative of both the private and public sector concerns.

Establish a time-table to complete the steps required to implement the improvements.

C. Work with the private and public sectors to improve the mechanical steps that can be improved quickly.

D. Possibly the single most important assistance will be communicating to the exporting community that Customs considers the development of practical, cost-effective solutions to exporting problems to be a high priority.

17. Customs should make more of an effort to place sufficient infrastructure in Aqaba where approximately 90% of the imports come into Jordan.

While it is recognized that the Customs Headquarters function will remain in Amman, the following decentralized authority and infrastructure items could be instituted in Aqaba:

A. Approval of all matters concerning temporary and drawback clearances;

B. Approval of license applications and amendments;

C. Provision of equipment to perform the routine testing that is carried out in Amman for Aqaba imports.

18. Customs should establish and utilize a reporting system which will enable them to track and manage such areas as invoice changes and delays in clearances.

19. The Ministry of Industry and Trade should review the operation of the Department of Standards with a view to reducing the amount of sample taking and testing. Also, they should not institute unique Jordanian standards unless they are absolutely required. More use shculd be made of international standards such as Underwriters Laboratory (UL) and the Canadian Standards Associaticil (CSA).

Implementation of recommendation number 1. would result in a substantial reduction in the number of samples for imports-exports. Until such time as this first recommendation is implemented, sample taking could be significantly reduced by increasing the cycle time between samples for products from companies that are internationally recognized as being high quality companies. This approach would result in much less sampling of imported products.

NOTE: It was observed by several members of the public and private sectors that the Department of Standards is expanding unnecessarily and that this growth is resulting in excess samples being taken. This does appear to be a legitimate concern.

20. The Department of Standards should make readily available to the importing/exporting community the Jordanian standards.

21. The importers should make these Jordanian standards available to their suppliers. This procedure should be enforced by the Department of Standards.

22. Customs should establish uniformity in classification to reduce to a minimum the number of times that imports are given different classifications by different individuals.

23. Customs should establish a classification arbitration committee to handle the volume of classification issues that will arise as a result of implementing the new Harmonized System of classification on January 1, 1989. Additionally, during the first year (possibly longer) of using the Harmonized System, there should be a monthly meeting of importers, brokers, and Customs, with Customs providing a review of the previous month's classification decisions and the technical reasons for the decisions. This will enhance the private sector's understanding of the new classification system and also give that sector an opportunity to contribute constructive comments.

24. Customs should evaluate the administrative procedures for the protection of Jordanian manufacturers. Two examples cited were:

A. A manufacturer of paint (for export) imports a resin that is not made in Jordan. He must pay duties because another Jordanian company makes a resin (this product is not the same as the imported resin); and

B. The same paint manufacturer must buy Jordanian-made cardboard cartons to use in exporting paint. These are 30% more expensive than cartons from Saudi Arabia.

25. Customs should sponsor an objective for Jordan to become a signatory to the General Agreement on Tariffs and Trade (GATT). The GATT has evolved, over a long period of time, many procedures for the inspection, classification and valuation of imported products.

26. Customs should address current procedures requiring importers to forward shipments arriving at Alia to Aqaba for Customs lab inspection. Where possible, imports arriving by air should be inspected at Alia or Amman.

27. The Department of Standards should promote procedures that will permit pre-clearance of samples.

28. Customs should administer the policy of clearing food products at Aqaba within two days. Those products are not being cleared within the specified time period.

29. Customs should standardize the data requirements on import documentation (e.g., state the BTN and the ingredients on the import invoice).

30. Customs should establish higher export inspection standards. Inspectors of exported products are not always as careful as they should be. This results in damage being done to the exported product.

31. Customs should review the requirement for re-export authorization for goods imported under a temporary import status.

32. There is a 100% audit of Customs Declarations at Customs headquarters. This should mean that other individuals may not be performing audit functions.

33. Customs should enforce the practice of typing and proofreading all Customs Declarations to reduce the clerical errors caused by handwritten documents.

34. Changes affecting the import-export process should be phased in at regular periods. There are too many regulation changes from all of the agencies involved in the import-export process. It is very difficult for Customs to stay current. The Ministry of Finance should assist Customs in implementing this plan with the other agencies.

35. The current Customs computerization g.zogram should be continued and enhanced to include comnercially available data bases that are easy to program and use.

36. The recently started program of ffconditional releaseu of goods while awaiting lab results should be continued as well as improved upon.

37. It should be mandatory that brokers subscribe to all of the regulations that affect the services they provide.

38. Customs should not issue any new broker licenses until there is a reduction in current licenses. It is apparent that the number of brokers per capita is very high (e.g.! if the same per capita ratio existed in Jordan that exists In the United States, there would be approximately 15 broker companies in Jordan versus the actual number of 172.) Jordanian per capita ratio is over 10 times that of the U.S.

39. There must exist a better sense of commercial practice in the Customs regulations and the individuals dealing with the import-export process (e.g., if it is suspected that an importation of samples may be diverted to the marketplace, then there should be a simple procedure for the articles to be I1damaged1@ by Customs prior to clearance. This will make the sample unsuitable for sale.) Additionally, samples of small quantities should be duty-free and cleared without the normal tests (e.g., if a legitimate paint seller/manufacturer imports several cans of paint or other substances that are used to make paint, then these should be treated as truly commercial samples with no commercial value.)

There, of course, has to be a rule of reasonableness in this procedure to prevent an importer from importing samples on a daily basis when it is known that there is no commercial need to do so. In this case Customs indivi:iuals well trained in commercial practices would be able to quickly and efficiently resolve any disputes.

40. It should be mandatory that all practicing brokers attend a minimum number of training hours per year. Both the private and public sectors should teach these training sessions.

41. The importers/exporters whose practices and documentation are excellent should be identified and called upon to provide training seminars for the private sector.

42. Customs should enforce the stricter penalties and jail sentences for repeat offenders of serious offenses such as smuggling.

43. Customs should encourage computerization in the private sector, especially by the brokers. Customs would be able to transmit regulation changes and other important information to the private sector on a very timely basis by means of modems.

44. The Central Bank should clarify the regulation in Chapter 13, article 88, paragraph b. of the Central Bank Regulations. Many exporters do not understand that this regulation enables them to consign products to foreign distributors with the payment not being due until they, the Jordanian exporter, are paid by the foreign distributor.

45. The recent changes to the drawback regulations are excellent, and they have created an immediate incentive for companies to use drawback, as evidenced by the 30 companies that have just started to do so. This number compares to 1 company that was using drawback under the old regulations.

Additional improvements could be made to the drawback regulations that would encourage Jorchnian companies, which normally import duty paid raw materiils for manufacture and sale in the domestic market, to break into foreign markets

with the sale of production that is in excess of domestic needs. The mechanical steps involved in these improvements are :

A. Make optional the requirement to declare imports as being destined for duty drawback. This would alleviate the current situation of being able to claim drawback only on exports that have been imported for drawback.

B. Obtain Customs approval for drawback prior to exportation of products that contain duty-paid imported materials.

C. Develop straightforward formulae for claiming duty drawback on the valueless and valuable wastes that result from the Jordanian manufacturing process. This is known as claiming drawback on a basis of "appearing in,n ''used in," or "used in, less valuable waste." Initially establish national standards by industry or product and revise them only when the system is running smoothly.

This is currently being partially achieved by the use of manufacturing coefficients. The administration of these coefficients can be cumbersome and the system could be improved.

D. Allow substitution of Jordanian product in the exported duty drawback product to encourage use of domestic materials. This is a common world standard.

E. Allow drawback on the exportation of articles which are exported in the same condition as they were when imported. This would be applicakLe fir the exportation of imported spare parts which are not involved in a ~ordanian manufacturing process.

46. With the improved drawback regulations, it now appears that there are more benefits to using the drawback import system instead of the temporary import system. Further, there is no clear distinction between what imports should use one system versus the other. It is recommended that all of the benefits of the new drawback regulations be incorporated into the temporary import procedures, and that the drawback regulations focus on the exporters getting duty drawback on the exportation of duty-paid goods. This could be achieved by implementing recommendation number 45.

Implementation of this recommendation (number 46.) would also provide a clear distinction between temporary imports and drawback imports. That is, any import-ed goods with a high probability of being subsequently exported would be cleared as a temporary import (under the improved temporary import system), and drawback would be used for imported duty-paid goods which are exported.

One important exception to implementing all of the benefits of the new drawback system under a new temporary import system would be the ability to transfer the non duty-paid imported goods into the domestic market without prior approval by Customs. If this were allowed, it could very easily result in abuses by the exporters to save cash flow on duty payments.

STATEMENT OF PROJECT CHRONOLOGY

The chronological steps in the project are as follows:

1. Meeting with the Steering Group to agree on the basic approach to the project.

2. Conduct interviews with the private and public sectors to determine the viewpoint of each and to document the various mechanical processing steps needed to import goods into and export goods from Jordan.

3. Prepare a preliminary report, based on the interviews, including preliminary recommendations for simplification of the import-export procedures.

4. Design a questionnaire for obtaining comments from the importing-exporting community and the public sector.

5. Design forms to be used for collecting historical and ttlive't data on: the time to obtain import and export licenses; the problems involved in getting these licenses, especially relative to the involvement of other than the primary agency; the time to clear imports and exports through Customs; and, the problems involved in clearance, especially relative to the involvement of agencies other than Customs.

6. Meet with the Steering Group to review the preliminary report, the draft questionnaire and the draft data collection f oms.

7. Distribute questionnaires and collect data.

8. Analyze the questionnaires and the data samples.

9. Meet with primary agencies (Customs and Ministry of Industry and Trade) to discuss the data.

10. Draft recommendations for simplification of the import-export procedures based on all interviews and data analyses.

11. Prepare a draft of the final report for a November 26th review by the Minister of Planning.

12. Submit the final report by the week of December 19th, 1988 to Dr. Rima Khalaf at the Ministry of Planning.

INITIAL INTERVIEWS - GENERAL

During the process of reviewing the import-export procedures from June 29th through July 16th, a working group of ten (10) people performed the tasks and approximately 80 people were interviewed. Several of the 80 were intemiewed more than once.

The interviews contained a great deal of emotional reaction and animosity from both the private and public sectors towards one another. At first, this made it very difficult to distill the results of the interviews into any meaningful conclusions. However, by balancing the interviews between the two sectors, meaningful conclusions and recommendations were derived.

The November interviews involved only Customs, the Ministry of Industry and Trade, and the Chamber of Industry (by telephone).

INITIAL INTERVIEWS - PRIVATE SECTOR

The private sector members interviewed included importers, exporters, and brokers.

The interviews with the private sector resulted in the statement of several problems and solutions as presented herein.

It is stressed that the following problems and suggested solutions are as stated by the private sector. They do not contain any opinions of the consultant or the working group.

1. The first major problem is the complete lack of mutual trust between the private and public sectors (e.g., Itthe attitude of Customs is harsh and almost always full of suspi~ion~~ and vlCustoms treats us as guilty until proven inno~ent.~)

The major effects of this lack of trust are: the frequency with which Customs does not accept the invoice values; and the large number of fines and penalties for situations that are not mistakes (e.g., an importer gets a product from Vienna which has to be loaded on a ship in Germany but there are no ports in Austria. In this case, the importer is fined 5% because the waybill does not correspond to the commercial invoice. )

The major solutions suggested are:

A. Reduce the duty rates to lower than the current average rate of 65%. There would be fewer attempts at cheating and, consequently, mutual trust could be established.

B. Increase the severity of fines and penalties, including prison terms for repeat offenders, for smuggling offenses. This would create a big incentive to be honest and would thus foster mutual trust.

C. Consider specific rates of duty instead of ad valorem. This would take away the incentive for false' invoicing and thus encourage trust.

NOTE: This is done in Mexico and Switzerland on the basis of weight (e.g., duty on a kilo of foodstuffs is 1, etc.)

D. Change Customs approach as was done by the income tax service a few years ago. The trust process may be initiated with Customs adopting t:he attitude of "innocent until proven guilty.I1

E. Increase the experience level of Customs. Experienced individuals would be able to differentiate between the real cheaters and clerical errors.

F. Create segregation of Customs responsibilities towards industrialists versus traders and other importers. There are unique problems encountered by industrialists and thus unique skills are required to handle these problems.

2. The second major problem is the lack of "one-stop" service for all of the steps in the import-export process. The major solution is for Customs to control all of the agencies at the Customs Houses and for the Ministry of Industry and Trade to control the complete licensing process.

The third major problem is the very large number of signatures required on documents (e.g., a minimum of 19 signatures are required on a Customs Declaration for the simplest of products which have no need to be checked by any agency other than Customs.) The number of signatures can very easily exceed 25 for an agricultural product that has no known problems. The numbers get higher. It has been known for a Customs Declaration to contain over 100 signatures!!

4. The fourth major problem is the procedure whereby Customs employees (through the highest level) can share 40% of fines and extra duties when an importer-exporter loses a vcase." This practice encourages Customs to make ncasesll and results in clearance delays and undue expenses. This should be discontinued immediately and 100% of the fines should go to the Treasury.

The following is a list of other problems and suggested solutions that were stated by the private sector:

1. Establish uniformity in practice at the various Customs Houses. Customs should provide more training for personnel.

2. Eliminate the practice of a fee of 150 fils per ton to the Ministry of Agriculture. This is not just a matter of the money, it also concerns time (e.g., the fee must be paid in Amman, requiring the importer to go to Amman for imports of 1 ton in Aqaba.)

3. Eliminate the practice of fees for live and dead animals. Customs should incorporate this fee into the duty rate. This would also save a double inspection.

4. Re-evaluate the procedures for sending samples from Aqaba to Amman for a radiation check. This is expensive and very time consuming. The procedure should be centralized at Aqaba where 90% of the requirement exists.

5. Redefine authority structure. Agriculture, Health and Standards personnel at the Customs Houses have little or no authority, even to clear product that is imported on a routine basis.

6. Re-evaluate the requirement for separate import licenses (e.g., the importation of trousers, jackets, and shirts requires three separate licenses. This is also the case for duty-free imports from Syria.)

NOTE: At a meeting held July 17th, Ministry of Industry and Trade said these separate licenses are no longer required.

7. Streamline the import licensing procedures (i.e., one should not have to go from Aqaba to Amman to make a change to an import license.)

8. Liberalize the requirement for use of Aqaba refrigeration facilities for a cargo of less than 500 tons.

9. Establish fair arbitration practices on classification issues.

10. Establish uniformity in classification (e.g., often routine imports are given different classifications by Customs.)

11. Publicize foreign standards information to the importing and exporting public.

12. Re-evaluate the bonded facilities operations. The problems encountered are so great that people do not use these facilities.

13. Develop an atmosphere of cooperation hetween Customs and the importing community. There is often a hostile attitude displayed by Customs, and it is not unusual for them to intimidate the private sector.

14. Address import procedures for spare parts. Customs appears to always be concerned that the imported part will not be used as a spare part but will be sold in the market, thus evading duty.

15. Establish improved import procedures for duty-free entry of commercial samples. Currently Customs suspects that the samples will be sold in the market and thus evade duties.

16. Eliminate bank guarantees for proof that exported products are received by the foreign customer.

17. Re-evaluate administrative procedures for the protection of Jordanian manufacturers. Two examples cited were: (1) a manufacturer of paint (for export) imports a resin that is not made in Jordan. He must pay the duties because another Jordanian company makes a resin. This resin is not the same as the imported resin; and (2) the same paint manufacturer must buy Jordanian-made cardboard cartons to use for exporting paint. These cartons are 30% more expensive than cartons from Saudi Arabia.

18. Become a signatory to the General Agreement on Tariffs and Trade (GATT).

19. Increase the quality standards for exports to ensure high quality Jordanian goods.

20. Re-evaluate current procedures that permit Customs to lock facilities (subject to production tax) after 1 shift. This practice restricts factory owners to 1 shift and can be dangerous in the case of fire if Customs has the only key.

21. Address the country of origin certification issues for small foreign towns that do not have a Chamber. It can be a problem for country of Origin certification.

22. Address current procedures requiring importers to forward air shipments to Aqaba for Customs lab inspection. This results in additional expenses.

23. Establish procedures that will pennit pre-clearance of samples with the Department of Standards.

24. Administer the policy of clearing food products at Aqaba within two days. Products are not being cleared within the specified time period.

25. Have Customs treat the constituents of food products as being food products.

26. Address the issue of expediting Customs clearance processes. Delays in clearing imports can result in a significant portion of the shelf life being consumed and at times even require re-export.

27. Standardize data requirements on import documentation for industrialists ( e . g . , state the BTN and the ingredients on the import invoice.)

28. Expedite the export clearance process. Export clearance processing takes two days. This is too long and could be expedited if Customs had people more expert in exported products.

29. Increase availability of Customs officials for problem resolution.

30. Re-evaluate the requirement for two bank guarantees for temporary imports and production tax.

31. Establish export inspection standard:;. Inspectors of exported products are not always as careful as they should be, and this results in damage being done to the exported product.

3 2 . Expedi te process ing t i m e t o reduce t h e added t r u c k i n g expense. Approximately 2 0 % of t h e t ime, t r u c k s c a r r y i n g expor ted product must s t a y overn ight a t t h e Customs House.

3 3 . El imina te t h e requirement f o r re -expor t a u t h o r i z a t i o n f o r goods imported under a temporary import s t a t u s .

3 4 . E l imina te t h e requirement t h a t a D i r e c t o r a t t h e Min i s t ry of I n d u s t r y and Trade s i g n a l l import l i c e n s e a p p l i c a t i o n s f o r impor ts from Arab c o u n t r i e s .

INITIAL INTERVIEWS - PUBLIC SECTOR

The interviews with the public sector resulted in the statement of several problems and solutions as presented herein.

It is stressed that the following problems and suggested solutions are as stated by the public sector. They do not contain any opinions of the consultant or the working group.

1. The public sector individuals were not unanimous that the major problem is a complete lack of mutual trust between the private and public sectors. Although several Customs officials stated that there is a big trust problem, most of them went on to point out specific instances where they had caught someone smuggling. This places the responsibility for the lack of trust onto the private sector. Generally speaking, Customs did not agree that they consider the private sector as l1guilty until proven innocent.I1 There was general agreement that a lack of trust: between the private and public sectors is a significant problem.

The major solutions suggested were:

A. To reduce the duty rates tp lower than the current average rate of 65% (rates prior to November 6, 1988). There would be fewer attempts at cheating and, consequently, mutual trust could he established.

B. For people to obey the laws of the land and stop smuggling.

2. Establish a "one-stoptt service process. There are too many agencies involved in the import-export process. The need to go from Ministry to Ministry should be replaced by "one-stopll service.

3. Establish centralized control by Customs over all agencies at the Customs Houses.

4. Educate Customs on international pricing structures. There is a great deal of evidence which shows that false invoicing is a major problem (several examples were cited where the importer was caught with "no shadow of a doubttt). The major suggestions for solving this problem were: for Customs to have more knowledge of world pricing - this will discourage the use of false invoices; and for Cc.stoms to lower the duty rates.

5. Educate brokers on import-export procedures. Many brokers are not technically competent in the tariff or import-export procedures.

6. Require Customs brokers to have an est-ablished place of business. Some brokers operate out of a briefcase and do not have any facilities to keep regulations pertaining to their services.

The following is a list of other problems and suggested solutions that were stated by the public sector:

1. The phasing out of protectionism. This will result in more efficient private sector operations for domestic and export sales.

2. Many importers routinely import products which they know are not acceptable to Jordanian standards (e.g., those with lack of labelling).

3. The private sector many times does not understand the need for certain controls (e.g., a major shoe manufacturer was not authorized a license to import a machine that could have put out of business approximately 300 small shoe manufacturers.)

4. Many importers apply for multiple licenses to save cash flow on the 5% import fee.

5. Brokers and/or importers cause procedural delays by not expediting the flow of documentation.

6. Certain agencies have more people than they need, which encourages too many signature approvals.

7. Importers do not provide their foreign suppliers with Jordanian standards. This causes problems at the time of importation.

8. There are too many brokers for the volume of transactions. This quantity should be reduced.

9. The attitude of some Customs officials is that the importers can afford to have invoice values increased.

lo. Many brokers do not complete the Customs Declaration correctly (e.g., they routinely do not fill in the tariff number) .

11. Customs trusts only about 20% to 30% of the importers.

12. The duty rates are too high, which ercourages smuggling.

13. Some importers cannot afford to give correct invoices because they would not be competitive in the market.

14. The duty drawback system is not efficient and is not being used.

There is a 100% audit of Customs Declarations at Customs Headquarters. This suggests that other individuals need not be performing audit functions.

There is no need for the Customs House to keep track of the balance on an import license.

There is too much interference by other agencies in the Customs function.

There is a problem with Arab countries not recognizing a Certificate of Origin for goods produced in a Free Zone. This reduces exports.

Jordan should use international standards wherever possible (e.g., if importing a product from Canada, then use the Canadian standard, if appropriate).

The practice of typing all Customs Declarations has not yet been achieved.

Many laboratories do not send sample results to Customs.

The temporary import system is frequently abused.

There are too many regulation changes from all of the agencies involved in the import-export process. This makes it very difficult for Customs to stay current.

COMMENTS ON INITIAL INTERVIEWS

As can be determined by reviewing the tasks stated on the first page of this report, the foregoing interviews covered the first two tasks. Some applicable comments are:

1. Observations of the process and discussions with officials lead to the conclusion that there are indeed many problems for the private sector in the import-export process.

2. The statement of the major problems by both sectors is essentially correct.

3. It is considered that the lack of mutual trust is something that has existed for a very long time. It is to a significant degree based on factual events such as smuggling by some of the private sector and high duty rates coupled with certain inefficiencies on the part of the public sector. This latter item is certainly not the exclusive domain of Customs. There are at least 10 other public sector agencies involved in the import-export process.

4. It appears that both sectors are ready and willing to make immediate improvements.

5. Definite signs were seen of planned improvements by Customs (e.g. conditional import clearances while waiting to resolve delays; the introduction of a new Customs Declaration; and, the introduction of computerization).

6. Everyone interviewed was very cooperative.

INVOICE VALUE INCREASES BY CUSTOMS

HISTORICAL DATA FOR CUSTOMS CLEARANCE DECLARATIONS

DATA COLLECTED BY MINISTRY OF PLANNING

AQABA TRANSIT

..................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE

OF AS A PERCENTAGE DECLARATIONS 0% 1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................

Total original value of the 98 declarations: 5,922,163

Total uplifted value of the 98 declarations: 8,443,700

Total JD. uplift: 2,521,537

Average percentage uplift: 43%

AQABA OTHER



Total original value of the 17 declarations: 244,290

Total uplifted value of the 17 declarations: 291,115

Total JD. uplift: 46,825


AQABA RE-EXPORT


OF AS A PERCENTAGE DECLARATIONS 0% 1 - 5 % 6 - 1 0 % 1 1 - 2 0 % 2 1 - 3 0 % OVER30% .....................................................................





AQABA FREE ZONE


OF AS A PERCENTAGE DECLARATIONS 0% 1 - 5% 6 - 10% 11 -- 20% 21 - 30% OVER 30% ..................................................................... .....................................................................



Total JD. uplift:

Average percentage uplift:

AQABA LOCAL SALES

...................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE

OF AS A PERCENTAGE DECLARATIONS 0% ,1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................

Total original value of the 10 declarations:




AQABA CONSUMPTION (INCLUDES TEMi'ORARY IMPORTS)

..................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE OF AS A PERCENTAGE

DECLARATIONS 0% 1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................



Total JD. uplift:

Average percentage uplift: 4 %

AMMAN CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

-------------- --------------========ia=ia~3~3~=i=i=====i=i=i=i=i=3~==i=i========================= NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE




Total JD. uplift:


TOTAL DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

..................................................................... ...................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE






TOTAL OF ALL SAMPLE DECLARATIONS

..................................................................... ..................................................................... NUMBER INVOICE QUANTITIES BY RANGE OF INCREASED VALUE OF AS A PERCENTAGE

DECLARATIONS 0% 1 - 5% 6 - 10% 11 - 20% 21 - 30% OVER 30% ..................................................................... .....................................................................



Total JD. uplift: 3,267,638


Percentage of sample uplifted by 0%: 4%

Percentage of sample uplifted from 1 to 5%: 40%




Percentage of sample uplifted by more than 30%: 3 2 %

COMMENTS ON DATA FOR INVOICE VALUE INCREASES

Although the data does not show the reason for the value increases, it is useful to consider the following:

1. It appears to be significant that only 4% of the sample declarations were not subject to any increases.

2. The large percentage (47%) of uplifts in the 1% to 10% range could be accounted for by the difference between F.0.B and C.1.F pricing and inaccurate exchange rates.

3. It also appears to be significant that 32% of the sample declarations were increased in excess of 30%, while 49% were increased in excess of 10%.

4. The data does not provide a definitive answer as to whether or not the increases are justified due to undervalued invoices or if they are as a result of Customs1 desire to increase for the sake of increasing or for the sake of revenues.

It appears that the increases were not the result of any I1cases. Customs individuals would not have benefited financially from arbitrary uplifts.

5. The Amman increases could be higher than those at Aqaba because many of the problem valuation issues are settled in Amman.

6. Transit increases may be high due to the practice of the brokers not wishing to have their transit guarantee amounts used up. It appears that documentation for transit goods often does not include invoices, just packing lists. Correct value is not a priority conceirn. These increases do not result in any duties since the goods are treated as duty- free.

The invoice increase data certainly verifies the 172 comments made in the questionnaire that Customs increases over 90% of a.11 invoices.

NUMBER O F DAYS FOR CUSTOMS CLEARANCE DECLARATIONS

H I S T O R I C A L DATA SHOWS THE AGENCIES INVOLVED

DATA COLLECTED BY M I N I S T R Y O F PLANNING

The data herein is based upon an I1approximatel1 translation (by Khaled Rababa of the Customs Department) of an original Arabic document. The original document was prepared by the Ministry of Planning.

AQABA DECLARATIONS FOR TRANSIT

The sample size is 88 out of a population of 8127 for the period (i.e., 1%).

..................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES

DECLARATIONS SPECIFIC NUMBER OF

% 1-2 3-6 7+ DAYS(D) *1 * 2 *3 *4 * 5 *6 *7 *8 *9 ..................................................................... ...................................................................... 39 44 39

..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY

*2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER

The original data did not give details of the other agencies involved in any of the declarations. Also, there was no indication of how many of the total 88 declarations involved only Customs.

AQABA DECLARATIONS FOR RE-EXPORT




% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 * 8 *9 ..................................................................... ..................................................................... 12 19 12

..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY



AQABA DECLARATIONS FOR FREE ZONE

The sample size is 55 out of a population of 435 FOR THE PERIOD (i.e., 13%).

..................................................................... ..................................................................... QUANTITY C L E W C E PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES


% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... ...................................................................... 8 15 8

55 100 8 47@3-256D 7 15 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY


Original data did not give details of the other agencies involved in the 3 declarations that took from 94 to 256 days to complete. Also, there was no indication of how many of the total 55 declarations involved only Customs.

AQABA DECLARATIONS FOR BONDED WAREHOUSE




% 1-2 3-6 7t DAYS(D) *1 * 2 *3 *4 *5 *6 *7 * 8 *9 ..................................................................... ..................................................................... 3 75 3

4 100 3 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY



AQABA DECLARATIONS FOR AUCTION CUSTOMS


...................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES


% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 * 8 *9 .....................................................................

14 67 14

21 100 14 ..................................................................... ..................................................................... LEGEND *1: NO OTHER AGENCY

*2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9 : OTHER


AQABA DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 395 out of a population of 32,855 for the period (i.e. 1%).



% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 * 5 *6 *7 *8 *9 ..................................................................... .....................................................................

28 7 28 12 G 2

183 52 46 13 18 37 13 4 VET

18@3+D

395 100 28 163 183 21@ 130 106 13 39 61 13 4 4-llOD ..................................................................... .....................................................................

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7: CUSTOMS LABORATORY *8: RSS *9: OTHER (VET IS VETERINARY DEPARTMENT)

AMMAN DECLARATIONS FOR CONSUMPTION (INCLUDES TEMPORARY IMPORTS)

The sample size is 199 out of a population of 29,133 for the period (i.e., 0.7%) . ------i-------------------------------------------------------------- ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED OF IN DAYS BY OTHER AGENCIES


% 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... ..................................................................... 84 42 84 43 7 1 2 9 3 2

3 7 VET

3 2 MH

4 5 lVET 4 MH

6 9 19 12MH 2MS lMIT 4VET

199 100 84 47 68@ 90 59 17 55 9 6 14 19 33 7-ll+D ..................................................................... .....................................................................

LEGEND *1: NO OTHER AGENCY *2: DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE *3: DEPARTMENT OF STANDARDS AT MINISTRY *4: DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE *5: MINISTRY OF AGRICULTURE *6: MINISTRY OF INFORMATION *7 : CUSTOMS LABORATORY *8: RSS *9: OTHER (VET IS VETERINARY DEPARTMENT; MH IS MINISTRY OF

HEALTH; MS IS MINISTRY OF SUPPLY; MIT IS MINISTRY OF INDUSTRY AND TRADE)

TOTAL OF ALL DECLARATIONS FOR AQABA AND AMMAN

The sample size is 828 out of a population of 71,706 for the period (i.e., 1%).

..................................................................... ..................................................................... QUANTITY CLEARANCE PERIOD QUANTITIES PROCESSED

OF IN DAYS BY OTHER AGENCIES DECLARATIONS SPECIFIC

NUMBER OF % 1-2 3-6 7+ DAYS(D) *1 *2 *3 *4 *5 *6 *7 *8 *9 ..................................................................... .....................................................................

188 23 188 55 13 1 31 3 2

89 74 2 24 4 3 24 3 7 VET

2 3 3 2 3 2 MH

1 4 2 5 4 5 lVET 4 MH

VET

Legend on next page.

LEGEND *1: * 2 : *3 : * 4 : *5: *6: *7: *8: *9:

NO OTHER AGENCY DEPARTMENT OF STANDARDS AT CUSTOMS HOUSE DEPARTMENT OF STANDARDS AT MINISTRY DEPARTMENT OF AGRICULTURE AT CUSTOMS HOUSE MINISTRY OF AGRICULTURE MINISTRY OF INFORMATION CUSTOMS LABORATORY RSS OTHER (VET IS VETERINARY DEPARTMENT; MH IS MINISTRY OF HEALTH; MS IS MINISTRY OF SUPPLY; MIT IS MINISTRY OF INDUSTRY AND TRADE)

COMMENTS ON DATP. FOR CLZARANCE DECLARATIONS

Due to the ommission of the date when signing the various documents involved in a Customs Declaration, it is not possible to determine from historical data how long the document spends in each department or agency. This being the case, it is not possible to directly relate the delayed clearances (anything over 2 days) to any specific agency.

In spite of this limitation, some inferences can be made from the summary data on the number of days it took to complete the Customs Declarations, especially if the historical data is considered in light of the I1liveH data which indicates that delays (arbitrarily defined herein as a period in excess of two days) are a function of the other agency involvement.

Prior to stating inferences, it is important to note that 77% of the clearances are delayed (i.e., they ta1:e more than two days). Other agencies were involved in 360 of the 640 clearances which took more than two days for clearance.

The first inference is that 56% of the delays may have been caused by other agencies.

It should be noted that the I1livel1 data (starting on the next page) presents more detailed information showirq that approximately 40% of the delays were caused by the importers and/or brokers.

import export procedures in jordanpdf.usaid.gov/pdf_docs/pnabc091.pdf · import - export procedures...

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