Simplicity cuts business costs

Simplifying customs procedures is significant in lifting restrictions and burdens that unnecessarily add to traders’ cost of doing business and cause undue delays at borders.

The cost of doing business has been one of the complex phenomenons for most small economies to manage which sometimes dash investors’ hope of making profits.

Various studies show that where the investment climate is hostile, businesses face many challenges such as decline of profit margins and multiplicity of taxes consuming too much of cash flow. 

The Assistant General Manager with the Said Salim Bakhresa Group, Mr Hussein Sufian Ally, said in an interview that the cost of compliance and multiplicity of permits especially at border posts have been the major challenge haunting businesses in the region.

“The bottlenecks sometimes make it difficult to meet clients’ orders, supply of raw materials to the company’s factories, increased costs for undue delays in the border posts,” remarked Mr Ally last week at the launch of Authorized Economic Operator (AEO) scheme in Dar es Salaam.

The AEO programme launched in Dar es Salaam on Wednesday is an entity involving importers, clearing agents, transport companies authorised to import and move cargo within the EAC region with minimal inspections and other customs interventions at checkpoints.

Mr Ally said the implementation of the AEO programme will revolutionalise business activities by boosting profit margins and on the other facilitate attraction of potential investment opportunities to the EAC region.

Customs administration are not only important actors when securing and facilitating international trade but also support efficient and transparent crossborder management that would ultimately result into reduced risks for corruption.

The essence of AEO programmes in the EAC region is designed to reward companies that establish themselves as “low risk” importers with faster cargo clearance, so that the revenue authorities can focus their resources on higher risk importers.

The Tanzania Revenue Authority (TRA) acting Commissioner of Customs and Excise, Mr Patrick Kisaka said two local firms of Said Salim Bakhresa & Co Ltd and Super Star Forwarders Co. Ltd will be involved in the three months AEO pilot project where a total of 13 companies across the region have been slated for the AEO pilot project.

The AEO status can provide companies with significant competitive advantages in terms of supply chain certainty and reduced import costs. In the long run, it will be reflected in reduced costs of products to the final consumer. 
The government called upon the business community to take advantage of the AEO scheme that targets to cut down costs of doing business in the East African member states.

This was said by Permanent Secretary in the Ministry of East African Cooperation Dr Stergomena Tax who made the remarks at the launch of the World Customs Organisation (WCO)-AEO pilot programme. 

“The AEO status can provide companies with significant competitive advantages in terms of supply chain certainty and reduced import costs and finally to the final consumer,” she said, adding that, “EAC business community should enjoy the creation of a wider market of the products and attraction of new investments.”

Apart from reduced transport costs, Dr Tax said the programme would also pull down storage charges which are subject to minimal customs border inspections as well as few checkpoints or road blocks for transit goods.

The Swedish Ambassador to Tanzania Mr Lennarth Hjelmaker said the AEO scheme is a broader compliance strategy to reward compliant traders with simplification benefits which are concrete and predictable. 

“Regional integration and cooperation are factors which are important for development, including creation of favourable conditions under which private sector can operate and provide for economic growth with focus on sustainability,” he said.

Sweden through the Swedish International Development Cooperation (SIDA) has been supporting the work carried out the WCO-EAC-AEO Programme since 2008. 

“I note that the Swedish support to the EAC customs modernization project will enable the creation of a forum to promote imports and export into the region by introducing the AEO framework,” he said.

Speaking on behalf of TRA Commissioner General Mr Saleh Mshoro, the revenues body’s Finance Director said efficiency and effectiveness of customs procedures can significantly stimulate the nation’s economic competitiveness. 

The launching of AEO programme marks the beginning of a journey between the region’s revenues authorities and the business communities in facilitating smooth and win win trading activities.
Source: The Daily News, reported by Sebastian Mrindoko in Dar es Salaam
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