Paperless Trade in ASEAN: A Long Way To Go
Digitalising paperless trade across ASEAN will help the grouping strengthen supply chains amid the Covid-19 pandemic. But ASEAN has a long way to go.
The ongoing Covid-19 pandemic, especially the highly infectious variants such as Delta and Omicron, has reinforced the importance of digitalising trade procedures to strengthen regional trade recovery. Accelerating the use of cross-border paperless trade in ASEAN is essential to mitigate the risks of supply chain disruptions caused by the pandemic.
If cross-border paperless trade in the form of the ASEAN Single Window (ASW) is fully implemented, it should make intra-regional trade simpler, cheaper and more resilient. This would help to boost the region’s competitiveness. At the 53rd ASEAN Economic Ministers’ Meeting on 8–9 September 2021, regional leaders highlighted the need to accelerate digital economic integration.
The full implementation of the ASW will help mitigate the supply chain disruption caused by the pandemic. For example, a survey by the Business Continuity Institute reveals that 39 per cent of firms in 2020 experienced delays in cross-border land transportation due to lockdowns as well as testing and quarantines of truck drivers. The ASW enables traders and other economic operators — transporters, logistics firms, freight forwarders and customs brokers — to submit all trade-related documents electronically, and only once, for each occurrence of their exports or imports. Such documents are then processed electronically by the regulatory authorities either at the office or home.
The ASW should also reduce the time and cost for both the public and private sectors. Trade information submitted to the ASW via the national single windows (NSWs) of participating countries can be exchanged or made accessible to all relevant government authorities for processing. This eliminates the need for the business to make multiple submissions of the same information or documents. The authorities’ responses can be returned to the applicant via the same single-entry point. In the absence of ASW, a business must approach each border authority separately — often physically at different offices or locations — and provide the information or documents required using the relevant forms, procedures and systems.
The ASW is a stepping stone to more efficient regional supply chains. According to the ASEAN Secretariat, all ASEAN countries have joined the ASW’s live operation, which in 2020 allowed more than 800,000 electronic exchanges of certificates of origin for granting preferential tariff treatment among member countries under the ASEAN Trade in Goods Agreement. ASEAN is also seeking to expand the types of trade-related information exchanged. Five ASEAN countries, namely Cambodia, Myanmar, Singapore, Malaysia and Thailand, have exchanged customs declaration documents through the ASW. The other five ASEAN countries are expected to join this year.
If cross-border paperless trade in the form of the ASEAN Single Window is fully implemented, it should make intra-regional trade simpler, cheaper and more resilient. This would help to boost the region’s competitiveness.
While the ASW is the holy grail for regional paperless trade, challenges remain. Work-from-home directives stemming from Covid-19 control measures means that some regulatory authorities in the ministries of trade, health or agriculture have to provide public services from different locations. Such services might not be fully available to process paper documents submitted by traders. This increases the risks of disrupting supply chains in food and medical supplies, which have become even more essential.
When it comes to paperless trade, ASEAN has some way to go. The UN Global Survey on Digital and Sustainable Trade Facilitation in 2021 reveals that ASEAN has not reaped the potential benefits of cross-border paperless trade. The grouping’s member countries are in different stages of implementing their NSWs and cross-border paperless trade measures. First, while the NSWs in ASEAN countries have been established, half of them have not yet been fully implemented. Laos is in the planning stage. Cambodia, Myanmar, the Philippines, and Vietnam have only partially implemented their NSWs. In contrast, Brunei, Indonesia, Malaysia, Singapore, and Thailand have fully implemented their NSWs. Linking the NSWs of countries at different levels of development remains a key challenge for achieving the full-fledged ASW. This requires shared procedures between participating countries.
Second, less than half of ASEAN countries have instituted laws and regulations for cross-border electronic transactions, and established the recognised certification authorities to issue digital certificates for electronic transactions. The two measures have been fully implemented in Malaysia, Singapore, and Thailand. Cambodia has fully implemented the laws and regulations for electronic transactions, but has not yet established the recognised certification authorities. The remaining six ASEAN countries, namely Brunei, Indonesia, Laos, Myanmar, the Philippines, and Vietnam, have either partially implemented or are in the planning stage of implementing these measures.
Third, the cross-border electronic exchange of trade-related documents among ASEAN countries has not yet been fully implemented. All ASEAN countries have partially exchanged electronic certificates of origin. Indonesia, Malaysia, Myanmar, the Philippines, Singapore, and Vietnam have partially exchanged sanitary and phytosanitary (SPS) certificates that certify a consignment of goods such as agricultural products as being free from harmful pests and plant diseases. The other ASEAN countries have either not started the exchanges, or remain in the planning stage of starting the process. In addition, Cambodia, Myanmar, Singapore, and Thailand have partially exchanged electronic customs declaration documents that provide details of imported or exported goods such as quantity and origin of goods for customs purposes. The other ASEAN countries are in the pilot or planning stage of implementing them.
To achieve seamless cross-border paperless trade measures, ASEAN needs to advance its implementation of the ASW. Even strong performers such as Malaysia and Singapore have areas for improvements such as electronic exchanges of SPS certificates and customs declaration documents. Weaker performers such as Cambodia and Laos need to make significant progress to catch up with the rest of the region. ASEAN countries should focus on improving laws and regulations for cross-border electronic transactions, and explore possibilities for improving the efficiency of cross-border electronic exchange of certificates of origin, SPS certificates, and customs declaration documents. This will put ASEAN on the right path to bolstering regional supply chains during and after the pandemic.
Sithanonxay Suvannaphakdy was Lead Researcher (Economic Affairs) at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute.