Vietnam to Introduce Customs Bond to Facilitate Customs Clearance
Vietnam will be introducing a customs bond system to facilitate customs clearance and reform import and export procedures. The joint project launched by the Global Alliance for Trade Facilitation (GATF) and Vietnam Private Sector Forum (VPSF) on 1st September will help in modernizing the import and export administrative procedures. GATF will work with local government agencies and monitor the Vietnam Automated Cargo and Port Consolidated System (VNACCS) and Vietnam Customs Information System (VCIS) to assist in implementing the new system.
GATF consists of the World Economic Forum, the International Chamber of Commerce, and the Center for International Private Enterprise together with the governments of Australia, Canada, Germany, the United Kingdom, and the United States to setup a public private platform to support trade facilitation reforms.
The project will assist Vietnam in meeting its WTO commitments and implementing its government’s Resolution 19, which aims to improve the business environment and national competitiveness. Vietnam will be the first Asian country and the first developing nation to be selected by WTO under the WTO Trade Facilitation. The WTO Trade Facilitation, which came into effect on February 22, 2017, after being ratified by 112 countries, aims to ease trade procedures, reduce barriers, and increase developing countries engagement with global trading routes.
Customs bond is an agreement, which ensures that importers will pay all relevant fees and taxes and operate in accordance with all laws and regulations. As per the new reforms, anyone importing goods or transporting them locally must buy a bond from a surety company. If the importing company is unable to pay the fees or follow regulations, customs department can file a claim against the bond. In that case, the surety company will be required to compensate to customs and the importing company will be required to pay back to the surety company.
Customs bond is currently used in the US, Australia, Sweden, New Zealand, UK, Singapore, Malaysia, the Philippines, Thailand and South Korea.
Benefits of customs bond
Customs clearance procedures in Vietnam accounts for 72 percent of the total time it takes goods to be released from the border. Customs bonds will significantly reduce the customs clearance timeline for importers and exporters and act as a contract to ensure that importers oblige with duties, taxes, and fees owed to the government.
In addition, it will lead to an increase in trade volumes, effective trade monitoring, government revenues, and overall economic growth. The new system aims to streamline the cumbersome customs documentations procedures leading to a faster customs clearance.
To ensure the success of customs bond, the government has to make sure that surety companies have all the information about the importers so that they do not incur losses while making restitutions to customs.
The government has taken numerous steps in the last few years such as electronic customs clearance, to reduce complications and delays in import and export procedures. In the recent World Bank’s Doing Business 2017 ranking, Vietnam climbed nine spots to 82, with cross-border trading ranking related to import-export operations rising by 15 spots to 93. As per the report, the time needed to handle import and export procedures, which includes documentation and border clearances stood at 138 and 108 hours respectively. Vietnam aims to reduce it to 80 and 60 hours respectively by 2020.
Vietnam has to continue to modernize and reform its trade related procedures to increase competitiveness and integrate further into the global supply chains.
Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at firstname.lastname@example.org or visit us at www.dezshira.com
Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN, and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.
Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.