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Lag in automated customs clearance practices

November 28, 2011

FBR Chairman Salman Siddique informed the media that Agility has demanded $62 million as service charges of last six years against its software at PACCS and another $42 million for future payments. - File photo


The ever-growing traffic of containerised cargo requires automated customs clearance to avoid congestion at ports without compromising revenue collection. The three container terminals, one at Port Qasim and two at Karachi Port are currently handling around 2.3 million TEUs per annum and are being cleared through Pakistan Automation Customs Clearance System (PACCS).

The system was launched by the then Chairman Federal Board of Revenue Abdullah Yousuf in 2005 to meet the growing traffic of containerised cargo.

However, the only drawback of the PACCS has been that its intellectual property right (IRP) is owned by Kuwait-based logistics company, Agility. Its mainframe or the server is also located outside the country with entire external trade data exposed to outside world, an official at Customs House said.

According to the FBR insiders, from the day one, the sensitive agencies were not happy with the arrangements because the system gave access of trade data to competitors from other countries, as well as to perceived ‘enemy countries.’

The PACCS auto-clearance system was initially rolled out in 2005 at the Karachi International Container Terminal (KICT) as a pilot project and in the following year was introduced at the Pakistan International Terminal Container (PICT) and the Qasim, International Container Terminal (QICT). However, the FBR did not enter into proper agreement with the Agility and till this day, the PACCS technically remains a pilot project at all the three terminals, stated a high official of the Board.

A high FBR official said that over the last seven years, many times the Agility, which owns the IPR of the PACCS software, threatened to switch off the system which could have totally paralysed the movement of containerised cargo and caused heavy congestion at the ports.

However, the FBR early this year rolled out an indigenously developed auto-clearance system known as Web-based One Customs (WEBOC) by initially installing it at MCC PMBQ and later extending to QICT.

The indigenously developed auto-clearance system could have been launched much earlier but the Pakistan Revenue Automation Ltd (PRAL) responsible for converting revenue collection system from manual to automation was technically not a position to face the challenges. PRAL was badly in need of people with high skills in IT who could develop software for revenue collection. Teething troubles aside, WEBOC can go a long way in tackling the persisting issues.

When the PACCS was launched seven years back, the users (importers and customs agents), faced teething troubles. The customs staff deputed also encountered a lot of technical problems. There were also reports of large-scale misuse of the system, resulting in enormous revenue loss to the national exchequer.

Critics blame the FBR of initially giving free hand to the operators (customs staff) and users (importers and customs agents) of the system by removing all sorts of checks and balances. The Customs Intelligence Collectorate was also barred from interfering in the working of the system.

The customs officials agree that this caused billions of rupees in revenue loss and a large number of containers till this day are missing. In one of the cases, terminal operator was accused of being involved in the scam of 287 missing containers.

Once the audit is done it may unearth many huge revenue losses, observed Khurram Ejaz former president Karachi Customs Agents Group. Undoubtedly, the new auto-clearance system suffers from some deficiencies but being indigenous software it could be improved, upgraded and changed as per the requirement of customs authorities.

Contrary to this, the FBR for the last three years had been asking the Agility to upgrade and make some changes in software of PACCS but to no avail. The system has become highly predictable and causes billions of rupees in revenue loss, a customs high-up told this scribe.

Shabbir Ahmed, chairman Pakistan Bedwear Exporters Association (PBEA) says the WEBOC is operating satisfactorily at QICT and it could improve over time by constant upgradation. It can help the country to save foreign exchange spent on foreign software services.

Recently, FBR Chairman Salman Siddique informed the media that Agility has demanded $62 million as service charges of last six years against its software at PACCS and another $42 million for future payments.

A customs official while giving details of revenue (customs duty) collection at PACCS said that during FY2007-08 dutiable imports grew by 10.51 per cent but customs duty collection declined by 23 per cent.

Similarly, he said in FY 2008-09 dutiable imports grew by 9.98 per cent but customs duty increased by 12 per cent. In FY 2009-10, dutiable imports went up by 10.29 per cent but customs duty was only two per cent higher. And in FY 2010-11 dutiable imports were higher by 10.71 per cent but customs duty rose by nine per cent only.