By THEPHILBIZNEWS STAFF
Since the pandemic, a lot of enterprises have embarked on digitization and digitalization not just for health and safety reasons but even more so for efficiency.
The shift to paperless transactions across various industries has proven not just to be effective but also cost-efficient. For instance, the digitization of all cargo clearance processes will significantly benefit small and medium enterprises (SMEs) in the Philippines, which in turn can be a pathway to the overall economic development of the country, according to a new United Nations (UN) report.
The report from the UN Economic and Social Commission for Asia and the Pacific (ESCAP) points out that SMEs, which account for 99.5% of firms and 63.2 % of employment in the country, are the most vulnerable to unpredictable business climates, and will therefore gain immensely from the digitalization of customs procedures.
But for SMEs to better benefit from paperless trade, they have to be better connected and better resourced and have better visibility, said the report titled “National Feasibility Study on Cross-border Electronic Exchange of Trade-related Data and Documents: The Philippines. “
Unfortunately, awareness of paperless trade is still low among SMEs, who only know that manual processes are still prevalent in the handling and verifying of permits and certificates that Customs and trade regulatory government agencies or TGRAs need to expedite cargo shipments.
“Thus, it is important to focus on the underlying requisites of the SMEs by adopting cross-border paperless trade that can potentially reduce e-commerce transaction costs. This should in turn enable them to create a more seamless digital experience for their customers,” the study, issued this month, said.
It further noted that the number of businesses conducting retail sales via the internet in the Philippines has increased, but this also comes with an increase in the number of consumer complaints over delays in the clearance of goods.
“Digitalizing the permit and certificate processes will eliminate much of the need for tedious, manual data entry of supporting documents required by Customs and contribute to quicker clearance of goods, which would ultimately lead to a better experience for retail customers and thus facilitate business for SMEs,” the UN report said.
At the same time, ESCAP pointed out that the entering into force of the Regional Comprehensive Economic Partnership (RCEP) is an important development in the Asia-Pacific region that could translate into opportunities for SMEs to tap huge markets.
The Agreement, to which the Philippines is a party, holds the potential to help SMEs participate in the growing digital economy and leverage opportunities in increasing the export coverage for Philippine electronics and semiconductor manufacturers.
Importantly, the Agreement will reduce the prices of imported components and raw materials, and for the exported electronic goods. Moreover, imported components are often re-exported to other markets as intermediate products, further extending the economic distance between producers and the final consumer. Through greater market access enabled through RCEP, the Philippines is also aiming to attract investments that will enable it to move up the global value chain.
Said the report: “Overall, RCEP encourages inclusive, comprehensive, and mutually beneficial economic policies that aim to enable SMEs to trade within the region with greater ease and enhanced tariff concessions. It is hoped that these benefits would, eventually, allow Filipino SMEs—especially those in e-commerce—to be able to focus more on enhancing their businesses rather than dealing with cargo clearance issues. Realizing these benefits will require continued efforts to involve SMEs in paperless trade.”
Meanwhile, the paper recommended the development of an Authorized Economic Operator (AEO) program for SMEs to bring about positive impacts in efficiency, productivity and profits for participating firms.
“Faster customs checks, a global network of improved suppliers and a certificate of reliability and safety will have considerable benefits for any SME. AEO benefits should be transparent and meaningful to justify the additional costs sustained by economic operators in meeting AEO program requirements,” said ESCAP.
On a practical level, the AEO status means that items pass through customs as quickly as possible. It also means the following: It will be quicker and easier to obtain customs clearance; the AEO will be subjected to fewer physical and document checks at borders; if the traded item is selected at controls, priority will be given as an AEO consignment; and any certified AEO can request that a control be held at a different place.
The good news, said the paper, is that together with the DTI, the Bureau of Customs is exploring setting up an AEO program for SMEs by pushing for a pragmatic approach in accrediting MSMEs, as well as encouraging them to work together to pool their resources to achieve higher levels of production and better manufacturing processes.