Monday 25 March, 2019

Reforming specialized inspection procedures is one of the measures intended to facilitate trade and improve the Trading Across Borders indicator. However, businesses are still struggling with these procedures.

One product inspected twice (?)

Speaking about shortcomings in specialized inspection of imported goods at a meeting with a General Department of Customs working delegation on March 19, Mr. Pham Le Tuan, Director of ISUZU Automobile Company, said the company imports automobile parts for assembly into complete vehicles. After a vehicle is fully assembled, the company must have the complete vehicle inspected and certified for conformity before placing it on the market. Under current regulations, when components are imported for assembly, the company must also conduct specialized inspection. Thus, imported automobile components are subject to quality inspection twice. In view of this problem, the Director of ISUZU Automobile Company proposed that specialized inspection not be required for products imported to assemble complete automobiles. The company also proposed considering an exemption from specialized inspection for components used for after-sales service.

Regarding this issue, Mr. Le Thanh Hai, Deputy Head of the Customs Supervision and Management Division of the Ho Chi Minh City Customs Department, said that in practice many enterprises importing automobile parts face the same problem as ISUZU. Imported goods under HS heading 8708 are regulated by Circular 41/2018/TT-BGTVT dated July 30, 2018 of the Ministry of Transport, which promulgates the list of potentially unsafe goods under the Ministry’s management (Appendix II of Circular 41). For these products, enterprises do not have to submit a notice of state quality-inspection results before customs clearance, but must submit a registration certified by the state quality-inspection authority before clearance in accordance with Decree 74/2018/ND-CP. According to the Ho Chi Minh City Customs Department, this requirement is appropriate for enterprises importing products directly for sale on the market, but is not appropriate for enterprises importing them for production and vehicle assembly on their own production lines. This is because the final manufactured and assembled product is a complete automobile, for which the manufacturer is already required to carry out certification and declaration of conformity before it is placed on the market.

To remove difficulties for businesses, the Ho Chi Minh City Customs Department proposed that quality inspection not be carried out for products and goods in Appendix II when they are imported by enterprises for use in their own automobile production and assembly.

Business opportunities lost because of specialized inspection

Businesses not only complain about overlapping procedures; some have also lost business opportunities because of specialized-inspection requirements. A representative of Truong Hai Automobile Group said that, in order to expand automobile exports to Thailand, the company planned to take vehicles manufactured in Vietnam to an exhibition in Thailand under temporary-export and re-import procedures. However, when carrying out the temporary-export procedures, the enterprise was required to have an inspection certificate. Unable to obtain the quality-inspection certificate, the enterprise lost the opportunity to participate in the exhibition and consequently lost a business opportunity. The representative said that Truong Hai would soon export a batch of buses to Thailand, but if specialized-inspection procedures were not changed, they could continue to cost enterprises business opportunities.

According to Saigon Port Area 1 Customs Branch, specialized inspection procedures have improved, but there are still cases in which ministries and sectors are inconsistent in their management. Many requirements overlap: the same goods may be managed by several ministries, with duplicate or inconsistent regulations that are difficult to implement. Some imported goods are still managed by multiple ministries. For example, marine radar is subject to quality inspection under Circular 04/2018/TT-BTTTT of the Ministry of Information and Communications as well as Circular 41/2018/TT-BGTVT dated July 30, 2018 of the Ministry of Transport; refrigeration systems are subject to quality inspection under Decision 3482/QD-BKHCN dated December 8, 2017 of the Ministry of Science and Technology and Circular 22/2018/TT-BLDTBXH dated December 6, 2018 of the Ministry of Labour, Invalids and Social Affairs; elevators and boilers are also subject to overlapping quality-inspection requirements under the relevant regulations of the Ministry of Transport and the Ministry of Labour, Invalids and Social Affairs.

In practice, businesses spend considerable time and money on specialized inspection because the responsible authorities have not fully applied risk-management principles and have not established rules recognizing inspection results from exporting countries, including advanced manufacturing countries such as Australia, the United States, Japan and Canada. This prolongs customs-clearance time.

Based on these practical problems, customs authorities proposed reforming and improving the legal framework for specialized inspection to ensure consistency among ministries and sectors. The list of exported and imported goods subject to specialized inspection should clearly state the goods description and HS code consistent with Vietnam’s list of exports and imports issued by the Ministry of Finance, as well as specific and clear forms and conditions of specialized management and simple procedures. Requirements restricting inspection to a particular location should be limited so enterprises can register for inspection at the location most convenient to them, reducing additional costs and facilitating both businesses and customs authorities.

Source: Le Thu – Customs News