About "Notes From the Field": With this occasional feature, we let World Bank professionals who are conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank.
The interview below was conducted with Hamid Alavi, a senior private sector specialist and Regional Private Sector Development Coordinator. He oversees and manages the work program, projects and advisory services related to private sector development and competitiveness. He has published on access to finance, innovation, private sector development, enterprise competitiveness and trade facilitation, food security, telecoms, pollution control, trade finance, and export promotion.
Mr. Alavi spoke with us about the successful implementation of a single-window trade portal project in Tunisia. The project enhanced transparency of trade transactions and cut processing time at the Port of Rades from 18 days to two-and-a-half days during an 8-year period starting in 2000. In 2008, the project was featured in the International Finance Corporation’s “SmartLessons” series. In the interview, Alavi explains why it worked, despite some political resistance.
The Trade Post: What’s your background and what got you interested in private sector competitiveness?
Mr. Alavi: My background is economics, with a specialization in international trade and finance. My first major paper on this was in 1990. I worked with many well-known experts in the field, including Michael Porter and (Charles) Kindleburger. This was my thing.
The Trade Post: What is the logic of implementing a “single-window” system and how does it improve trade?
Mr. Alavi: Trade liberalization can create jobs and raise incomes, but these benefits are easily undermined if excessive costs and delays hinder trade transactions − reducing a country’s export competitiveness. In many countries, to clear a single trade transaction there are not only customs and port authorities involved, or border crossing authorities, but also many agencies or ministries have a clearing or permit role because of their own mandates. In many countries there are between 30 and 60 agencies that need to clear or give permits or are involved in every single transaction that happens.
These agencies – and they are of course not involved in every transaction – have different mandates, from revenue collections, to protecting the health of people, to ensuring food security, and so forth. There are transactions involving products such as meat or paint, where many agencies have a clearing role. The agencies’ specific involvement depends on their mandate, and trade-related permits are normally issued on paper and done in sequence.
The Trade Post: What was the problem in Tunisia?
Mr. Alavi: In the late 1990s, when I started to think with my Tunisian counterparts about implementation of a single window in Tunisia, cargo spent an average of 8 days in Tunisian ports − and often up to 18 days − due to customs, port, and technical control procedures, compared with a few hours in Singapore and 4 days in Argentina and Brazil. Further complicating matters, Tunisia's procedures for external trade required that documents be processed by multiple entities: the Ministry of Commerce, banks, the port authority, and the customs agency, as well as the usual professional organizations, such as customs brokers, shipping agents, and freight forwarders. Document exchanges had to be carried out physically − meaning that hard copies of documents had to be delivered and in some cases picked up again (after several days) for further processing. Underlying these inefficiencies were 19 distinct steps required for import transactions and 15 steps for export transactions. Beyond the costs involved, these cumbersome processes severely impeded the ability of Tunisian companies to respond to or accept short-notice orders, further undermining their competitiveness.Today it takes two-and-a-half days for the same shipment.
So imagine if the cargo of the ship can be processed in half of the time – only half of the time – this means, in effect, that the capacity of your port is increased without any new investment. Your trade is more competitive because you can get things to the market in half of the time, or inputs to your domestic producers and exporters in half of the time. So there are enormous benefits to reducing this time. And one of the major ways of reducing this time is by introducing electronic processing.
The Trade Post: In your opinion, what is the best way to implement a single-window process?
Mr. Alavi: Sometimes countries assign the customs agency as the developer and manager of single windows. This can create problems. Trade-transaction costs are reduced if all of the agencies that I mentioned carry out their due diligence requirements simultaneously. This in turn necessitates sharing information simultaneously among all agencies, therefore maximizing transparency.
You put the single window in customs – that’s what they are mostly doing today– or any other agency involved in trade clearance or permits, it does two things. One is that the information is now with the agency. They share it when they want to. This increases the opportunity for information monopoly and incentives for irregular payments, just like the face-to-face clearance that is the practice in most cases. The second problem is that even when customs clears the shipment, the shipment may still stay in port because the other agencies have to do their thing. Customs has no authority over these other agencies. They have very different mandates. Customs is in the Ministry of Finance, which has no mandate over the ministries of health or agriculture. It cannot force them to meet their service requirements. I am not saying having customs as the owner and operator of single windows will never work; it may in special circumstances.
But if there is a single window somewhere reporting to the highest authority of the country, independent of any of these single agencies, that authority can enforce service requirements and timelines. The information is shared at the same time and therefore incentives for corruption are minimized – everybody has the same information and there is no room for negotiation and face-to-face transactions.
The Trade Post: How did you get started in Tunisia?
Mr. Alavi: We started the single window as an independent agency. We said, ok, we want to do this right. Initially the customs did not participate. They knew what the implication was for them. In many countries they wear military uniforms. They are very powerful people. So, they didn’t want to participate.
We had a champion in Tunisia. It was the Minister of Trade, who was close to the President at the time. So, he decided, “Look, I see the benefit of this for the country. We’re going to do this.” I said, ok, we’ll help you.
The Trade Post: How were you strategic about the implementation of the single-window system?
Mr. Alavi: We did it in phases to show a demonstration effect as the project progressed. In Tunisia, they had this exchange control document, the document de control d’echange. This exchange control document was in the central bank. For each transaction, traders had to fill out this form. So they would send a person on a scooter, and it took about a full day to complete.
That was not controversial to automate. So we said ok, the importer or the freight forwarder can now do it online. This is the information the central bank needs, boom. This normally would take one day. We eliminated that one day, boom. Then we automated the manifest, from the ship. Not controversial. The manifest document, once a ship would come, would take two days. We reduced this to five minutes.
The next day this information about the achievement and reduced transactions costs was in the newspapers. Everybody was: Oh, the single window is doing all of this, reducing the time! Everybody is happy. Private sector associations are happy, the government is impressed. The customs said, oh, we’re missing this. They came. Of course this automation and all of that took about five months. So the customs came in.
The Trade Post: Why should the Bank, as an institution, continue to work on these issues?
Mr. Alavi: Because of all the international experiences we have. All the mistakes we have made, all the good things we have done, all the learning we have behind us.