COVID-19 highlights need for digitizing and automating trade in South Asia

Early in March, amid concerns about the spread of COVID-19, Bangladesh, Bhutan India, and Nepal (BBIN countries) placed restrictions on the movement of people and freight between their countries. Supply chains were disrupted, and trade flows were heavily impacted as a result.

Thousands of trucks, many loaded with perishable goods, were reportedly stranded at the border between India’s northeastern state of Assam and Bangladesh, resulting in significant daily loss.

Similar disruptions were reported at Petrapole-Benapole —the largest land port in South Asia where more than 2,000 trucks were stranded for weeks as authorities struggled to find the right approach to mitigating COVID-19 risks.

The pandemic’s toll has been staggering. Besides claiming around 750,000  lives worldwide as of mid-August, it has crippled economies. The World Bank estimates that South Asian countries will likely experience the worst economic performance of the past 40 years. Trade has been severely impacted too with transport costs soaring driven by additional inspections, reduced hours of operation, road closures, and border closures.  The WTO is forecasting a year‑on‑year drop in global trade of around 18.5 percent. The Government of India estimates the country’s imports will contract 47 percent in financial year 2020/21, while exports will fall 26 percent.

Trade in BBIN countries is paper-heavy, often requiring physical submission of paper documents to the various government agencies regulating trade

COVID-19 can pave the way for a digital transformation in trade processes

While the pandemic is undoubtedly changing our way of life – from social distancing norms, remote working and greater reliance on e-commerce – it may also act as a catalyst to make trade more resilient and less costly by digitizing and automating the trade process. According to the Deutsche Post DHL, the world’s largest logistics company, the pandemic has revealed that countries with less bureaucracy and cost at the border have been able to benefit ahead of those that haven not during the pandemic.

The need for such transformative change is most compelling in BBIN countries. Trade in the sub-region is paper-heavy, often requiring physical submission of paper documents to the various government agencies regulating trade.  This adds complexity, frequently delay border clearance, provide opportunities for rent seeking, and act as a costly impediment to the private sector.

We have seen positive examples of BBIN countries introducing measures to expedite the movement of cargo amidst the crisis. India introduced a ‘faceless assessment’ program to assess declarations online irrespective of the port of arrival, and established a dedicated single window COVID-19 helpdesk. Nepal Customs formed a Quick Response Team to ensure essential goods are cleared within two hours. Bangladesh waived import duties on priority medical supplies, and accepted electronic copies for assessing goods imported from select countries. Bhutan implemented zero contact clearance procedures and release consignments with minimal interference.

Bolder steps to digitize and modernize are needed to ensure the long-term health and security of trade chains in the sub-region.  Impediments that previously prevented governments from adopting new innovations were often not related to the technology itself - but a reluctance to disrupt existing ways of working. COVID-19 has laid bare that governments as well as private sector must adapt to the “new normal”.   

Adopt and expedite paper-less trade

At this time, when it is incumbent upon everyone to reduce face-to-face interactions to halt the spread of the pandemic, technology and automated systems should be leveraged. Electronic National Single Windows (NSW), already under development in Nepal and Bangladesh with the support of the World Bank, will help facilitate trade by allowing importers and exporters to file all import, export and transit information via a single electronic gateway and reduce face-to-face interactions.

Nepal and Bangladesh can benefit from optimizing the functionality of ASYCUDA World (Automated System for Customs Data), a computerized system to manage cross-border shipments, to introduce available modules for paper-free processing and customs clearance.  Bhutan can upgrade the semi-automated and paper-based Automated Customs System (BACS) to a web-based system. 

Customs authorities in India can extend the implementation of the faceless assessment program to the border crossing points with Nepal and Bangladesh and reorganize staff to reduce face-to-face interactions between officials and traders.

The COVID-19 pandemic presents an important opportunity for BBIN countries to automate and improve critical infrastructure and border management processes

Identify legitimate freight and facilitate its entry

Nepal and Bangladesh can consider developing an automated risk management system (ARMS) to identify high-risk shipments for careful scrutiny and low-risk shipments to facilitate trade by allowing them to flow through the border without any impediments. In the absence of an effective risk management system, a high percentage of legitimate freight is unnecessarily subjected to physical interactions, creating long dwell times and congestion at the border , and, as a result, impedes the flow of critical goods. The facilitation of legitimate shipments is integral to trade facilitation, a standard of the most developed nations.

Enhance border agency cooperation 

During times of a significant critical event such as COVID-19, borders have a propensity to harden as countries reassess their ability to satisfy their own critical needs before allowing the export of goods. During these trade pauses, all trading nations that rely on each other are greatly impacted. Therefore, it is essential to increase regional cooperation between customs, land border authorities and other regulatory agencies.

The COVID-19 pandemic presents an important opportunity for BBIN countries to automate and improve critical infrastructure and border management processes.  Streamlined trade practices between these four countries are essential for national security and economic stability. Enhanced trade facilitation will lead to stronger economies and border management practices that are agile, resilient, and adept enough to respond when the next crisis strikes.