ADB: Coping with the pandemic in South Asia by making it easier to trade

By Aileen Pangilinan, Satish Reddy (from the ADB)

The pandemic has underscored the importance of trade facilitation within South Asia and with the region’s neighbours.

The pandemic severely impacted trade in South Asia. It disrupted transport, core services that support trade (like customs and border controls), and business travel across the region, essentially bringing cross-border supply chains and economic activity to a stand-still.

As national lockdowns begin to ease and supply chains resume operation, difficulties in cargo movement and clearance processes are expected to linger. A look at the South Asia Subregional Economic Cooperation (SASEC) countries – Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal, and Sri Lanka – shows the importance to recovery of effective and modern trade facilitation measures.

Trade facilitation, defined as measures that promote and ease trade, was already underway in the SASEC countries when the pandemic started. This included helping countries modernize legislative frameworks in line with international standards; introducing automation, single window systems, and risk management programmes; and enabling efficient movement of cargo in transit to land-locked regions.

Recognizing the importance of trade facilitation to cope with the pandemic, the SASEC Secretariat shared an advisory with member administrations at the end of March 2020, outlining measures to cope with the pandemic. In response, countries in the region simplified customs and regulatory procedures, waiving the need for paper documents and reducing the scale of customs involvement. Some also waived tariffs and fees on essential goods, deferring the payments and waiving terminal charges.

As national lockdowns begin to ease and supply chains resume operation, difficulties in cargo movement and clearance processes are expected to linger.
Automation and zero-contact customs clearance procedures were used, along with enhanced staff health protocols and new task forces to assist trade. Customs clearance was provided 24 hours a day/ seven days a week at key locations, with faster disbursal of refunds in order to provide immediate relief to businesses, particularly medium and small enterprises affected by the pandemic.

These reforms have helped make clearances faster, boosted the efficiency of trade, and enhanced the transparency and predictability of trade processes. While these South Asian countries have made considerable progress to expedite trade in recent years, the pandemic exposed core bottlenecks in trade facilitation processes across the subregion. 

Customs agencies during the height of COVID-19 found it difficult to position staff at clearance locations. This meant that border crossings couldn’t function efficiently, if at all. The private sector—including importers, exporters, customs brokers, and freight forwarders—struggled to mobilize staff.

They also experienced difficulties meeting clearance requirements like providing original documents and paying duties at the bank. These bottlenecks affected the movement of goods and services, including time-sensitive products like medicine and relief goods.

Automation of clearance processes, which should have played a greater role in helping cargo move seamlessly across borders, with limited need for human contact, affords an example of the gaps in trade facilitation progress.

Although the SASEC countries have made progress in automation, there is still a need for physical interfacing and paper filings, which is difficult during the pandemic. Inadequate digitization in many of the cross border regulatory agencies, and lack of digital connectivity among these agencies, ports and terminal operators, and shipping lines further hindered the flow of cargo.

The pandemic has underscored the importance of trade facilitation, particularly for responding to crises. The need to clear cargo expeditiously, with minimum physical interface and to maintain efficient supply chains, has highlighted the need for an enhanced trade facilitation environment.

The pandemic has also highlighted the need to institutionalize business continuity protocols, cross-border pandemic management protocols, and workplace and staff safety procedures.