customs reform

7/28/2019 Customs Reform

1/26

December2011

CustomsReforminAfghanistan:

MovingBetweenIntroducedand

Pre-exis=ngStructures

AfghanistanPublicPolicyResearchOrganiza


2/26

Acknowledgements

ThispaperisaproductofaresearchprojectfundedbyHarakatAfghanistanClimateInvestmentFacility.APPROexpresses

itssincerethankstoHarakatfortheirsupportandfeedbackonthevariousaspectsofthisresearch.Thisresearchwould

nothavebeenpossiblewithouttheacEveparEcipaEonandassistancefromthemanytradersandcustomsofficialswho

wereapproachedbyAPPRO.

APPROtakesfullresponsibilityforallomissionsanderrors.

AbouttheAuthors

LeadauthorsforthispaperareSaeedParto(DirectorofResearch)andEhsanSaadat(Researcher).AhmadShaheerAnil

(ResearchandvaluaEonsManager)managedthefieldwork.RebeccaGangeditedthisreport.

AboutAPPRO

AfghanistanPublicPolicyResearchOrganizaEon(APPRO)isanindependentsocialresearchorganizaEonpromoEngsocial

andpolicylearningtobenefitdevelopmentandreconstrucEoneffortsinAfghanistan.APPROisregisteredwiththeMinistry

ofconomy(RegistraEonNumber:1212)asanot-for-profit,non-governmentorganizaEonandheadquarteredinKabul,

Afghanistan.

APPROsmissionistofacilitatecriEcaldialogueonpolicyandreconstrucEonissues.Thismissionhastwocomponents.The

firstcomponentistomeasuredevelopmentprogressagainststrategicreconstrucEonobjecEvesandprovideinsightsinto

howtoimproveperformanceagainstthemilestonessetbytheGovernmentofAfghanistanandtheinternaEonaldonors.

ThesecondcomponentistotrainandmentorapoolofAfghanresearcherstoconductresearchconsistentwith

internaEonallyrecognizedstandardsforsocialscienEficresearch.ResearchatAPPROisundertakentoaddressexisEngand

pressingknowledgegapsinthepolicymakingprocessandtoadvancethelearningofresearchers,academics,anddecision

andpolicymakersatalllevels.

i

(c)2011.AfghanistanPublicPolicyResearchOrganizaEon.Somerightsreserved.ThispublicaEonmay

bereproduced,storedinaretrievalsystemortransmi\edonlyfornon-commercialpurposesandwith

wri\encredittoAPPROandtheauthors.WherethispublicaEonisreproduced,storedortransmi\ed

electronically,alinktoAPPROswebsitewww.appro.org.afshouldbeprovided.Anyuseofthis

publicaEonfallingoutsideofthesepermissionsrequirespriorwri\enpermissionandcanbesoughtby

[email protected]+93700538081.


3/26

TableofContents

...................................................................................................................xecuEveSummary 1

..........................................................................................................................1.IntroducEon 4

2.ObjecEvesandMethodology.................................................................................................5

3.CustomsReformSince2001..................................................................................................6

4.Keyfindings ...........................................................................................................................9

4.1.Hairatan .......................................................................................................................11

4.2.IslamQala ....................................................................................................................11

4.3.Torkham.......................................................................................................................12

4.4.CommonChallenges....................................................................................................13

5.Conclusion ...........................................................................................................................14

6.RecommendaEons ..............................................................................................................16

............................................................................................................................Bibliography 19

.............................................................Appendix1:CustomsReformProgramsandProjects 20

.........................................Appendix2:CustomsClearanceProcedures(innglishandDari) 21

iii


4/26

Glossary

APPRO AfghanistanPublicPolicyResearchOrganizaEon

ASYCUDA AutomatedSystemforCustomsData

HOO HighOfficeofOversightandAnEcorrupEonMAIL MinistryofAgriculture,IrrigaEonandLivelihood

MoCI MinistryofCommerceandIndustry

MoF MinistryofFinance

MoI MinistryofInterior

UNCTAD UnitedNaEonalConferenceonTradeandDevelopment

UNDP UnitedNaEonsDevelopmentProgramme

ii


5/26

Execu4veSummary

Afghanistanishighlydependentonimports.AfuncEonalcustomssystemwithminimalornoleakage

indutycollecEoncanbeareliableandsustainablesourceoffundsfortheGovernmentof

Afghanistan.RecognizingtheimportanceofafullyfuncEonalcustomssystemasasourceof

governmentrevenue,effortshavebeenmadebyalonglistofinternaEonaldonorstomodernizeand

systemaEzethecustomssysteminAfghanistan.

ThisresearchwascarriedoutfromFebruarytoAugust2011toassesstheimpactofthechanges

madesince2001andtoidenEfypathwaysforfutureplanningandprogrammingina\emptsto

insEtuteafullyfuncEoningcustomssystem.TheraEonaleforthisresearchwasthatfurtherplansto

reformthesystemneedtobebasedonacloseexaminaEonofwhathasbeenaccomplishedtodate

andtheidenEficaEonofthebarriersandbo\lenecksthatAfghantradersconEnuetofaceinmovingmerchandizetoandfromtheborderentrypoints.

TheresearchfindsthatachangeofthenormsthatunderliecorrupEoninthecustomssystem

requiresallmannerofmeasuresrangingfromproceduraladjustments(shortterm)toincreased

oversightandenforcement(mediumterm)tovalue-basedbehavioralchangeamongthecustoms

systemsofficialsandtradersthroughawarenessraising,educaEon,andasystemofincenEvesand

disincenEves(longterm).Failuretoa\endtothemulE-layeredneedsofthecustomssystemruns

theriskofageneralweakeningoftrustinthesystembylegiEmatenaEonalandinternaEonal

investorswhowouldbeeitherdissuadedfrominvesEngduetoahighlevelofriskand

unpredictabilityor,iftheydecidetoinvest,arelikelytotolerateand,bydefault,helpperpetuate

corruptpracEces.AnetoutcomeofthesetrajectorieswilldepriveAfghanistanofdesperately

neededlegiEmatetradeacEvityanddirectinvestmentbynaEonalandinternaEonalinvestors.

TheheavilyfundedmulE-donorandmulE-yearprojecttobuildandmaintainAfghanistanscustoms

systemislikelytobeaslowprocess.Thedutyrateshavetobethoughullysettoencourage

importerstoconEnuetogothroughthesystemratherthanoutsideit.Dutychargesneedtobe

enEcingenoughtokeeptheimporterscomingthroughlegalchannelssothattheGovernment

conEnuestocollectcustomsrevenue.Oncetheacceptablethresholdfordutylevelsispassedand

thedutyisdeemedtoohighbythetradersthelicitimporteristemptedtogothroughinformal/

illegalchannels,causingrevenuelossesfortheGovernment.

Adequatesalariesarebutonemeasureintheoverallpackageofmeasuresthatneedstobeput

togetherinthereformofthecustomssystem.Ifitisnotpossibletoincreasesalariesimmediately

andsufficiently,otherinnovaEveincenEvesneedtobedeployedtobringbriberyundercontrol

through,forexample,commission-basedbonusestothecustomsofficials.Otherformsofassistance

toincreasethecapacityandcapabilityofcustomsemployees,suchasappoinEnginternaEonal

advisorsatportsofentry,shouldbedonemorethoughully.

1


6/26

Thereisaneedtostrengthenlawenforcement,yettherehastoberecogniEonthatenforcingthe

lawisoenafuncEonoftheabilitytoenforceandafullsetofincenEvesanddisincenEveforthose

subjectedtothelaw.Consistentlawenforcementinthelongrunislikelytoresultinchanged

behaviorbytheofficialsandthetradersalike.Forthistohappen,theusersofthecustomssystem

(customsofficialsandtraders)willhavetobecomepartofthesoluEonbybeingincludednthe

discoursetoaddresscorrupEon.

Theproblemsandbo\lenecksinthecustomssystemarelesstodowithinadequaciesinthe

infrastructureandproceduresandmorewithsystemiccorrupEon.ChangesininformalinsEtuEons

suchascorrupEontakealongEmetobecomeestablished,andwillrequireallmannerofincenEve

anddisincenEvewhichmaybemonetaryandnon-monetary,proceduralandregulatoryand,most

importantly,innovaEveandinteracEvetomaximizelearningbydoing.TheformalizaEonoftherole

ofkomishenkarsinthecustomssystemservesasagoodexample.Thereisnoimmediateone-Eme

soluEontothebo\lenecksinthecustomssystemandcurrentlythereisli\leornoincenEveforthe

usersofthesystemtochangeit.Muchcouldbeaccomplished,however,throughreforminwages

and/orotherformsofremuneraEon,increasedandtransparentoversight,and,mostimportantly,

engagementandlearningwithaviewtoinnovateandeffectinsEtuEonalchange.

KeyRecommenda,ons

- ConEnuethebuildingandmodernizaEonofcustomsinfrastructure.Atmajorpointsofentry,i.e.,Hairatan,IslamQala,andTorkham,Afghanistanscustomssystemisoneofthemosta\endedto

andmodernizedinSouth/CentralAsiaandtheMiddleast.ffortstomaintainthecurrent

funcEonsandincreaseadherencetotheproceduresthroughmoreeffecEveenforcementand

oversightwillneedtobeintensified,bearinginmindthatinsEtuEonalizaEonofthemany

changesplannedforthecustomssystemislikelytotakemanyyears.

- IniEateaprocessofdialoguetoinvolvetheMinistryofFinance,HighOfficeofOversight,Ministry

ofCommerceandIndustry,representaEvesoftradersandotherprivatesectorrepresentaEve,

andotherrelevantparEesonhowtoconEnueeffortstoimplement/enforcecustomslawandrelatedregulaEonsandproceduresanddevisewaysofminimizingarbitrarinessinthepracEces

ofcustomspersonnel.IntermediaryorganizaEons,suchasHarakat,arewellposiEonedtoiniEate

suchadialogue.TheoutcomesfromthisdialogueshouldincludeintervenEonstoincreasethe

integrity,independence,andauthorityofthecustomssysteminrelaEontoothergovernmental

agenciesacEveinborderareas.

- Maintaineffortstoimproveinfrastructure,providetrainingandcapacityexchange,raisesalaries

andotherformsofremuneraEon,andinsEtuteafuncEoningoversightmechanismtoinclude

monitoring,evaluaEon,andperiodicaudits.

2


7/26

- FormallycerEfykomishenkarsaslegiEmateactorsinthecustomsprocesswhiletakingstepsto

ensurethattheyreportonthefeeschargedandtaxespaidonearnedcommissions.

- ConEnuetobuildcooperaEonandharmonizaEonthroughcustomstreaEes,forexample,with

neighboringcountries.Forthistohappen,andforAfghanistantomaximizebenefitsfromsuch

associaEons,Afghanistanneedstoaddresstheremainingproblemsinitscustomssystem(mostly

relatedtocorrupEon)simultaneouslywithstrengtheningEeswithregionalandinternaEonal

partners.

- ConductfurtherresearchtounderstandthebackendofcustomsoperaEons.Thescopeofthis

researchwaslimitedtoanexaminaEonofthefrontendofcustomsoperaEons,focusingonhow

usersandofficialsprocessgoodsthroughthesystem.Tofurtherbenefitthedesignand

implementaEonofreformsinthecustomssystemitwillbenecessarytoinvesEgate,forexample,

howcollectedduEesaretransferredfromtheborderintoGovernmentrevenuestreams,towhat

usecollectedrevenuesareput,andhowtheseaspectsofthesystemaffectdaytodayoperaEons

attheborderpointofentry.

3


8/26

1.Introduc4on

Afghanistanishighlydependentonimports.Thecustomssystemplaysaninstrumentalroleinboth

facilitaEngandcurtailingtransferofgoodsbetweenAfghantradersandtheircustomersorsuppliers

inadjacentcountries.InaddiEon,afuncEonalcustomssystemwithminimalornoleakageinduty

collecEoncanbeareliableandsustainablesourceoffundsfortheGovernmentofAfghanistan.

RecognizingtheimportanceofafullyfuncEonalcustomssystemasasourceofgovernmentrevenue,

effortshavebeenmadebyalonglistofinternaEonaldonorstomodernizeandsystemaEzethe

customssysteminAfghanistan.1

ThemostrecentmajoreffortbytheGovernmentandtheinternaEonaldonorsinstreamliningthe

customssystemisarEculatedintheFiveYearStrategicPlan(2007-2012).2Thekeyareasof

intervenEoninclude(re-)organizaEonofthecustomssystemsworkforce,protecEonofcustomssystemsusers,i.e.,traders,improvementininfrastructureandequipment,andraEonalizaEonof

laws,procedures,andautomatedprocessestominimizecontactbetweencustomspersonneland

othergovernmentofficersandtraderstominimizerentseekingopportuniEesandcorrupEon.The

addedadvantageofafuncEoningcustomssystemistheminimizaEonandcontrolofsmuggling

goodsincludingnarcoEcsandhazardousmaterials.

Theremainderofthisstudyisstructuredasfollows.ThenextsecEonoutlinestheobjecEvesand

methodologyforthisstudy.SecEon3providesanoverviewofcustomsreformstodateandidenEfies

someoftheremainingchallengesinfurtherimprovementstothecustomssystem.SecEon4

analyzesthedatacollectedfromthreeportsofentry(Hairatan,IslamQala,andTorkham).Where

appropriate,theanalysisdrawsondatafromsecondarysourcesincludingAPPROsotherresearch.

SecEons5and6concludewithrecommendaEonsforconsideraEonbynaEonalandinternaEonal

policymakersinvolvedincustomsreform.

4

_____________________________________________________________________________________

1ThelistincludesAsianDevelopmentBank,DfID,UCommission,GermanGovernment,ItalianGovernment,Iranian

Government,JapaneseGovernment,USAID,andtheWorldBank.

2GovernmentofAfghanistan(2007).AfghanistanCustomsDepartment(ACD):AFiveYearStrategicPlan(2007-2012),(Kabul:MinistryofFinance,GovernmentofAfghanistan).


9/26

2.Objec4vesandMethodology

Thegoalforthisstudywastodocumentprogresstodateandongoingchallengesinthereformof

AfghanistanscustomssysteminordertogeneratefindingsandrecommendaEonsforuseinfuture

customs-relatedpolicymakingandprogramming.TheobjecEvesfortheresearchwerethusto:

1. Documentreformstothecustomssystemsince2001;

2. IdenEfyprogressandremaininggapsincustomsreform;

3. PinpointareasofconEnueddifficultyforcustomssystemusers,includingbo\lenecks,

duplicaEveorunnecessaryprocesses,andopportuniEesforcorrupEon;and

4. IdenEfypossibleentrypointsforintervenEontoaddresscorrupEonamongkeyprivateand

publicsectoractorsinthecustomssystem.

TomeettheseobjecEvesresearcherscompletedadeskreviewofcustoms-relatedreforminiEaEvesinAfghanistansince2001andaseriesofinterviewswithkey,Kabul-based,naEonalandinternaEonal

stakeholdersandexpertsinvolvedincustomsreform.Forthisstudyinterviewswereheldwith

individualtraders,brokers(komishenkars),andcustomsofficialsatthethreeborderpointsandKabul

whiletwofocusgroupswithbusinessesandadisseminaEonworkshoptoverifythefindingswere

heldinKabul.

ThisresearchwascarriedoutfromFebruarytoAugust2011,threeyearsintotheimplementaEonof

theFiveYearStrategicPlan.ThesitesforthisresearchwereTorkham,controllingtheborderwith

Pakistan,Hairatan,controllingtheborderwithUzbekistan,andIslamQala,controllingtheborder

withIran.AlthoughAfghanistansautomatedcustomssystemshouldoperateidenEcallyacrossthe

country,itwasassumedthattherewouldberegionalandsite-specificvariaEons.TheselecEonof

threegeographicallyandethnicallydisEnctbordersiteswasthusintendedtohighlightbothnaEonal

andsite-specificpa\erns.

ThestudyoriginallyplannedtoembedanAPPROresearcherwithaconsignmentofgoodstobe

importedintoAfghanistanandthenescorttheconvoytoitsdesEnaEoninordertoobservethe

customsprocessandin-countrytransitcondiEonsfirst-hand.However,thiswasdeemedunsafein

thepresentsecurityenvironmentandwasnotfulfilled.Tocollectdata,threeteamsoftwo

researchersspenttwoweeksineachborderlocaEontoobservecustomsproceduresandtoconduct

interviewswithcustomsandborderofficials,truckdrivers,andkomishenkars.Researchersfurther

conductedin-depthinterviewswithatleasttenindividualtradersateachborderlocaEon,selected

onthebasisoftheirregularuseoftheborderpoint.

5


10/26

3.CustomsReformSince2001

AfuncEonalcustomssystemisareliableandsustainablesourceforgovernmentrevenuegeneraEon.

Recognizingthis,internaEonaldonorprogrammingonthereconstrucEonofAfghanistansince2002

hasplacedparEcularemphasisonimprovingandexpandingcustomsfaciliEesandpracEcesatmajor

bordercrossingpoints.In2003thecustomsDepartmentoftheMinistryofFinanceintroduceda

SingleAdministra8veDocumentsystempilotprogram,basedontheuropeanUnionscustoms

system,inthefivekeyprovincesofKabul,Herat,Kandahar,Balkh,andNangarhar. 3In2005work

begantoimplementtheAutomatedSystemforCustomsData(ASYCUDA),whichiscurrentlyongoing.

TheFiveYearMasterPlanoftheAfghancustomsDepartment(MinistryofFinance)reportsan

esEmatedtotalprojectexpenditureof$202millionforstrengtheningandexpandingthecustoms

system.4KeyareasofintervenEonandreformaccordingtothisPlanareminimizingleakageinduty

collecEonthroughraEonalizaEonoflaws,procedures,andautomatedprocessestofacilitateclearanceofgoodsandminimizecorrupEonamongsystemusersandoperators.5

Twokeyelementsinthisreformprocessaretheexpressedintenttoformpartnershipswithtraders

throughwhichtoencouragevoluntarycompliancewithlawsand,secondly,toimprovetheinternal

organizaEonofthecustomssystemfocusingoneffecEveandefficientstructures,logicaldefiniEonof

roles,fairrecruitmentsystem,servicecondiEons,accountability,conductanddisciplinaryrules,

trainingsupport,andbuilt-inmechanismsforthepromoEonofethicsamongthestaff.6Otherareas

offocushighlightedinthePlanincludeprotecEonofcustomers,interdicEonofdangerousgoods,

collaboraEonwithfiscalaudits,collecEonoftaxesatsource,andexpansionofphysicalstructuresfor

customsoperaEon.

AccordingtotheFiveYearStrategicPlan,someofthekeyachievementssince2003inreformingthe

customssystemincludetheconstrucEonofinfrastructurefaciliEesatmajorborderpoints,

enactmentofamoderncustomslegislaEon,harmonizedsystemfortheclassificaEonandcodingof

goods,developmentofasinglecustomsFormforcustomsdeclaraEons,adopEonofASYCUDAfrom

UNCTAD,computerizaEonoftransitproceduresthroughthephasedimplementaEonofASYCUDA

commencingin2005,import-relatedexempEonspolicyandprocedures,automateddatacollecEon

andproducEonofcustomsstaEsEcs,customsbrokersprogram,andacquisiEonofinformaEon

technologyandotherequipmentanduniforms.

6

_____________________________________________________________________________________

3AltaiConsulEng.2007.ChallengesPresentedbytheLegalandRegulatoryFrameworkGoverningPrivateSector,For-profit

AcEvityBackgroundpaperpreparedforthenablingnvironmentConference,organizedbyAgaKhanDevelopment

NetworkinAugust2007,Kabul,Afghanistan.Also,DepartmentofState(2009),DoingBusinessinAfghanistan:2009

CountryCommercialGuideforU.S.Companies.(WashingtonDC:UnitedStatesGovernment).

4ACD.2007.AfghanCustomsDepartment:AFiveYearStrategicPlan(2007-12).(Kabul:GovernmentofAfghanistan).

5ACD.2007.AfghanCustomsDepartment.6ACD.2007.AfghanCustomsDepartment.


11/26

Thereremainmajorbasicchallenges,however,atcustomsfaciliEesevenatimportantborderpoints

suchasTorkham,IslamQala,andHairatan.Theseincludelackofelectricityand/orgenerators,or

lackoffuelforgenerators,lackofadequaterunningwaterandsanitaryfaciliEes,lowsalariesof

customsstaff,anddeterioraEngsecurityandtheemergenceofaparallel,shadowcustomssystem.

Theuseofthenewphysicalinfrastructureandbuildingsbeingbuilttoservecustomspurposesare

someEmescontestedbyothergovernmentalbodiessuchastheborderpolicewhoalsohaveneeds

forbe\erfuncEoningphysicalstructures.InaddiEontocustomsofficialspresentatmajorborder

entrypointsaretheborderpolice,MinistryofCommerceandIndustry(MoCI)whichownsmuchof

thelandaroundimportantcustomspointsandcollectsdutyonselectedgoodsenteringthecountry,

MinistryofInterior(MoI)whosefuncEonistomonitorimportofintelligenceequipment,Ministryof

Culturewhichvetscontentsofwri\enandrecordedmaterialsenteringthecountry,Ministryof

PublicHealthwhichchecksthestandardsofimportedmedicalgoods,provincialgovernors

representaEvesparEcularlyinJalalabadwheretheGovernorsofficehasstaEonedaround20

peoplewhoimposeadevelopmentlevyongoodsenteringfromPakistan,AfghanistanNaEonal

StandardAuthoritywhichchecksthequalityofvariousgoodstoensurecompliancewith

internaEonalstandards,andMinistryofAgriculture,IrrigaEonandLivestock(MAIL)whichchecksall

importsofagriculturalproducts.

RumorsrunrifeatvariousborderpointsaboutwidespreadcorrupEonrunningthroughthe

operaEonsofthesevariousenEEesandtherebeingli\leornoopportunityforregistering

complaintsorhavingcomplaintsaddressedinaEmelyandjustmanner.Thereisli\lefaithinthe

abilityofthecustomssystemtofulfillitsmandateofmanagingandoverseeingthedaytodayworkingofthecustomsandrelatedworkforce,ensuringthatcorrupEonischecked,andthatthe

customschargesareappliedconsistently,fairly,transparently,anddiligently.TheimplementaEonof

ASYCUDAsince2005hasstreamlinedthecustomsprocedurestofoursteps,takinganaverageEme

ofaround90minutestocomplete.PartoftheASYCUDAsystemisacomprehensivelistof6,000

codesforallmannerofgoodstobeenteredintothecomputerizedsystemandfortheappropriate

feetobeapplied.This,togetherwithX-rayfaciliEesatTorkhamandIslamQala(butnotyetat

Hairatan)shouldmakeforanefficientsystemofcheckingcargoandregistraEonswhileapplying

standardizedfees.However,asthefindingsfromthisstudyshow,theimplementaEonofthe

ASYCUDAandotherprojectstostructureandmodernizethecustomssystem,andtheadopEonoflegislaEoninaccordancewithinternaEonalpracEcesmustbeviewedasthestartofalongerprocess

ofphysicalandhumancapacitydevelopmenttoensurethatthenewphysicalstructuresandwork

procedures,technologies,andlegislaEonareappropriatelyallocated,learned,andapplied

consistentlyandwitheffecEveoversightmechanisms.

Otherdeficienciesincludelackofadequatelytrainedpersonneltocollectandanalyzecustomsdata

andtogeneratereportstoinformfurtherreformandimprovementsinthesystem.ConflicEng

mandatesand/orjurisdicEonsoftheMinistryofInterior,MinistryofCommerceandIndustryand

othergovernmental(andsomeEmeslocalandnon-governmental)enEEesalsoconEnueto

7


12/26

underminethespeedandeffecEvenessofthereformprocesswhileincreasingtransacEoncosts

formallyandinformally(throughvariousformsofextorEon)fortraders.Insomecasesthecustoms

borderpersonneldonotevenhavesufficientauthoritytomaintaintheuseofinfrastructure

designatedfortheirownuse.

Regardlessoftheseandothermonumentalchallenges,thecustomssystemhasseenamarked

improvementinitsoverallfuncEonalityandabilitytocollectandtransferrevenuestothe

Government.Customsrevenuesincreasedfrom$50millionin2004tomorethan$399millionin

2008,forexample,anincreaseofmorethan700%infiveyears.7For2011theesEmatedrevenue

fromcustomsoperaEonsisaroundonebilliondollarsUS.8Attheircurrentrates,customsrevenues

consEtutewelloverhalfofallGovernmentrevenueswhilethewaiEngEmefortrucksatmajor

bordercrossingshasdecreasedsignificantly.9Forexample,over90%oftrucksatTorkhamarecleared

inlessthan1.5hours,comparedto18hoursin2003.10Thebroadgoalsofthecustomsreform

programaretoincreaserevenue,standardizereportgeneraEon,increasespeedincargoprocessing,

andgeneratecompletedocumentaEon.(Seedetailsofspecificprogramsandprojectstomeetthese

andfutureobjecEvesinAppendix1andcustomsprocessdescripEonsandproceduresinAppendix2).

DespitethenumerousprogramsandsuccesseswidelypublicizedbyinternaEonaldonorsandthe

GovernmentinbuildingthecustomssysteminAfghanistan,theviewfromoutsidethecountryand

theadvicetothosewishingtodobusinessinAfghanistanisratherskepEcal,cauEonary,and

contradictorytothestatedaccomplishments:

AlthoughthereisafocusedAfghananddonorcountryefforttoimprovefaciliEesandpracEcesatthe

majorbordercrossingpoints,thecustomsregulaEonsandproceduresinAfghanistanareneither

transparentnorconsistent.CoordinaEonbetweencustomsandothergovernmentauthoriEesis

minimal,customsofficialsreceiveminimaltraining,andinfrastructureissEll2to3yearsfrombeing

fullyupgraded.Tradersfaceunclearproceduresatthebordersaswellassignificantdelays,extra-legal

duEes,andbureaucraEcobstrucEons.CorrupEonisasignificantproblem.11

Also,aUSGovernmentinvesEgaEonin2010reportsskepEcismbyalargenumberofsignificant

actorsabouttheprospectofexpecEngtheAfghanistanNaEonalPoliceorAfghanistanNaEonalArmytoplaycentralrolesincurbingcorrupEonintransitofgoodsfromborderentrypointstovarious

locaEonswithinthecountry.ThisskepEcismisbasedonconcernsaboutcapacity,competence,and

corrupEon.12TheunderlyingreasonforsuchskepEcismisnotweaknessesinorlackofprocedures

8

_____________________________________________________________________________________

7IDA2011.InternaEonalDevelopmentAssociaEonoftheWorldBank,availableat:h\p://web.worldbank.org/WBSIT/

XTRNAL/XTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:

73154,00.html

8Customskeyinformant,Kabul,May2011.

9ACD.2007.AfghanCustomsDepartment.Page9.

10IDA.2011.InternaEonalDevelopmentAssociaEon.

11DepartmentofState.2009.DoingBusiness.Chapter5.

12Tierney,J.F.2010.Warlord,Inc.:xtorEonandCorrupEonAlongtheUSSupplyChaininAfghanistan.(WashingtonDC:

UnitedStatesGovernment),page67.
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.html


13/26

butlackofenforcementcoupledwithactualorperceivedinsecurity.Arguably,themostformidable

insEtuEontocontendwithinthecustomsandnumerousothersystemsinAfghanistanisdeeply

rootedand,inmanycases,sophisEcatedformsofcorrupEoncompoundedbythepresence(at

borderentrypoints)ofaplethoraofothergovernmentalenEEeswithinsufficientlyclear,or

overlapping,mandates.

ItisworthpoinEngoutthatcorrupEoninAfghanistanhassomeofitsbeginningsinthetradiEonof

appreciaEnghelpthroughofferingsofpresentsand,morerecently,money.ThistradiEonhasnow

evolvedintoasophisEcatedandwidespreadsystemofextorEonmanifesEngitselfinallfacetsoflife

inAfghanistan,parEcularlyinareaswheretherearesignificantflowsofgoodsandpotenEalcash

suchascustoms.NochangeinproceduresalonecandealwithcorrupEoninitscurrentstate.

Procedurally,therearerulestobefollowedandtoolssuchasASYCUDAtobeuElized.Neitherisdone

adequatelyorsufficiently,however,duetoli\leincenEvetodosoandnoseriousoversightto

enforceadherence.ChangingorovercomingtheinformalinsEtuEonsofthetotalAfghaneconomy,

includingcorrupEon,aremuchgreaterchallengesthanintroducingorchangingtheformalones,e.g.,

rulesandregulaEons.

.KeyFindings

Reportedly,thenewandverymoderncustomssystemestablishedbytheGovernmentof

AfghanistanwithsignificantsupportfromtheinternaEonaldonorsisthesourceofenvyforallthe

neighboringcountries.However,despitethevariousfaciliEesprovidedbytheASYCUDAsystemfor

applyingthecorrectduty,generaEngreceipts,andbuildingaveryusefuldatabase,thereare

complaintsthatthepricingdepartmentsatborderpointsimposearbitrarycodesandpricestothe

goodsenteringthecountry.TradersalsocomplainthatASYCUDAsexpansivedatabaseisnotuElized

toassistthemwithtrackingmisplacedorlostdocumentaEonandinsteadtheyhavetoresorttothe

servicesofkomishenkarstoobtainduplicates.Theproblemsofthecustomssystemaremostlytodo

withwidespreadcorrupEon,lackofclarityamongthesystemsusersinrelaEontothefeescharged,

underuElizaEonoftheASYCUDAtechnology,andli\lerecoursefortheuserstoreportmaltreatment.

InconsistencyincustomsdutyallocaEonwasthemaincomplaintbymanyofthetraderswho

parEcipatedinthisresearch:

Dependingonthepointofentry,differentratesofdutyareappliedtothesameimports.Itisasifthe

headofcustomsistheself-appointedMinisterofFinance.InHeratthedutyforonetonofgoods

couldbe560AfghaniswhereasinMazaritcouldbe760.IfthisisonecountrywithoneMinistryof

Finance,thentheratesshouldbethesameatallentrypoints.13

9

_____________________________________________________________________________________

13FocusGroupDiscussion,Kabul,April2011.


14/26

ThesenEmentsharedbymanyofthetradersinterviewedatthethreeborderpointswasthatthey

didnotmindpayingfeesonthecondiEonthattherewasconsistencyinthesystemandthelevels

chargedandthattheproceedswouldgototheGovernment,verifiedthroughproperlyprepared

documentaEon:

Wedontmindpayingfees,butwepreferittogothroughofficialchannelstotheGovernmentandnot

toanyonewhohasthepowertotakeitfromus.14

ThetradersinterviewedinKabulandatthethreeborderentrypointscitednumerousexamplesof

extorEonbyseniorandothercustomsofficialswhoallegedlydemandafeedependingonthesize

andtypeofimportedgoods.15Ifthetraderiswillingandabletopay,theconsignmentpasses

throughthesystemwithoutdelay.Ifnot,thegoodsareimpounded,someEmesforuptoamonth,at

thebordertowaittheirturntobeprocessed.InspecEonofthegoodsconsistsofoffloading

everythingfromthecontainertruck,inspecEngitwiththeriskoflossanddamage,uploadingit(also

withtheriskoflossanddamage),andthenallowingthegoodstopassthrough.16Smallerbribesare

requestedthroughouttheprocessofinspecEon.Accordingtoonetrader:

Thiswholesystemisunfair.WhendutyratesaredecidedthereisnoconsultaEonwiththetradersor

theirrepresentaEves.Noonecansolvethisproblembecausealotofthesecustomsofficershave

purchasedtheirjobsandareobligedtoactinacorruptmannertorecouptheircosts.17

Fortraderswhowishtominimizetheirdiscomfortandtogothroughthecustomsprocedures

expediEously,therearekomishenkars(brokersormiddlemen)whoare,allegedly,appointedbythe

seniorofficialsatcustomspoints.Typically,komishenkarschargebetween1,4001,800Afghanispertruck,notcounEngallothergratuityorbribemoniesthatthetradersareexpectedtopaythevarious

officialswhilethekomishenkarisgoingthroughtheprocess.Traderswhogothroughtheprocessare

expectedtopayaformalchargeof1,800AfghanisfortheT1Formandbetween200-300Afghanis

forthetashrihnameh(descripEondocument).Manytraderspayclosertoaround6,000Afghanisand

complainthattheycanonlyshowreceiptsforsomeofthecoststheyincurincomingthroughthe

customssystem.18AllallegaEonsaboutextorEonandbribeexpectancybycustomsandotherofficials

arevehementlydenied,however,byMoFofficials.19Theroleofkomishenkars,thoughiniEally

informal,wereformalizedinJune2011andevendocumentedintherevisedproceduresfor

obtainingcustomsclearance.(SeeAppendix2).

10

_____________________________________________________________________________________

14FocusGroupDiscussion,Kabul,April2011.

15Reportedly,thenormalbribefortrucksis$250forcarryingcement,$110forEmber,$100forpotatoes,and$90for

petroleumgas.SeeADB(2008),AfghanistansTradewithCARCNeighbours:videncefromSurveysofBorderCrossing

PointsinHairatanandSherKhanBandar.(Kabul:AsianDevelopmentBank).Conceivably,highvalueelectricand

electronicproductswouldincurhigherbribes.

16InterviewwithtradersatIslamQala,February2011.

17FocusGroupDiscussion,Kabul,April2011

18OnetraderatIslamQalaclaimedthathepaidanythingrangingfrom100to20,000Afghanisdependingonthetypeand

sizeofhiscargo.19ADB.2008.AfghanistansTrade.Theinterviewsheldwithofficialsinthecourseofthisstudyalsoconfirmthis.


15/26

4.1Hairatan

ThetradersandotherkeyinformantsinterviewedatHairatanandinMazar-eSharifreportedpaying

informalfees(orbribes)ofupto5,000Afghanispercontainertrucktogetthroughthefirst

inspecEonpointsothatthecontentscanbevaluedandfeespayablecalculated.PassagethroughMazar-eSharifalsoinvolvesthepaymentofhaqulubor(rightofpassage)ofbetween1,800to2,000

Afghanis,chargedbythemunicipality.Ifatraderwishestopaylessincustomscharges,itisatthis

pointwherenegoEaEonsbeginaboutthevalueofthecargo.HighvaluecargosarerouEnely

undervaluedattradersrequesttominimizepayablecustomsfees.Theofficer(s)whoassistthe

tradersbyundervaluingthecontentsaregivenashareofthesavingsmadethroughcontentsbeing

undervalued.Accordingtoonetrader,

Onthissideoftheborder[inAfghanistan]wearerequestedtopaybribesbythecustomspeopleand

the[border]police,whoarejustlookingforanexcuse.venwhenwehavenoproblemswithour

paperwork,wearetoldthatsinceweareimporEngsomuchweshouldgivethemali\leastheir

share.20

Bribesarealsowillinglypaidbytraderswhowanttheircargomovedquicklythroughcustoms:

OnceIaminAfghanistan,IoffertopaybribesbecauseIknowthatIcanspeeduptheprocess,andget

mygoodstotheirdesEnaEonwithinoneortwodays.21

Incontrast,thereareveryfewproblemswithbriberyandlossofgoodswhilegoodstransitthrough

UzbekistanandTajikistanontheirwaytoHairatan.Alltraderswereadamantthatproblemsfor

shipmentsbeginfromthepointofentryintoAfghanistan.TheonlysituaEonwherethereisa

possibilityofbribepaymentoutsideofAfghanistaniswhentransitpaperworkisincompleteor

inadequatelyadministered.

4.2IslamQala

TradersinIslamQalareportvariousexcusesusedbyofficialstoextortbribesfromthetradersfor

amountsrangingfrom100to20,000ormoreAfghanis.22

ThetraderswhoimportvehiclesanddecidetodrivethemtoKabulforregistraEonareharassedbyofficialsfornothavingplatesdespitethefact

thatthedocumentaEonforthevehiclesisinorder.ThissituaEonisoenresolvedthroughthe

paymentofbribes.Tradersarecharged1,800AfghanisforobtainingtheT1Formand2-300Afghanis

forobtainingtashrihnameh.However,withvarioustypesofotherunofficialchargesandtheuseof

komishenkars,thetraderstypicallypayaround6,000AfghanistohavetheirimportaEonpaperwork

completed.

11

_____________________________________________________________________________________

20InterviewwithatraderinMazar-eSharif,February2011.

21InterviewwithatraderinHairatan,February2011.22InterviewswithtradersinIslamQala,February2011.


16/26

TheroutefromHerattoKabulisparEcularlyunsafeand,reportedly,thereareofficialandunofficial

checkpointstocollectillegalrightofpassagefeesfromthetrucks.Unofficialrightofpassagefeesare

alsochargedoncargocomingfromIslamQalatoHerat.Asonetraderputit,

Ifyoutravel5kilometersawayfromIslamQalatowardHerat,youseeallthesepeoplestandingonthe

roadwiththeirshalwarchemiseclothingandaskingformoney.Theyhavenorighttodothis,only

powertoextortmoney.23

Someofthesecheckpointsevenissuetheirownreceiptstothedriverswhilemanydriversinsiston

payingandobtainingthereceiptstoinsurethemselvestherightofpassagethroughfurther

checkpointsorforwhentheyreturnonthesameroute.GoodsenteringintoAfghanistanthrough

ZaranjalsopayafeeattheDelaramT-juncEonwheretheTalibanhaveacheckpointandchargea

dutybasedonthenumberofEresonthetrucks.Theusualpriceis1,000AfghanisperEre.24A

numberofthetradersinterviewedexpressedawishforinsurancecoverfortheirgoodswhileen

routefromIslamQalatoKabul.

4.3Torkham

ThetradersinterviewedreportedonirregularapplicaEonofcustomsduty.Theypay16,500Afghanis,

whichincludesafeeforthekomishenkar,toobtainaT1Formtoimportgoodsand1,000Afghanisto

theprovincialgovernmentasdevelopmentfee.OncompleEonofthepaperworkthetradersare

expectedtogiveabout100Afghanistotheprocessingofficerasbakhshish(gratuity).ThemainobjecEonbythetradersusingTorkhamastheirentryportwasnotreceivingreceiptsorbeinggiven

inadequatedocumentaEonexplainingthechargesandthereasonsforthem.

InaddiEontoinconsistentdutybeingapplied,othercostsincurredbytradersincludea

developmentchargeinTorkham,imposedbytheGovernorsofficeforrightofpassagethroughthe

Jalalabadmunicipality,andinformalfeeschargedatthevariousentrypointstoKabul.nrouteto

Kabul,trucksareoenstoppedbythepoliceandaskedtopay,aspassagefee,theunofficial

cigare\eandsnuffmoneywhichrangesfrom30to200Afghanis.

ThereareanumberofsignificantissuesfacedbythetraderswhotransitthroughPakistanentering

AfghanistanviaTorkham,parEcularlyenroutefromtheportofKarachi.25Goodsthatremainin

KarachibecauseofinsufficientdocumentaEonorbecauseofhighbribessoughtbyPakistanicustoms

officials,havetopaystoragefees,ordemerge,whichsomeEmescanbeashighasoneto1.5

millionKaldars.Also,recentlytheGovernmentofPakistansetupagovernmentownedandoperated

12

_____________________________________________________________________________________

23InterviewwithatraderinHairatan,February2011.

24InterviewwithtradersinIslamQala(February2011)andwithacustomsofficialinKabul(June2011).

25Notethatnoneofthekeyinformants,interviewedforthisresearch,alludedtoproblemswithtransiEngtheirgoodsthroughUzbekistanorIran.


17/26

transportaEoncompany,NLC,taskedwiththetransportaEonofintransitgoodsdesEnedfor

AfghanistanfromKarachi.TheAfghantradersarenolongerallowedtoarrangetheirownintransit

andarecompelledtouseNLC.ReportedlyNLCdoesnothavesufficienttruckstoaccommodatethe

highvolumeofintransitgoodsdesEnedforAfghanistan.Also,thetrainsusedfortransporEngthein

transitgoodscannotaccommodateheavyitemssuchascarsandotherheavyvehicles.Thisresultsin

increaseddelayinthemovementofimportsfromKarachitoTorkhamandpaymentofmulEple

storagefeecosts. 26

TheamountofimportedgoodsintoAfghanistan,parEcularlyofelectricalandelectronicgoods,far

exceedsthedomesEcdemand.ThereasonforthisisthelucraEveandinformalre-exportaEon

systeminoperaEonaroundTorkham,whichtakesadvantageofthehighduEeschargedonimported

goodsinPakistan.Significantvolumesofelectricalandelectronicgoods,clothes,DVDs,CDs,tea,and

drugsimportedintoAfghanistanthroughTorkhamarere-exportedbacktoPakistanthroughborder

villagessuchasGaroko,Durbaba,andShalmanandsoldatpremiumprices.27Theamountofillegally

importedgoodsintoAfghanistanisesEmatedat20%ofthetotal.Theentryportsforillegal

importaEonareLalpoora,Gowshta,Garoky,Kama,Chachobi,andAchin.28

4.4CommonChallenges

Gengthroughthecustomsisthefirstofaseriesofchallengesfacedbytraderswhothenhaveto

movetheirgoodstoKabul.FromallthreeborderpointstoKabultherearelayersofpolicecheckpointswho,reportedly,demandafeetoallowthetruckstoconEnueontoKabul.When

enteringKabul,aninformalfeeispaidtothetrafficpolicetogainpermissionfortransiEngheavy

loads.IffinesareimposedontruckdriverswhileinKabul,receiptsarenotalwaysprovided.29When

inKabul,thetrucksareimpoundedindesignatedstorageareasasameanstolessenthelevelof

trafficinthecity.Foreachnightofimpoundmentthetruckshavetopayaround250Afghaniseach,

whichamountstoasmallfortuneconsideringthataround3,0005,000trucksenterKabulevery

day.30ThetraderswhohavetheirownstoragefaciliEesarelegallynotallowedtousetheminsteadof

thedesignatedstorageareas.

InaddiEontothebribespayablebythetraders,tradersfaceothermajorchallenges.Asonekey

informantputit,

thereisnoinsurancesysteminourcountry.Thisisaseriousproblemforus[giventhesecurity

risks].AfghantradersarenotrealizingtheirfullpotenEalforanumberofveryimportantreasons.

13

_____________________________________________________________________________________

26InterviewswithtradersinTorkham(February2011).

27InterviewwithtradersandcustomsofficialsinTorkham(February2011)andinterviewwithcustomsofficialinKabul

(June2011).

28InterviewwithcustomsofficialsinTorkham(February2011).

29InterviewwithtradersinTorkham,February2011.30FocusGroupDiscussionparEcipant,Kabul,April2011.


18/26

OutsideAfghanistantheyhavevisaproblemsanddifficultyinnegoEaEngwithforeigntradersbecause

we[Afghantraders]haveveryli\leexperienceofworkingininternaEonalmarketsandwedonthave

appropriateknowledgeandeducaEonabouttrade.Anotherissueistheinadequacyinhowthe

Governmentchargesitsvariousfees.Forexample,therearemulEplechargesimposedonmany

importedgoods.First,thereisachargeattheportofentryandthenattheendoftheyearthereis

anotherchargeimposedbytheMinistryofFinance[astax].Ourtradersarenotclearastowhytheyare

payingthesecharges.31

ThelossesincurredbythetraderswhentheirperishablesarespoiledduringretaliatoryinspecEonsby

customsofficersaresignificant.ThiscreatesanarEficialgrowthbarrierformanytraderswhoarerisk

averseandshyawayfromtradinginlargevolumesforfearofpayinghigherbribesorhavingtheir

goodsstolenatvariouspointsofthejourneyfromthebordertoKabul.Othertradersoptforsub-

qualityimportstominimizerisks.

AsignificantfactortobeconsideredinresolvingthehighlevelofcorrupEoninthecustomssystemis

theverylowsalariesofthecustomssystememployees.32Rumorsarerifeaboutcustomsjobsbeing

soldandexcessivecorrupEontakingholdasthemeanstoextortmoneyandpayforthedebtincurred

tobuyacustomsjob.venwhenallpaperworkisinorder,thetradersareaskedtopaysomething

sincetheyarecarryingsignificantamountsofcargoand,presumably,haveaccesstolotsofmoney.

Someofthecustomspersonnelinterviewedreportedthatitwasdifficultforhonestpersonnelto

remainhonestsincetheyweresurroundedbypeersandsuperiorswhoforcedthemtobecorrupt.Reportedlytheconsequenceofnotsuccumbingtopeerpressureisoendismissal.

5.Conclusion

Intechnicalterms,Afghanistansnewautomatedcustomssystem(ASYCUDA)istheenvyoftheregion.

However,despitenewfaciliEes,improvedinfrastructureanda\emptstobuildcapacityand

accountabilityamongcustomsofficials,thecustomssystemconEnuestoexhibitexceedinglyhigh

levelsofcorrupEon.WhilecorrupEoninAfghanistanmayhaveitsrootsinthetradiEonofoffering

monetarygratuiEesorinkindappreciaEoninexchangeforservices,thistradiEonhasevolvedintoa

sophisEcatedandwidespreadsystemofextorEonmanifestinalmostallfacetsoflife.ThesepracEces

areparEcularlyevidentwherethereisasignificantflowofgoodsandcash,asinthecustomssystem.

14

_____________________________________________________________________________________

31InterviewwithanofficialfromAfghanistanChamberofCommerceandIndustry.

32Thisispartofamuchlarger,naEonalissuewithlowwagesacEngasincenEvesforcorruptbehavior.Whilesimplyraising

salariesofallgovernmentemployeesbyafactorof5or10isnotarealisEcopEon,theissueremainsthataslongas

salariesremainattheircurrentlevels,thereisahighlikelihoodthattheywillconEnuetoactasamajorincenEvefortakingbribesorextorEon.


19/26

Customsofficialscommonlytakeadvantageoftraders,demandingbribesofvaryingsizesin

exchangefortheperformanceofnearlyanyfuncEon.Customsemployeesreportthatevenwhen

theydonotwanttoparEcipateincorrupEonandextorEon,theyareforcedtodosounderpeer

pressureandduetofearofpersecuEonbytheircorruptcolleaguesandsuperiors.Asaresult,few

customsemployeesspeakoutagainstthecorruptpracEcesoftheircolleagues.33Thisstateofaffairs

hasanegaEveimpactontradeandstaterevenues,increasesrisksfortraders,andthushinders

economicgrowth.

Yet,tradersactasbothvicEmsandperpetratorsinthecurrentsystem.Tradersplayaninstrumental

roleinmaintainingastable,butillicitequilibriumwithcustomsofficials,basedonpaymentof

minimalfees(bythetraders)andreceiptofmaximumgratuiEes/bribes(bythecustomsofficials).

Thisequilibriumismaintainedthroughthesubversionofproceduralchangesintroducedsince2003

by,forexample,intenEonallymiscodinggoodsintheASYCUDAsystemtochargelowerduEes.The

mainlossescausedbythisextra-legalequilibriumareaccruedtothegovernment,whichfailsto

receiveduEesonimportedmerchandise.

DeterioraEngsecuritycondiEonsnotwithstanding,thevolumeoftradebetweenAfghanistanandits

neighbors,andthuscustomsrevenue,islikelytoincreaseinthecomingyears.InternaEonaldonors

arelikelytoconEnueprogrammingoncustomsreconstrucEon/reform.ffortsbytheGovernment

toenterintoregionaltradeagreementsandtojointheWorldTradeOrganizaEonarelikelyto

increasethepressuretoEghtenthecontrolsinthecustomssystemandrootoutcorrupEon.

RegionalintegraEonandrooEngoutcorrupEonare,arguably,inEmatelyinterrelatedbutrealizingthemisnotalinearprocess.LesscorrupEonislikelytoincreasethechancesofregionalintegraEon

andWTOaccessionwhileregionalintegraEonislikelytobearpressuretorootoutcorrupEon.From

apolicy/intervenEonperspecEve,bothobjecEvesshouldbepursuedsimultaneously.

GiventhepotenEalofthecustomssystemasareliableandsustainablerevenuesource,further

improvementsinthecustomssystemarelikelytobeiniEatedandimplementedbytheGovernment

ofAfghanistanandtheinternaEonaldonors.Asusersofthesystem,thetradersandvariousother

privatesectorenEEeshaveli\leornoincenEvetoadvocatefortransparency,oversight,or

accountabilitysincetheirbordertransacEonsoccurthroughastableequilibriummaintainedbetweencorruptcustomsofficialsandcorruptimporEngtraders.AtthesameEme,thegovernment

andtheinternaEonaldonorsarenotinthestrongestposiEontoeffectchangeintheimmediate

term.StructuralreformofthecustomssystemtorootoutcorrupEonrequiresinputfromthe

governmentandthedonorsontheonehandandinputfromthebusinesscommunityontheother.

Breakingthecurrentstableequilibriumtoestablishanew,morelegiEmate,equilibriumwillrequire

simultaneousintervenEonfromthetop,bythegovernmentandinternaEonaldonors,andfroma

grassrootslevelbythebusinesscommunity.Inthefirstinstance,topdownreformshouldbe

15

_____________________________________________________________________________________

33InterviewswithcustomsofficialsinTorkham,February2011.


20/26

a\emptedthroughtheGovernmentanditsinterveningagenciessuchastheHighOfficeofOversight

andAnEcorrupEonandtheA\orneyGeneralOffice.ForHOOtosucceedwhereGIAAfailed,much

moreauthorityandresourceswillberequiredtoenableHOOtocontend,contest,andchallengethe

currentstatusquoincustomsoperaEons.Similarly,fortheA\orneyGeneralOfficetoplayarolein

rooEngoutcorrupEoninthecustomssystem,seriousthoughtmustbegiventohowtheOfficesrole

isbeingfulfilledcurrently,howsuccessfulithasbeeninbringingtoprosecuEoncorruptofficialsof

thecustomsDepartment,andwhatcanbedonetostrengthenA\orneyGeneralsimportant

funcEon.

GrassrootsintervenEonsaremuchhardertoiniEateandorganizebutextremelynecessaryin

fundamentalreform.OnecannothopeorexpectthatonedayAfghantraderswill,ontheirown,

decideagainstbeingpartytocorrupEoninthecustomssystemtheyhavenoincenEvetodoso.

ThetaskofiniEaEonthusmustfallonintermediaryorganizaEonsandenEEeswithresourcesandan

interestinandmandateforprivatesectordevelopment.SuchorganizaEonsincludeHarakat,which

hasamandatetopromoteprivatesectoracEvityinAfghanistanandalsohasadequateresourcesto

iniEateandfacilitateaseriesofdialoguesinvolvingotherintermediaryorganizaEonsandenEEes

suchasACCI,AISA,andetehadias(guildsortradeassociaEons).34

6.Recommenda4ons

ChangesininformalinsEtuEonssuchascorrupEontakealongEmetobecomeestablished,andwill

requireallmannerofintervenEon,incenEve,anddisincenEvewhichmaybemonetaryandnon-

monetary,proceduralandregulatoryand,mostimportantly,innovaEveandinteracEvetomaximize

learningbydoing.Thereisnoimmediateone-EmesoluEontothebo\lenecksinthecustoms

system.ThestepsrequiredtomoveawayfromcurrentpracEcesinvolvesproceduralrevisions(short

term),improvedoversightmechanismsandimplementaEon(mediumterm),andashiinthevalues

thatcurrentlysupportcorrupEonamongcustomsofficialsandusersthroughawarenessraising,

educaEon,andredefinedincenEvesanddisincenEves(longterm).Suchchangescannotbeexpected

tocomeonlyfromthetopdown,however.CurbingbriberyattheoperaEonallevelrequires

dedicatedenforcementmechanismsandadministraEvesancEonssupportedatthegrassrootslevel.

InaddiEon,suchmechanismsneedtobeextendedandmaintainedintheprovinces.

ReformsmustalsoaddresstheneedsandinterestsoftheactorsmostaffectedbycustomspracEces

customsofficialsandthetraders.IncenEvestoiniEatebehavioralchangeamongcorruptofficials

shouldincludesalariesthatsurpassbasicsubsistence.Ifthisisnotimmediatelypossibleor

sustainable,innovaEveincenEvesarerequiredtobringcorrupEonundercontrol.Forexample,one

customsofficialsuggestedthatwhencontrabandisintercepted,upto20%ofthevalueoftheseized

16

_____________________________________________________________________________________

34ForthefullmandateandoperaEonsofHarakat,see:h\p://www.harakat.af/index.php?page=en_About+Us
http://www.harakat.af/index.php?page=en_About+Ushttp://www.harakat.af/index.php?page=en_About+Us


21/26

goodsshouldbegivenasrewardtotheemployeeortheteamresponsibleforthecatch.Thistypeof

incenEveprovidesamerit-basedbonustopoorlypaidcustomsofficialswhilepublicdisbursementis

likelytobenoEcedbycoworkers.OtheriniEaEvestoimprovecapacityandaccountabilitymustbe

plannedwithmoreforethoughtsuchaslegiEmizingtheroleofkomishenkarsandpunginplace,

whennecessary,internaEonaladvisorswiththerequisiteexperience.35

AtthesameEme,incenEvesmustbedesignedtotargettraders,withanunderstandingthatmany

tradersalsobenefitfromcorrupEon.Withthisinmind,dutyratesshouldbesetthrougha

consultaEveprocesstoencourageimporterstousethesystemratherthansubvertit.Tradersmust

beabletoeasilyandconfidenEallyreportinstancesofcorrupEon,andtoimmediatelyseetheimpact

oftheirefforts.Mechanismsfortheappealofcustoms-relateddecisionsshouldberelocatedtothe

borderpointssincerequiringtraderstotaketheirclaimstotheCustomsAppealBoardinKabulonly

encouragespayingbribesatborderentrypointstominimizetransacEoncosts.

FailuretoaddressthemulEplelayersofrequiredchangeinasystemaEcmannerrunstheriskof

underminingstaterevenues,regionalandinternaEonaleconomicintegraEon,andislikelytofurther

weakenthelegiEmacyofthecustomssystembydiscouraginglegiEmateinvestorsandrewarding

thoseengagedinsubverEngthesystem.Thenetresultofthesetrajectorieswillbetodeprive

AfghanistanofdesperatelyneededlegiEmatetradeacEvity,governmentrevenue,anddirect

investmentbynaEonalandinternaEonalactors.AddiEonally,changesofrulesandregulaEonswill

notbehelpfulunlesstheissuesofenforcementaresolvedandtheperpetuaEonofthecultureof

offeringgratuiEestogetthingsdoneismanagedwithinacceptablelimits.Thatsaid,muchcouldbeaccomplishedthroughreforminwagesandotherformsofremuneraEon,increasedandtransparent

oversight,and,mostimportantly,engagementandlearning.

Specifically,theGovernmentofAfghanistanandinternaEonaldonorsshouldconsiderimplemenEng

thefollowingmeasuresintheireffortstoreformthecustomssystem:

- ConEnuethebuildingandmodernizaEonofcustomsinfrastructure.Atmajorpointsofentry,i.e.,

Hairatan,IslamQala,andTorkham,Afghanistanscustomssystemisoneofthemosta\endedto

andmodernizedinSouth/CentralAsiaandtheMiddleast.ffortstomaintainthecurrentfuncEonsandincreaseadherencetotheproceduresthroughmoreeffecEveenforcementand

oversightwillneedtobeintensified,bearinginmindthatinsEtuEonalizaEonofthemany

changesplannedforthecustomssystemislikelytotakemanyyears.

- IniEateaprocessofdialoguetoinvolvetheMinistryofFinance,HighOfficeofOversight,Ministry

17

_____________________________________________________________________________________

35OnecustomsofficialcomplainedthatappoinEngyoungfemaleuropeansasadvisorstocustomsofficialswas

counterproducEve,parEcularlyinsomeofthemoreconservaEveborderregions.ThesuggesEonwastoappointoldermaleswithregionalexperiencetomaximizeimpactonthelocalcustomsofficials.


22/26

ofCommerceandIndustry,representaEvesoftradersandotherprivatesectorrepresentaEve,

andotherrelevantparEesonhowtoconEnueeffortstoimplement/enforcecustomslawand

relatedregulaEonsandproceduresanddevisewaysofminimizingarbitrarinessinthepracEces

ofcustomspersonnel.IntermediaryorganizaEons,suchasHarakat,arewellposiEonedtoiniEate

suchadialogue.TheoutcomesfromthisdialogueshouldincludeintervenEonstoincreasethe

integrity,independence,andauthorityofthecustomssysteminrelaEontoothergovernmental

agenciesacEveinborderareas.

- Maintaineffortstoimproveinfrastructure,providetrainingandcapacityexchange,raisesalaries

andotherformsofremuneraEon,andinsEtuteafuncEoningoversightmechanismtoinclude

monitoring,evaluaEon,andperiodicaudits.

- FormallycerEfykomishenkarsaslegiEmateactorsinthecustomsprocesswhiletakingstepsto

ensurethattheyreportonthefeeschargedandtaxespaidonearnedcommissions.

- ConEnuetobuildcooperaEonandharmonizaEonthroughcustomstreaEes,forexample,with

neighboringcountries.Forthistohappen,andforAfghanistantomaximizebenefitsfromsuch

associaEons,Afghanistanneedstoaddresstheremainingproblemsinitscustomssystem(mostly

relatedtocorrupEon)simultaneouslywithstrengtheningEeswithregionalandinternaEonal

partners.

- ConductfurtherresearchtounderstandthebackendofcustomsoperaEons.ThescopeofthisresearchwaslimitedtoanexaminaEonofthefrontendofcustomsoperaEons,focusingonhow

usersandofficialsprocessgoodsthroughthesystem.Tofurtherbenefitthedesignand

implementaEonofreformsinthecustomssystemitwillbenecessarytoinvesEgate,forexample,

howcollectedduEesaretransferredfromtheborderintoGovernmentrevenuestreams,towhat

usecollectedrevenuesareput,andhowtheseaspectsofthesystemaffectdaytodayoperaEons

attheborderpointofentry.

18

_____________________________________________________________________________________

46See,forexample,Box1and2regardingICCstandardsforbusinessesandnaEonalgovernments,aswellasAppendix1fortheGlobalCompacts10thPrinciple.


23/26

Bibliography

ACD(2007).AfghancustomsDepartment:AFiveYearStrategicPlan(2007-12).(Kabul:Government

ofAfghanistan).

ADB(2008),AfghanistansTradewithCARCNeighbours:videncefromSurveysofBorderCrossing

PointsinHairatanandSherKhanBandar.(Kabul:AsianDevelopmentBank).

AltaiConsulEng(2007).ChallengesPresentedbytheLegalandRegulatoryFrameworkGoverning

PrivateSector,For-profitAcEvityBackgroundpaperpreparedforthenabling

nvironmentConference,organizedbyAgaKhanDevelopmentNetworkinAugust2007,

Kabul,Afghanistan.

DepartmentofState(2009).DoingBusinessinAfghanistan:2009CountryCommercialGuideforU.S.

Companies.(WashingtonDC:UnitedStatesGovernment).

GovernmentofAfghanistan(2007).AfghanistancustomsDepartment(ACD):AFiveYearStrategic

Plan(2007-2012),(Kabul:MinistryofFinance,GovernmentofAfghanistan).

IDA(2011).InternaEonalDevelopmentAssociaEonoftheWorldBank,availableat:h\p://

web.worldbank.org/WBSIT/XTRNAL/XTABOUTUS/IDA/0,,contentMDK:

22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.html

IntegrityWatchAfghanistan,AfghanPercepEonsandxperiencesofCorrupEon:ANaEonalSurvey

2010.(Kabul:IntegrityWatchAfghanistan).

Tierney,J.F.(2010).Warlord,Inc.:xtorEonandCorrupEonAlongtheUSSupplyChainin

Afghanistan.(WashingtonDC:UnitedStatesGovernment).

19
http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.htmlhttp://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22311336~menuPK:4752068~pagePK:51236175~piPK:437394~theSitePK:73154,00.html


24/26

Appendix1:CustomsReformProgramsandProjects

Program Projects

Program1Automa,on Project1:ImplementaonofTransitandDeclaraonProcessingatMajorcustomsStaonsProject2:FullImplementaonofallASYCUDAModules

Project3:TrainingforOperaons

Project4:MISandotherRevenueReporngSystemsofASYCUDA

Project5:FullInternaonalizaon

Project6:ProcurementofNecessaryASYCUDAITEquipment

Project7:Cross-borderDataExchange

Project8:ACDsICTMasterPlan

Project9:EstablishmentofRiskManagementUnit

Program2

Legaliza,onand

Procedures

Project1:LegislaveReform

Project2:FinalizingSub-legislaon

Project3:ProceduresforSupporngAutomaon

Project4:CheckingRevenueLeakagesandTaxFraud

Project5:ReformofInternalAuditDirectorate

Project6:FormulaonofEffecveValuaonDatabase

Project7:ImplementaonofValuaonBestPraccesProject8:TransitCorridorsImprovement

Project9:DevelopmentofWarehousingProceduresandSystem

Project10:customsBrokersProgram

Project11:ReformPolicyandCoordinaon

Program3

Enforcement

andVoluntary

Compliance

Project1:PrevenveandEnforcementWingReforms

Project2:An-smugglingReformswithaFocusonContrabands

Project3:InvesgaonsandProsecuonWing

Project4:BorderlineSurveillance

Project5:EstablishmentofaModernIntelligenceUnit

Program4

HumanResource

and

Organiza,on

Development

Project1:SalarySystemReform

Project2:Incenves/Bonuses/RewardsReform

Project3:HumanResourcesPolicyReform

Project4:InternalAffairsandIntegrity

Project5:EstablishmentofNewSupportUnits

Project6:TrainingPolicyandTrainingScheduleProject7:ModerncustomsTrainingInstute

Project8:TraintheTrainers

Project9:RefresherandSpecializedTrainingCourses

Project10:ForeignTrainingProgram

Project11:HumanResourcesFunding

Project12:HumanCapitalDevelopmentManagementCapacityBuilding

Program5

Infrastructure

andEquipment

Project1:ConstruconorDevelopmentofICDsandRegionalHeadquarters

Project2:ConstruconorDevelopmentofBorderStaonsandcustomsTrainingInstute

Project3:EstablishmentofInventoryManagementandMaintenanceUnit

Project4:EstablishmentofInfrastructureManagementUnit

Project5:EstablishmentofStructureforCargoHandling

Project6:SurveillanceEquipment

Program6

LegalReform

Project1:EstablishmentofLegal/LigaonSupportOffice

Project2:EstablishmentofSupportAppealsandArbitraonUnit

Program7

Business

Partnership

Project1:HelpLineandMediaCoordinaonUnitatACDHeadquarters

Project2:WebsiteDevelopment

Project3:EstablishmentofanOmbudsmanProgramandIncreasedCapacityofConsultaveCouncil(withTrade)

Project4:EstablishmentofaHotLineatACDHeadquarters

Source:Afghani stansCustomsDepartment(2007).

20


25/26

Appendix2:CustomsClearanceProcedures(inEnglishandDari)

Source:Customsofficials

21


26/26

Source:Customsofficials