UNECE Trade Commission. 5 th session. Priority needs in trade facilitation, regulatory cooperation and agricultural development in Kazakhstan Geneva, Switzerland 18 June, 2012 Oleg Samukhin

Business Process Analysis Business Process Analysis helps pinpoint particular problems faced by TradersBusiness Process Analysis helps pinpoint particular problems faced by Traders Two Large Exporters were selected:Two Large Exporters were selected: –Producer of Candies and Biscuits –Producer of Flour, Pasta and Biscuits Companies have operations in 2 different corners of the country, which results in regional differences in:Companies have operations in 2 different corners of the country, which results in regional differences in: –Speed of control –Arrangement of transport

Scope of BPA study in Kazakhstan Products Export marketsModes of transport Trade financing CIS FTANon-CISRailRoadOther Flour Pasta Biscuits Candies

Core Business Processes and Stakeholders in export by Rail For all shipments Not for all shipments

Core Business Processes and Stakeholders in flour export Chamber ofCommerceCustomsCustomsBrokerExporterExporter’sBankFreightForwarderImporterImporter’sBankPhytosanitaryInspectionRailwaysRail carOperator 1. BUY 1.1. Negotiate & sales contract 2. SHIP 2.1. Arrange transport 2.2. Get the Certificate of Origin 2.3. Obtain Phyto Certificate 2.4. Load Transport 2.5. Pay for Transport 2.6. Do Customs Clearance 2.7. Ship goods and documents 3. PAY 3.1. Open transaction certificate 3.2. Pay for goods 3.3. Close transaction certificate Processes Stakeholders

Core Business Processes and Stakeholders in export by Road

Chamber ofCommerceCustomsCustomsBrokerExporterExporter’sBankImporterImporter’sBankRoad Operator 1. BUY 1.1. Negotiate & sales contract 2. SHIP 2.1. Arrange transport 2.2. Get the Certificate of Origin 2.3. Obtain Phyto Certificate 2.4. Load Transport 2.5. Pay for Transport 2.6. Do Customs Clearance 2.7. Ship goods and documents 3. PAY 3.1. Open transaction certificate 3.2. Pay for goods 3.3. Close transaction certificate Processes Stakeholders

Use Case Diagram. Export by Road to the EU

Use Case Diagram. Export by Rail to the CIS

Modes of Land Transport in Export-Import operations ModeMain use RailExport of minerals Export to Central Asian Republics Transport of low value goods to/from Russia RoadImport-export of consumer goods, equipment, food from/to the EU Import of consumer goods from China Import-export to/from Kyrgyzstan and Tajikistan (bi-passing Uzbekistan) PipelineOil Gradually replacing rail deliveries in tank cars

Trade flows. Export Astana st. Dostyk Khorgos Kordai st. Lugovaya st. Sary-Agach Fuels, grain, flour Oil, metals, grain

Trade flows. Import Astana st. Dostyk Khorgos Kordai st. Lugovaya st. Sary-Agach Equipment, consumer goods, food Consumer goods, food, equipment Agricultural products

SHIP: Arrange Rail Transport Rail cars not always available => delays or lost salesRail cars not always available => delays or lost sales Private wagons are more expensive => loss of profitPrivate wagons are more expensive => loss of profit Rail companies not always acknowledge bookings, Traders have to get what is availableRail companies not always acknowledge bookings, Traders have to get what is available

SHIP: Obtain Certificate of Origin Chambers of Commerce do thorough examination once a year, butChambers of Commerce do thorough examination once a year, but Certificates have to be issued for every shipmentCertificates have to be issued for every shipment One company spends days, the other – hours for obtaining CoOsOne company spends days, the other – hours for obtaining CoOs

Business Process. Obtain Phytosanitary Certificate It is needed for Flour exportIt is needed for Flour export It takes 3 steps in 3 different locationsIt takes 3 steps in 3 different locations But 3 steps take only few hoursBut 3 steps take only few hours Certificates are mostly received based on the Producer’s lab reportsCertificates are mostly received based on the Producer’s lab reports

SHIP: Load, Pay, Ship cargo and documents Rail cars have to be checked and repaired by TradersRail cars have to be checked and repaired by Traders Payment for services of foreign Rail companies have to be done through freight forwardersPayment for services of foreign Rail companies have to be done through freight forwarders

SHIP: Do Export Customs Clearance Declarations are prepared electronically, but must be printed and stampedDeclarations are prepared electronically, but must be printed and stamped Payment for declarations are in EUR, which is not always convenient for TradersPayment for declarations are in EUR, which is not always convenient for Traders

Time-procedure Chart: Export of Candies Getting Certificate of Origin sometimes can be the critical path activityGetting Certificate of Origin sometimes can be the critical path activity

Export of Flour, Pasta Time to Arrange transport cannot be forecastedTime to Arrange transport cannot be forecasted The whole process duration depends on availability of rail wagonsThe whole process duration depends on availability of rail wagons Export procedures take only one dayExport procedures take only one day

Narva - Ivangorod Koidulla – Kunichina Gora Vaalimaa - Torfianovka Nujamaa - Brusnichnoe Terespol - Brest Medidnkai – Kamenny Log Terehova - Burachki Kukuryki - Kozlovichi Kuznitsa Bialostoka - Bruzgi Salchininkai - Beniakoni Silene - Urbany Grebneva - Ubylinka Luhamaa - Shumilkino Imatra - Svetogorsk Bobrowniki - Berestovitca Road crossings between Customs Union and the EU Export to the EU is done by road transport through RussiaExport to the EU is done by road transport through Russia Queues up to several days at the bordersQueues up to several days at the borders Excessive control on Customs Union BCPsExcessive control on Customs Union BCPs Risk Management is not duly appliedRisk Management is not duly applied

Recommendations Border Crossing by Road should be facilitated through use of Risk Management systems and full implementation of relevant Transport Conventions (TIR and Harmonization Convention 1982)Border Crossing by Road should be facilitated through use of Risk Management systems and full implementation of relevant Transport Conventions (TIR and Harmonization Convention 1982) Rail transport is important for export of Kazakh products and needs reformsRail transport is important for export of Kazakh products and needs reforms Simplification of procedures for certificates and permits and electronic single window is very important for exporters and critically important for importersSimplification of procedures for certificates and permits and electronic single window is very important for exporters and critically important for importers

Specific Recommendations Phytosanitary certificate:Phytosanitary certificate: –Eliminate unnecessary steps –Issue certificates on the basis of periodic inspections of Producers’ production and management systems and Producers’ laboratory test results –Implement electronic submission of documents

Specific Recommendations Certificate of Origin:Certificate of Origin: –Within CIS allow both the certificates issued for a particular shipment (like it is done now) and periodic certificates for a particular product (such certificates can be copied and added to shipments the same way as the Certificates of Conformity) –Simplify documentary requirements and reduce time –Prepare CoO on basis of periodically submitted data. Implement electronic Certificates

Specific Recommendations Customs clearance:Customs clearance: –Collect customs fees in national currency –Consider waiving fees for selected list of exported goods Currency control:Currency control: –New law eliminated one document, but did not eliminate the procedure –New regulation (will become effective since 1 July 2012) imposes similar requirements of traders as the previous one –These requirements may need further revision

Specific Recommendations Payments and Trade Financing:Payments and Trade Financing: –Although use of trade financing instruments is the importers’ decision, Exporting country can promote their use and benefit from increased trade –Letters of Credit and other trade financing can be promoted through banks, professional associations, freight forwarders, etc.

UNECE Trade Commission. 5 th session. Priority needs in trade facilitation, regulatory cooperation and agricultural development in Kazakhstan Geneva, Switzerland 18 June, 2012 Oleg Samukhin