Malaysia's uCustoms project about to get off the ground

By Karamjit Singh December 6, 2013

New trade facilitation system to cost in region of US$140mil
Consolidated system intended to reduce time and cost for clearing goods

Malaysia's uCustoms project about to get off the ground THE long awaited national single-window system, called uCustoms, to facilitate trade in and out of Malaysia is finally about to see light of the day with the Royal Malaysian Customs having issued a Letter of Intent (LOI) to a technology company.

In October, during an interview with Digital News Asia (DNA), Customs had declined to reveal which company had been given the LOI. However it has since been reliably learnt that Brilliance Information Sdn Bhd, was issued the LOI, which it has accepted and a Letter of Award (LOA) with the scope of work will soon be signed.

Director-General of Customs, Khazali Ahmad (pic) told DNA that the total contract for the entire uCustoms project will be in the region of US$140 million (RM450 million) in total. It is unclear if Brilliance Information will get the whole contract.

The national single-window system is in essence a set of systems that facilitate trade by allowing traders to submit all import, export, and transit information required by regulatory agencies via a single electronic gateway.

The project is intended to eliminate the need to process and submit the same information numerous times to different government entities, including some that are automated and others that still rely heavily on paper.

In many countries, it is not uncommon for more than 30 different government agencies to play a role in the processing and clearance of goods. If a raft of paper-based documents needs to be submitted to various agencies – it matters little if customs declarations can be processed electronically.

This is why the Malaysian approach is a comprehensive one, based on effective information sharing, streamlining of procedures and genuine collaboration among all agencies. The Ministry of International Trade and Industry (MITI) is the lead ministry for the project.

If the total cost looks expensive, Khazali pointed out that the scope of work is going to be massive with the uCustoms system to be implemented in 40 Customs stations around Malaysia with major work to be done in busy ports like Port Klang and Tanjung Pelepas.

This does not include the costs involved in educating and getting the buy-in of various players in the entire value chain ranging from freight forwarding companies to bonded warehouses and shippers.

A recent catalyst for this project, which was being discussed as early as 2005, was a 2012 Mampu study that showed Customs needed to revamp their systems to include a Risk Management Engine and an Auto Approval process to further facilitate trade.

“We already have a system that acts as the national single window and that is DagangNet, operated by Dagang Net Technologies Sdn Bhd,” said Khazali, adding, “But the new system will be much more ubiquitous and cover more relevant trade related agencies. Hence its name, uCustoms, with the ubiquity coming from the fact that it can be accessed via mobile too, besides strategically placed kiosks.”

Dagang Net, a subsidiary of TIME Engineering Bhd, describes itself as Malaysia’s first, largest and most established e-commerce service provider. It has performed over 275 million electronic transactions and US$558 million (RM1.8 billion) worth of Customs duty payment.

In addition to Customs taking full ownership for the responsibility to ensure trade flows as smoothly as possible, Khazali indicated that it will be more cost effective in the future too. Besides the US$115 million (RM370 million) that it has cost to run DagangNet since it first started working with Customs, he said there is also a yearly fee for maintenance.

Some industry observers point out that once uCustoms goes live, allowing DagangNet to keep offering its services will mean that there will be two players competing to deliver better services to the market.

However Khazali said that uCustoms would eventually be the sole system, with both systems to run concurrently until the market is familiar with the new offering.
Confident that with uCustoms fully in place, Khazali estimates by 2016-2017, “our ranking in the World Bank’s Ease of Doing Business report will improve significantly.”

“The cost in doing business will reduce and the amount of time taken for goods clearance will be much faster too,” he added.