business process analysis report for armenia 1...bank 2.4 process carrier/transporter import...

Facilitating Cross-Border Paperless Trade along the Belt and Road Initiative (BRI) Corridors for Regional Integration and Sustainable Development (Phase I)

Business Process Analysis ReportFor Armenia

BPA1: Import of Meat and Edible Offal from Georgia to Armenia

BPA2: Export of Edible Vegetable and Certain Roots and Tubers; Beverages, Spirits and Vinegar from

Armenia to Georgia and other Countries


Main Purpose & Basis of BPA StudyMain Purpose:•Review current business processes in order to identify the bottlenecks for streamlining trade processes based on a BPA method. •The use of BPA helps to identify and analyze the existing ("as is") business processes and aids in developing recommendations for their optimization

Basis:•Review of current laws and customs regulations, including customs clearance•Analysis of data and information obtained from interviews with the stakeholders •Trade statistics and international business development information sourced online as well as various studies conducted on Armenian trade.



1. BUY 2. SHIP 3. PAY

Total Time: 8 – 21 days



1 BUY

3 PAY

2 SHIP

Exporter

Importer

3.1 Make payment

1.1 Conclude Sales

Contract

2.1 Obtain Value Declaration

2.3 Obtain Import License

2.5 Deliver goods

2.2 Submit cargo manifest

Customs

Importer’s Bank

Carrier/Transporter2.4 Process Import

Declaration

SSFS

Terminal Operator

Trucker

Exporter’s Bank

Central Bank



1 BUY

Exporter

1.1 Conclude Sales Contract

Importer/Representative

1.1 Conclude Sales Contract

Sales Contract

1.1.4Agree

1.1.1 Purchase Order

1.1.2 Approve Purchase

Order

1.1.3 Prepare Sales Contract

1.1.5 Sign Contract

Sales Contract1.1.6 Prepare Shipment of

goods

Sales Contract

1.1.7 Receive Invoice, Packing

List and Sales Contract

Exporter Importer

Yes

No



Name of Process Area 1. Buy

Name of Business Process 1.1. Conclude Sales Contract

Related laws, rules and regulations

Customs Code of the Republic of Armenia, January 1, 2001 amended in July 1, 2003

Process participants • Exporter• Importer

Input and criteria to enter/begin the business process

• The Importer and Exporter agree on and issue sales contract


Name of Process Area 1. BuyActivities and associated documentary requirements

1.1.1 Importer places purchase order1.1.2 Exporter approves purchase order1.1.3 Exporter prepares sales contract indicating the product, volume, instructions, terms of payment, etc.1.1.4 Importer agrees or not on the draft sales contract1.1.5 If the Importer agrees, he signs the sales contract. Else, the Importer rejects and returns the contract to the Exporter.1.1.6 Exporter prepares shipment of goods as per sales contract1.1.7 Importer receives invoice, packing list and sales contract

Output criteria to exit the business process

• Exporter and Importer agree to the terms by signing the Sales Contract

Average time required to complete this business process

1-3 business days




2 SHIP

Importer

2.1 Obtain value declaration

2.1 Obtain Value Declaration

Carrier/TransporterAccepted

?

2.1.1 Provide value declaration

2.1.2 Checks the value declaration

2.1.4 Provide Notice of Rejection

2.1.5 Appeal to the superior Customs Authority/to the court within 10 working days

2.1.6 Within 30 shall be obliged to

make decision

Importer Customs

2.1.3 Accepts value declaration

Yes

No



Process Description: Obtain Value Declaration

Name of Process Area 2. ShipName of Business Process 2.1. Obtain Value DeclarationRelated laws, rules and regulations


Process participants • Importer• Customs


• The Importer provides value declaration from the source



Process Description: Obtain Value Declaration Name of Process Area 2. ShipActivities and associated documentary requirements

2.1.1 The Importer provides customs with value declaration2.1.2 Customs Inspector checks the correctness of the value declaration 2.1.3 If the inspector agrees to the value declaration, he accepts the value2.1.4 Else, the Inspector rejects the value declaration and provides Notice of Rejection to Importer.2.1.5 In case of rejection, within 10 days, the Importer submits an appeal to the superior Customs Authority to accept the value declaration2.1.6 Customs decides on the case within 30 days (mandated)



Process Description: Obtain Value Declaration Name of Process Area 2. ShipOutput criteria to exit the business process

• Customs agrees to the value declaration


The average time required to complete this business process depends on the method which would be used to define the value and can range from 1 to 5 days. In case of appeals it could take a month to receive the decision based on the appeal claim.



Process Description: Prepare and Submit Cargo Manifest

2 SHIP

Importer

2.2 Submit cargo

manifest

Customs

Carrier/Transporter

Terminal Operator

2.2.1 Obtain & submit

required documents

2.2.6 Receive copy of cargo

manifest

2.2.4 Receive copy of Bill of

Lading

Bill of Lading2.2.6 Receive copy of cargo

manifest

Importer Carrier/Transporter Customs Terminal Operator

2.2.3 Provide Bill of Lading

2.2.5 Submits

Cargo Manifest

2.2.2 Receives docs, prepares Bill of Lading

& Cargo Manifest




Name of Process Area 2. ShipName of Business Process 2.2. Prepare and Submit Cargo ManifestRelated laws, rules and regulations


Process participants • Importer• Customs• Carrier/Transporter• Terminal Operator


• Import/Export processing requires copy of cargo manifest which provides all information about the cargo and its transport



Process Description: Prepare and Submit Cargo ManifestName of Process Area 2. ShipActivities and associated documentary requirements

2.2.1 Importer obtains required documents (contract, invoice etc.) and submits them to Carrier/Transporter2.2.2 Carrier/Transporter receives documents and prepares Bill of Lading and cargo manifest following prescribed format2.2.3 Carrier/Transporter provides Bill of Lading to Importer2.2.4 Importer receives the copy of Bill of Lading from the Carrier/Transporter. The bill of lading is used as one of the supporting documents for the processing of import entry covering the imported cargo.2.2.5 Carrier/Transporter submits cargo manifest to Customs and Terminal Operator2.2.6 Customs and Terminal Operator receive copy of cargo manifest upon arrival of the cargo at the port of entry.




Name of Process Area 2. ShipActivities and associated documentary requirements

2.2.7 Customs and Terminal Operator receive copy of cargo manifest upon arrival of the cargo at the port of entry.


• Customs and Terminal Operator receive copy of cargo manifest upon arrival at the port of entry. Bill of lading is received by the Importer which is necessary to process an import entry.


1 day



Process Description: Obtain Import Permit/License

2 SHIP

Exporter

2.3 Obtain Import

Permits/Licenses

2.3.1 Prepare application for cert.

SSFS

Application for Cert.

2.3.2 Submit application &

supporting docs

2.3.3 Receive & stamp application &

supporting docs

2.3.4 compliant

2.3.5 Issue Food Safety Cert.

Food Safety Certificate

2.3.6 Receive copy of FSA

Importer SFSS

Yes

No




Name of Process Area 2. ShipName of Business Process 2.3. Process Import LicenseRelated laws, rules and regulations


Process participants • Importer• SSFS


• Importer applies for the import permit/license for the imported cargo





2.3.1 Importer prepares the application for import license/permit 2.3.2 Importer submits application and all other supporting documents such as invoice, packing list, sales contract, etc. to SSFS2.3.3 SSFS receives and stamps application and other documents2.3.4 SSFS checks if application and documents are compliant 2.3.5 SSFS issues Veterinary and Phytosanitary Certificate.





2.3.6 Importer receives copy of the approved Veterinary and Phytosanitary Certificate.


• Importer receives copy of the approved Veterinary and Phytosanitary Certificate.


1-2 days is the average time spent to get Veterinary and Phytosanitary Certificate



Process Description: Process Import Declaration

2 SHIP

Importer

2.4 Process Import

Declaration Customs

Import Declaration

Yellow?

Red?

No

No

Yes

2.4.1 Prepare Import Declaration

2.4.2 Lodge e-declaration thru

trade portal

2.4.3 Attach CO and Veterinary and Phytosanitary Cert.

2.4.4 Submits to Customs

2.4.5 Perform Documentary

check

2.4.5 Conduct Physical Inspection

2.4.6 Assess & computes the total

D/T

2.4.7 Inspector informs

Importer of the total D/T

2.4.8 Pays D/T thru online payment facility by

transferring to Customs Service acct.

2.4.9 Receive payment on D/T

2.4.11 Checks receipt and allow release of

goods

Customs Service Account

Importer Customs

Yes

Customs Service Account

2.4.10 Submit receipt of payment




Name of Process Area 2. ShipName of Business Process 2.4. Process Import DeclarationRelated laws, rules and regulations


Process participants • Importer• Customs• Central Bank• Importer’s Bank


• Import prepares import declaration to release from customs the imported goods. This is required to identify the goods for release in customs.





2.4.1 Importer prepares Import Declaration, indicating the description of the goods, volume, mode of payment, value and container no., etc.2.4.2 Importer lodges e-declaration thru Armenia trade portal http://www.trade.gov.am2.4.3 Importer attaches the CO and Veterinary & Phytosanitary Certificate to the Import Declaration upon submission to Customs2.4.4 Importer submits to Customs the Import Declaration together with other documents such as Invoice, Packing List, B/L, CO, Veterinary and Phytosanitary Certificate and Sales Contract2.4.5 Customs examines the cargo if selected as ‘Red’, or conducts further document check if selected as ‘Yellow’.



Process Description: Process Import DeclarationName of Process Area 2. ShipActivities and associated documentary requirements

2.4.6 Customs Inspector assesses and computes the total duties and taxes due for the cargo 2.4.7 Customs Inspector informs Importer the amount to be paid2.4.8 Importer pays the total amount thru online payment facility by transferring from his/her bank account to the customs service bank (government bank) account the amount of the computed duties/taxes.2.4.9 The customs service bank (government bank) receives the amount of duties and taxes transferred.2.4.10 Importer presents/submits payment receipt to the Customs Inspector2.4.11 Customs Inspector verifies the receipt and allows the release of the cargo




Name of Process Area 2. ShipOutput criteria to exit the business process

• Duties and taxes paid and cargo is cleared and released from Customs


The average time required to complete this business process could vary depending on the line that the cargo gets, types of the supporting documents, etc. The time to complete is between one to several days.



Process Description: Delivery of Goods

2 SHIP

Importer

2.5 Deliver Goods

Customs

Trucker

2.5.1 Inform Importer that cargo can be

released

2.5.2 Receive info that cargo

can be released

2.5.3 Receive copy of import

declaration

Import Declaration

2.5.4 Proceed to warehouse and claim the

goods for delivery

2.5.5 Allow release of goods to truckerWarehouse

Importer Trucker Customs Warehouse



Process Description: Delivery of Goods

Name of Process Area 2. Ship

Name of Business Process 2.5. Deliver Goods

Related laws, rules and regulations


Process participants • Importer• Customs• Trucker• Warehouse/cargo terminal operator


• After Customs assessed and verified payment of the duties/taxes and released the goods, the Importer engages services of trucker to deliver the goods.



Process Description: Deliver Goods


Activities and associated documentary requirements

2.5.1 Customs informs Importer that cargo can be released2.5.2 Importer receives information that cargo can be released and provide copy of Import declaration to the designated Trucker2.5.3 Trucker receives copy of Import declaration2.5.4 Trucker proceeds to the cargo warehouse/terminal and claim the goods 2.5.5 Warehouse/terminal operator allows release of goods to trucker for delivery to the Importer


• Trucker delivers goods to importer



Process Description: Deliver Goods



The average time required to complete this business process 1-5 days, depending on the type of the cargo and the supporting documents.



3.1 Make Payment

Enough ?

Yes

3 PAY

3.1 Make payment

Importer’sBank

Exporter’sBank

ExporterImporter3.1.1 Request for Payment

3.1.2 Inform bank to

transfer the amount to be

paid

3.1.3 Check amount to be

transferred

3.1.4 Transfer amount to Exporter’s

Bank

3.1.5 Acknowledge

transfer of payment

No

3.1.6 Inform Exporter the total amount transferred

3.1.7 Receive info on the transferred

amount

Exporter Importer Exporter’s BankImporter’s Bank



Process Description : Make Payment

Name of Process Area 3. PayName of Business Process 3.1. Make PaymentRelated laws, rules and regulations


Process participants • Importer• Exporter• Importer’s Bank• Exporter’s Bank


• Exporter requests for payment of goods from Importer




Name of Process Area 3. PayName of Business Process 3.1. Make PaymentActivities and associated documentary requirements

3.1.1 Exporter requests for payment from Importer3.1.2 Importer advises the bank to transfer the amount to be paid3.1.3 The bank of the importer checks the amount to transfer3.1.4 Bank transfers the requested amount to the Exporter’s bank3.1.5 Exporter’s bank acknowledges the transfer of payment3.1.6 Exporter bank informs the Exporter the total amount transferred3.1.7 Exporter receives the information from his/her bank on the transferred amount




Name of Process Area 3. PayName of Business Process 3.1. Make PaymentOutput criteria to exit the business process

• Exporter receives information on the transferred payment


The average time required to complete this business process is 2-4 business days, with the assumption that banks are in different countries. If both banks are in the territory of Armenia the average time is 2-3 business days.


BPA2: Export of Edible Vegetables and Certain Roots and Tubers; Beverages, Spirits and Certain Roots from Armenia to Georgia and other Countries

1. BUY 2. SHIP 3. PAY• Conclude Sales Contract

(1-3 days)• Prepare goods for transport

(1-2 hours)• Obtain Export

Permits/Licenses (1-2 days)• Secure Certificate of Origin

(1-2 days)• Prepare, submit & process

Export Declaration (4-5 hours)

• Provide Cargo Manifest (1-3 day)

• Make payment (2-4 days)

Total Time: 7 - 19 days


BPA2: Export of Edible Vegetables and Certain Roots and Tubers; Beverages, Spirits and Certain Roots from Armenia to Georgia and other Countries


Issues and Challengeso The current Information Technology (IT) environment in Armenia is

modernized and commendable to the extent that the Trade Portal used by the business community proves to be very beneficial to all the stakeholders. The e-Customs System is also accessible to its stakeholders and is connected to the Trade Portal. However, it was noted that some customs procedures are still in their manual state and need to be automated.

o The import and export documents are required to be stamped manually. This leads to longer time spent and more copies of documents required in the process.

o The enhancement of Customs databases is not yet complete due to some problems in availing the necessary resources.


o The Customs system is not currently directly connected to banks’ system. The banks report their collections to the Central Bank. The Central Bank in turn, informs Customs through the special portal similar to “financial.net” of the payment of duties and taxes.

o Currently some documents related to risk management/analysis, inventory of goods and accounting of payments are not yet in digital form. It results in storing voluminous hardcopies of these documents and difficulty of managing information security.

Issues and Challenges

Facilitating Cross-Border Paperless Trade along the Belt and Road Initiative (BRI) Corridors for Regional Integration and Sustainable Development (Phase I) Facilitating Cross-Border Paperless Trade along the Belt and Road Initiative (BRI) Corridors for Regional Integration and Sustainable Development (Phase I)

Recommendations1. Armenia should ratify to the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific as soon as possible. Ratification of the Framework Agreement can help Armenia in improving its overall paperless trade environment.

2. Armenia should enhance the functionalities of existing trade portal into a comprehensive National Single Window (NSW). Fully functioning NSW system can help border agencies to cooperate and coordinate their regulatory processes by enabling them to share information and data. It also helps traders by creating a single channel for them to interact with all the regulatory agencies in fulfilling regulatory requirements.

Facilitating Cross-Border Paperless Trade along the Belt and Road Initiative (BRI) Corridors for Regional Integration and Sustainable Development (Phase I) Facilitating Cross-Border Paperless Trade along the Belt and Road Initiative (BRI) Corridors for Regional Integration and Sustainable Development (Phase I)

Recommendations

3. Armenia should consider establishing a dedicated information dissemination channels for stakeholders, a National Trade Portal (NTR). This will contribute to better dissemination of information among the stakeholders in the trading community. NTR could provide a single source of comprehensive, accurate and up-to-date information on all trade related matters, facilitate compliance with prescribed regulations. The NTR can also host a Tariff Finder system, for the up-to-date information on the preferential tariffs applied by various bilateral and regional trade agreements. It can also sets out the rules of origin criteria used to determine a product’s eligibility for preferential tariff treatment.


Recommendations4. Armenia should expedite the implementation of a Risk Management System. There was a joint Risk Management (RM) and Post Clearance Audit (PCA) diagnostic mission in 2018 with WCO’s support, which lead to a diagnostic report that will outline framework in implementing an effective “Blue Chanel” PCA. The recommendations contained in the Diagnostic Study should be translated into enhancement program to uplift the technical capability of Customs and PCA. In addition, the adoption of Authorized Economic Operator (AEO) can also complement the Risk Management System effort and increase the compliance level of trade operators in Armenia.

5. Armenia should expedite the digitalization of CO. It is noted that an agreement was signed to implement a project on digitalization of issuing the certificate of country origin issued by the Ministry of Economic Development and Investments, on September 2018. The adoption of electronic CO will be a boost to the trading community and is expected to facilitate the CO submission to other agencies and stakeholders inside and outside of Armenia.


Recommendations6. Armenia should consider to develop a system for electronic cargo release order. This electronic release order will become the primary basis for the customs officer in releasing the goods from the facility and can replace the manual “release” stamping of the import declaration. The application of automation will lessen the time spent and the number of copies of documents required in this process and will result in a more streamlined process of releasing and delivery of the imported goods.

7. Armenia should fast-track the enhancement of Customs databases. The enhancement is critical in order for the system to also cater to other information systems that will be used for better and effective Customs operations and administration.


Recommendations

8. Armenia should consider to establish the connectivity of Customs payment facilities with the banks. Payment transaction will be enhanced further if Customs payment system is interconnected with that of the banks.

9. Armenia should continue to conduct capacity building activities for stakeholders, especially on cross-border paperless trade. It is suggested that aside from the trading community, non-government organizations (NGOs) and other institutions should also attend the training and awareness sessions on the import/export process and documentation requirements of participating countries.


The End

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