Customs modernisation for efficiency, security, and prosperity

Globally, the mandate of customs comprises revenue collection, trade facilitation, security, and the protection of society. The preference within this mandate shifts based on the development goals of each country and its operational environment. In Pakistan, the operational environment still prioritises customs’ role in revenue collection to address the unbridged revenue gap, which is critical for the country. Pakistan is still striving to increase its tax-to-GDP ratio to equitable levels. Amidst this operational environment, it becomes challenging for customs to strike a balance between trade facilitation and strict compliance. The operational policy often oscillates between increasing facilitation measures and pursuing stringent compliance goals.

It goes without saying that trade and industry (business) are the driving forces behind a country’s prosperity. The World Bank, in its Business Ready Report 2024, states: “Today, the private sector generates about 90 percent of jobs, 75 percent of investment, more than 70 percent of output, and more than 80 percent of government revenues in developing economies.” The report further emphasises: “A vibrant private sector is central to efforts to end extreme poverty and boost shared prosperity on a livable planet. When it functions well, the private sector sparks innovation and entrepreneurship. It can unlock economic opportunities for people who need them the most. It can drive more efficient and sustainable use of natural resources.”

The above economic strategy, as narrated by the World Bank, has enabled numerous countries to lift people out of poverty, generate more state revenues, and create national prosperity. Customs administrations worldwide, with their core mandates of revenue collection, trade facilitation, security, and the protection of society, play a critical role in fostering a business-friendly operational environment. By reducing the cost of doing business, simplifying regulatory compliance, and instilling confidence in trade and industry, customs can stimulate economic growth. This, in turn, increases trade volumes, tax collection, job creation, innovation, and national prosperity.

To achieve these objectives, Pakistan Customs has been persistently advancing its reforms and automation processes, leveraging modern technologies to enhance performance. The first major step was taken in 2006 with the implementation of the Pakistan Automated Computerized Clearance System (PaCCS), incorporating international best practices and the World Customs Organization (WCO) standards enshrined in the Revised Kyoto Convention, regarded as the “Bible” of customs modernisation. The progress continued in 2011 when Pakistan Customs indigenously developed the Web-Based One Customs (WeBOC) system to expedite clearance processes and shift frontline checks to post-clearance audits of consignments.

For the first time, in 2018-2020, with support from the World Bank and WCO experts, the compliance management system known as the Risk Management System (RMS) was enhanced with tools like Artificial Intelligence (AI) and Machine Learning (ML). These technological interventions significantly benefited trade and industry by reducing dwell times for goods clearance at ports and eliminating human interaction in the process. Simultaneously, these tools strengthened customs administration by improving compliance levels, detecting tax evasion, assisting selective physical inspections, generating additional revenues for the state, and preventing contraband items from entering the country.

Pakistan Customs has introduced several new modules to further modernize customs processes, reduce dwell times, and enhance facilitation. The pre-arrival clearance and virtual assessment modules now enable traders to clear consignments even before their ships arrive at ports, supporting industries in achieving zero-inventory management. Additionally, a computerized assessment system was implemented to further eliminate human interaction and increase efficiency. Interventions like RMS-based clearances, the Blue Channel for scanning to reduce Red Channel clearances, the Authorized Economic Operator (AEO) program, the E-Commerce module, Smart Examination for on-site examination reports, and other technology-based initiatives have significantly enhanced efficiency. These measures have reduced dwell times from 3-4 days to less than 24 hours, with 74% of import and export containers cleared in under 24 hours. Recently, the introduction of the Faceless Assessment System has aimed to make processes even more transparent and efficient.

Recently, the WCO launched “The Smart Customs Project,” beginning with a domestic study mission on AI/ML experiences in China. Lin Wei, Director General of China Customs’ Department of Risk Management, highlighted the transformative role of digitalisation and intelligent customs systems in enhancing customs performance and global trade security. The project focuses on identifying high-risk enterprises through relationship network visualisation, Smart Non-Intrusive Inspection (NII) Image Analysis, Intelligent Document Examination, Smart Port Development, and AI applications in the Single Window Environment.

The government’s current strategic roadmap emphasises three key components: People, Process, and Technology. This approach seeks to harness the power of technology for revenue collection, trade facilitation, and societal protection.

Tangible benefits from AI integration, such as enhanced risk management accuracy, accelerated clearance times, and improved consistency in decision-making, can help fulfill the commitments of International Customs Day 2025: Efficiency, Security, and Prosperity. Achieving these goals, however, requires continuous investments in specialised expertise, advanced computational resources, robust data analytics infrastructure, well-defined policies, and leadership commitment to transforming the operational environment to achieve the desired outcomes.