Drop Bank Guarantee Requirement for Textiles

KUALA LUMPUR 15 Sept, 2003 -THE mandatory bank guarantee for movement of textiles in transit within Malaysia should be removed and instead replaced with a general bond.

Airfreight Forwarders Association of Malaysia (Afam) chairman Walter Culas said this was necessary because textiles formed the major transhipment cargo in the country.

Doing so would further promote Malaysia as an international transhipment hub, he said.

“We urge the relevant authority to waive the requirement for a bank guarantee.

“Afam had in October last year written to the Customs headquarters about our suggestions and they promised to consider it but nothing has been forthcoming yet.

“We have been informed that approval has to come from the Finance Ministry. Due to its importance, we hope an immediate decision will be made.”

During the last budget, the government waived the need for bank guarantees for transhipment cargo from port to port, and a general bond is now sufficient.

However certain goods such as cigarettes, liquor, petroleum and textiles were not given the exemption.

Culas further urged the government to waive the need for a mandatory bank guarantee for dutiable goods stored in public bonded warehouses.

“This would assist in cash flow of businesses and make the country more attractive to investors.”

Afam also proposed that a deadline of three months be given for government agencies to be linked to the Sistem Maklumat Kastam-Dagang Net Technologies (SMK-DNT), failing which the system should be scrapped.

Culas said till now, no other related agencies had come onboard except for Customs and this only defeated the purpose of the entire venture.

“Main players like the other government agencies should take the lead to make this project a success.

“Unfortunately, none of them are willing to participate. Instead some have come up with various excuses for not participating.

“We feel either the entire system should be scrapped or the International Trade and Industry Ministry should take a serious view of the matter and set a deadline of three months for all other government agencies to enrol in it.”

He said this was needed as the banks had acknowledged that they were not able to cater for the air community system under the electronic fund transfer (EFT).

“We strongly feel that some concrete action be taken immediately by the Finance Ministry rather than leaving this important issue unresolved.”

Culas said a letter had been written to the ministry in Feb 1999 with suggestions on how to overcome the problems.

Although the ministry had acknowledged that it received Afam’s correspondence, no further action had been taken to date.

Since full implementation in 1997, the EFT for the air industry had not been real time and it was found to be not practical.

This was because the time taken to process a transaction took several hours and sometimes even more than one day.

Subsequently, the EFT usage was suspended in 1998 due to the inconveniences, which saw agents reverting to manually paying the duties.

Another priority area that required urgent attention, said Culas, was the rationalisation of the service standards of the Customs at the KLIA cargo Village.

He claimed service standards had been seriously deteriorating in all areas and was below what was normally expected as international benchmarks.

“Afam hopes the service standards are revamped and streamlined to be in line with world international ones.

“The main emphasis should be made on the Customs personnel whereby they must have product knowledge, decision making capacity, be consistent, customer-driven and have proactive meetings with us for the benefit of the whole industry.

“There will usually be temporary improvement whenever this issue is raised but the outcome is short-lived and only a momentary measure.”

Culas further called on the Customs to extend the validity period of forwarding agents’ Customs licence to five years instead of the current two-year term.

He said this was because the procedures pertaining to licence renewal was time consuming and involved unnecessary administrative exercises.

At present, agents need to submit their application two months before the licence expiry date, which follows a checklist provided by Customs.

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