e-Kastam - Blue Ocean Strategy or Increasing Consumers' burden?

Everybody has heard of e-Custom or e-Kastam whatever it is. But do you know the total impact to your company? The Custom Dept wanted to adopt a Blue Ocean Strategy (www.blueoceanstrategy.com) by going into uncharted water & at the same time wanted to snuff everybody out via a monopoly arrangement.


In Malaysia, the system is known as "SMK-Dagang Net", just figure out what SMK means. It's Malaysia's e-trade facilitation service and Dagang Net operate this exclusive electronic linkage to the Royal Customs Dept on matters involving import & export declaration & clearance.


Haulers & freight-forwarders were aptly well informed ahead with Port Klang first on trial before extending the system to Penang Port. Importers & exporters (companies) were caught off guard by the rip-off in the new charges incurred and trading partners were forced on-line to extend the value of this network.


Freight forwarders "complained" it was compulsory to use the system & manual submission of the Custom forms were not acceptable. Of course, the obvious objective was to improve cycle time to generate & process shipping information required to move products through Customs clearance processes by using automated standard Custom Documentation Format.


The arbitrary charging system were readily accepted by the haulers & freight forwarders alike. After all, who bears the final brunt of this extra amount? - the shippers. Some shippers, in order to maintain the competitiveness of their products, absorbed the cost with a resultant lower profit margin while some others passed the extra cost to the consumers.


This is one of the causes of rising product costs that we hear so rampant of. The country further ( Malaysian vendors are famous for passing the costs to buyers at the slightest opportunity!) loses its competitiveness compared with neigbouring countries as well as to the far east countries.


Electronic systems are supposed to improve productivity with minimal operating cost after the initial cost outlay, but one wonders who ultimately prosper in this case.


Just think for a moment:
The fee for clearing a set of Custom form from the old manual system - RM5.
The new electronic fee for the same set - RM30.

One wonders why each form can only accomodate 5 items? The total cost would have been reduced tremendously if the form could accomodate 10 items or more. Only the Custom Dept can answer that.


For your info, the Dagang network handles about RM1.8billion worth of Custom duties payments annually from more than 2000 corporate customers.

As far as the consignees are concerned, there are no change in productivity: if it has taken 5 days to clear an LCL shipment in the past, it is still 5 days now. But consignees may be a few hundred ringgit poorer. If there has been 10 sheets of Custom forms to be physically handled & be filed up in the past, it is still so now. E-Custom is not a paperless system, at least for the shippers.

Nothing has changed. Except, one may be a few thousand ringgit poorer every month. If any shippers is expecting a reduction in the fees ( after all, the initial financial outlay of introducing the system would have been returned by now) , I don't see any coming in the immediate future.

MEF? FMM ?................zzzzz