Facilitating Trade:
Improving Customs Risk Management Systems
In the OIC Member States
1
Executive Summary
The Study on Improving Customs Risk Management in the OIC Countries is the result of a
research-based consultancy for the Standing Committee for Economic and Commercial
Cooperation of the Organization of Islamic Cooperation (COMCEC). The objective of the study is
to document and analyses the state of implementation of customs risk management (CRM) in
the OIC Member States (MS) to support the Member States’ efforts to deepen and improve CRM.
Customs Risk Management (CRM) by definition of the World Customs Organization (WCO) is
“the systematic application of management procedures and practices which provide Customs
with the necessary information to address movements or consignments which present a risk.”
The rationale for CRM lies in the evolution of CRM and has come fromwhat is commonly known
as the “gatekeeper style” of physically stopping all consignments to check all accompanying
documentation, physically examine and tally all goods. Furthermore, important segment of the
evolution of CRM is the analysis of the results to the advanced compliance-based approach of
minimal physical interventions according to risk and high levels of self-assessed declarations
and self-regulated supply chain security that are subject to compliance audit after the
consignment has entered or departed the Customs territory. These modern applications are
prevalent in the Authorized Economic Operator (AEO) programs.
Additional to reduced interventions, an important factor is the evolution of Customs
Administrations with regards to their priorities for resource allocation and effort to fulfill
traditional and emerging responsibilities to the government and the people. The progression
from principally a revenue collector to one of principally border security can be used as a gauge
of the progress of a nations system of taxation and its reliance on customs import revenue to
support its budget for expenditure. The more progressed economies do not require their
Customs Administrations to collect a large percentage of governments overall revenue. As the
priorities and objectives change, so to do the risks. Risk Management is a tool to mitigate risks
for achieving the Customs Administrations objectives.
Whilst attempting to analyze through the survey as many OIC Member States as possible, the
final analysis was limited due to their partial participation or lack of any response. The final
analysis was based on responses on the survey from 16 OIC MS and information publicly
available.
The OIC member states evaluated are positioned at different stages on the timeline of CRM
progression ranging from 29.8% having fully implemented CRM, 7% at an advanced stage,
43.9% at medium performance, 3.5% at the basic level, and 15.8% have no CRM.
As the analysis of the three global cases presents, the implementation of the CRM to the point
where they are today has been a laborious task for all of those countries considered to be
advanced in the concept. Constantly developing technologies and increased speeds and
efficiencies of multi-modal transport dictate that whilst having achieved considerable levels of
success, it is an approach that continues to develop and mature regardless of perceived or real
levels of competence. The global nature of trade and the drivers of Trade Facilitation dictate a
commitment to continuous improvement in all cross-border activities.
This study remotely examined the CRM systems of 3 non-OIC Member states, namely Australian,
New Zealand and Kosovo Customs as global best examples. Whilst this approach only allowed
for analysis of open source statistical data which represent the results of their CRM as opposed
to obtaining more intimate knowledge of the mechanisms that make CRM work, it did provide
the necessary evidence sought to establish the levels of interventions occurring and the
subsequent risk tolerance for such high levels of non-intervention. In average, the rate of