Authorized Economic Operator Programs
In the Islamic Countries:
Enhancing Customs-Traders Partnership
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Among OIC member states, Malaysia adopts a formal, three-day training process covering
subjects such as AEO implementation, MRA implementation, AEO systems and audit processes.
Recommendation:
1. Formal and regular training programs should be designed and implemented both in
headquarters and in the regional offices of the Customs Authority.
2. International organizations related to OIC countries, including COMCEC, should
provide training programs.
3. Self-learning tools should be made available to all involved parties.
EXTENSION of AEO STATUS
Challenge 9- Participation of SMEs
The OIC AEO programs seem to favor large businesses. This is due to the fact that the costs
involved in upgrading security systems to meet AEO requirements seem astronomical for
SMEs. Requiring all-over fencing for all AEOs, 24-hour security services and constant tracking
technology for cargo may become prohibitive barriers for the SMEs. Therefore, inflexibility and
prescriptive nature of security requirements may become insurmountable barriers for SMEs
and prohibit their participation in the program.
The way Japan addresses the difficulty of SMEs’ participation to the AEO program is to utilize
Customs brokers. Hence, SMEs can enjoy almost all procedural benefits of AEO status while
diminishing the cost of further investment.
Among the OIC countries Jordan offers an AEO-like program called the Silver List to incentivize
SMEs to participate in trade practices that are compliant and safe by offering some of the trade
facilitations in the Golden List program. Furthermore, successful Silver List participants are
invited to apply for the Golden List program.
Turkey has recently started a project to increase SMEs’ participation in the AEO program. The
objective is to increase compliance and institutional structure of these small firms. The project
involves subsidizing SMEs to fulfill compliance and physical security requirements. SMEs are
planned to be selected using a predetermined set of criteria.
Recommendations:
1. The Customs Authorities that prefer increased involvement of SMEs in the AEO
programs should first design an AEO-like program as a stepping tool.
2. The governments can provide guidance or financial aid for SMEs to be eligible for
applying to the AEO programs.
3. As discussed in Dincer and Tekin-Koru (2018), the governments can choose to
subsidize large firms to pull up the SMEs that are in their supply chain to be more
compliant and secure in their transactions. That way, the bottleneck of SMEs’
participation in AEO programs can be addressed by prepping SMEs to be eligible to
apply to the program.