SINGAPORE: Singapore needs to improve the governance of its free trade zones (FTZs) to tackle illicit trade, said a global index released on Thursday (Jun 7) which ranked the city-state 24th out of the 84 countries examined.
The Global Illicit Trade Environment Index, created by the Economist Intelligence Unit (EIU) and commissioned by the Transnational Alliance to Combat Illicit Trade (TRACIT), measures how well countries do in combating trade involving illicit goods, such as counterfeits or drugs.
AdvertisementFour categories, each made up of a few indicators, were assessed. They include government policy, supply and demand, customs environment, as well as transparency and trade.
While Singapore performed above the global and Asia averages in the first three categories, it had a poor showing in transparency and trade which pulled down its overall score to 71.1.
In this category, Singapore scored 45.6 – below the world and Asia averages of 52.6 – to be ranked joint-56th alongside Columbia. The report described Singapore as continuing to “remain a study in contrasts” when it comes to transparency and trade.
This is because while it did well in indicators, including the tracking and tracing of consignments, it was given a low score when it comes to the monitoring and oversight in the FTZs.
AdvertisementAdvertisement“There are laws and regulations in Singapore but in our research and interviews with various experts, the consensus was that customs officers and other law enforcers are virtually non-existent in the FTZs,” said Mr Chris Clague, EIU’s managing editor for Asia and global editorial lead in trade and globalisation.
When assessing Singapore’s customs environment, researchers working on the report also found a lack of a customs recordation system that intellectual property (IP) owners can use for enforcement at the borders, he added.
Meanwhile, Singapore remains one of the economies that has not adopted Annex D of the Revised Kyoto Convention on free zones and customs warehouses, said TRACIT’s director-general Jeffrey Hardy.
To improve, Singapore will need to beef up governance of its free trade zones by having customs supervision of the zones’ perimeters, entry and exit points and among others, implement “Know Your Customer” and “Due Diligence” measures, the report said in an accompanying recommendation paper.
REGULAR ENFORCEMENT OPERATIONS IN PLACE: SINGAPORE CUSTOMS
In response to queries from Channel NewsAsia, Singapore Customs said there are manned customs offices located within all FTZs and regular enforcement operations are conducted.
“As we had informed the Economist Intelligence Unit earlier this year when its staff were preparing this report, there are customs offices manned by officers from the Immigration & Checkpoints Authority (ICA) in Singapore’s FTZs,” the spokesman said.
“In addition, there are also customs offices manned by Singapore Customs officers within three FTZs – Pasir Panjang Terminal, Brani Terminal and the Changi Airfreight Centre,” the emailed response added.
The spokesman said officers conduct “targeted and random checks” on goods and activities in all of Singapore’s FTZs to ensure that tenants adhere to rules and requirements. Recent enforcement operations include one in Jurong Port in March and another in Keppel Distripark last month.
As for the lack of a recordation system, the spokesman said: “Singapore does not require right holders to register their trademarks separately with Singapore Customs under a recordation system as Singapore enforcement agencies have access to the Trade Mark Registry to check and verify the validity of trade mark registrations and the contact details of the right holders.”
“As Singapore is neither a source nor a major destination for intellectual property rights (IPR)-infringing goods, an additional recordation system, on top of the Trade Mark Registry, does not necessarily allow for efficient targeting of containers suspected to carry IPR-infringing goods.”
Hence, Singapore adopts the international practice on the Lodgement of Notice system, where right holders provide Singapore Customs with information identifying specific containers suspected of containing IPR-infringing goods.
This has worked as “right holders do provide specific, actionable and timely intelligence to Singapore Customs, who will work with the ICA to seize and detain the identified containers”, added the customs spokesman.
Overall, Singapore adopts a “whole-of-government approach” in countering illicit trade, said Singapore Customs.
“Such enforcement approach extends to the FTZs where all Singapore laws apply and law enforcement agencies are able to enforce their laws and conduct necessary operations to crack down on illegal activities occurring within the FTZs.”
ASIA-PACIFIC MUST DO MORE TO FIGHT ILLICIT TRADE
The global report named Finland as the country with the best environment to prevent illicit trade. It had an overall score of 85.6, followed by United Kingdom (85.1), United States (82.5), New Zealand (82.3) and Australia (81.0).
Among the four regions examined for this report, Europe is the best-performing region after topping all categories in the index.
Asia-Pacific, which includes 21 economies, came in second though researchers of the report said more needs to be done to keep illicit trade at bay as a disparity in capabilities remains.
Apart from New Zealand and Australia, Hong Kong (78.4), Japan (78.2) and South Korea (75.4) made up the top five Asian economies best-equipped to nip out illicit trade flows.
On the other end of the spectrum, however, Cambodia (30.6), Laos (26.8) and Myanmar (22.6) remained vulnerable due to capacity, skill, institutional and resource constraints.
This disparity can be attributed to the varying levels of economic development in the region, said Mr Clague. Singapore and other developed economies in the region will “need to take some initiative” to help their less-developed peers, he added.
“The issue of illicit trade is important not just how it violates things like intellectual property (IP) rights … but how it also helps to fund, in its various forms, transnational organised crimes and international terrorist networks.
“As the region becomes more integrated economically, the countries that score poorly can create vulnerabilities for countries across the region,” said Mr Clague. “They are not isolated.”
As such, the report recommended the region’s policymakers to call upon organisations like the Association of Southeast Asian Nations (ASEAN) to drive multilateral actions, strengthen national inter-agency collaboration or tap on private sector expertise.
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