Need Of Customs Reform

Since the beginning of the current fiscal year (2023-24), the federal government has been serious about revenue collection as it was unable to achieve its revenue target during the last fiscal year. The government was able to collect only about 71 per cent of its total revenue target and it had to suffer a budget deficit of about Rs. 397.8 billion in the last fiscal year. It was for the first time in nearly six decades that the country came across money problems. As revenue collection was much lower than the government’s planned budget expenses, the Ministry of Finance was under enormous pressure to mobilise the budget and carry out development projects. The nation’s economic growth rate in the fiscal year 2022-23 stood at just 1.16 per cent in consumer prices and 2.16 per cent in basic prices.  In its budget for the current fiscal year, the government has projected to attain 6 per cent economic growth. With the nation’s economic activities still sluggish, the government has a tougher time ahead to meet the revenue collection and economic growth targets. 

Amidst such a challenging situation, the government has to act prudently to enhance the confidence of the private sector and consumer spending. Finance Minister Dr. Prakash Sharan Mahat and his team members appear to have laid much focus on increasing revenue collection and stepping up austerity measures to boost the economy. Minister Dr. Mahat has asked the customs employees to play a proactive role in dealing with the interests and concerns of the common people in the changing situation. He has underlined the need for the employees to bring about timely changes in their mindset and deliver services in a more efficient manner. Speaking at a customs management seminar organised by the Department of Customs in Kathmandu on Sunday, the Finance Minister suggested that the employees should always facilitate importers and taxpayers instead of bargaining for personal gains by creating inconveniences to them. In fact, even a minor change in the attitude and behaviour of employees can make a huge difference.    

The government needs to strictly implement the provision of reward and punishment in order to improve employees’ performance. The chiefs of customs offices have an important role to play in evaluating the performance of the employees impartially. Besides, there is also a need for the customs offices to maximise the use of modern technology in order to deliver services efficiently. This also helps in making employees accountable to their decisions and actions.  There has been a propensity among the customs offices not to use technologies properly. This not only causes much inconvenience to customers but also gives rise to illegal practices like bribery and smuggling. Minister Mahat, citing an example of the Birgunj Customs Office, expressed his shock over a big X-ray machine gathering dust for years there. He also urged the employees not to harass importers and taxpayers on the pretext of collecting more revenue. 

What is equally essential is a drastic reform in the customs administration. Without making such reforms, it is not easy for the government to achieve its revenue collection goal. The business community has attempted to persuade the government to facilitate the customs for promoting exports. In nearly two dozen countries, it takes just an hour to prepare export documents while it takes 11 hours for customs clearance in Nepal. As demanded by the business community, the government needs to enforce a single window system in international trade. This will prove to be a game changer in export promotion.