Ever since the World Trade Organization meeting in Singapore in 1996, international trade discussions and negotiations have focused on trade facilitation. Trade facilitation was a key agenda point at the World Trade Organization Summit in Cancún in the fall of 2003. That is just one recent illustration of how trade negotiators see trade facilitation, together with policies that reduce trade barriers, as a powerful way to help countries integrate better into the world economy and thereby enhance their growth prospects.
Singapore's achievements in speeding up trade transactions and linking most members of the trading community by means of a single data network, known as TradeNet, have attracted the attention of a number of observers. Mauritius has replicated Singapore's system, and Ghana has recently moved toward introducing key features of this approach to its own trading community. This chapter briefly describes the origins and achievements of Singapore's TradeNet and what other countries that want to facilitate trade transactions might learn from Singapore's experience. The chapter then turns to Ghana's experience to date, including the results achieved and what Ghana still needs to do to fully capture the benefits that TradeNet has to offer.
The Singapore TradeNet links multiple parties involved in external trade, including 34 government units, to a single point of transaction for most trade-related activities, such as clearing customs and paying duties and taxes, processing export and import permits and certificates of origin, and collecting trade statistics. The introduction of this system in 1989 drastically simplified trade transactions (King and Konsunski 1995; United Nations Economic and Social Commission for Asia and the Pacific 2003). TradeNet's main achievements since 1989 include the following:
* The processing time for cargo clearance was reduced from two to four days to only minutes.
* The number of documents required for cargo clearance fell from a range of 3 to 35, depending on the transaction, to 1.
* The number of trade transactions processed per day rose from 10,000 to 30,000.
* The freight forwarders estimate that their costs of handling trade documentation have fallen by 20 to 35 percent.
* The customs service receives customs duties payments much faster than before.
* The compilation of trade statistics has improved substantially, benefiting both the trading community and the national authorities responsible for trade policy and economic surveillance.
TradeNet was not created overnight. The idea originated as early as 1979, when a high-level government committee recommended that Singapore should make maximum use of information and communication technology (ICT) to overcome the handicap presented by its small size. A first step in that direction was to expand the skill base through accelerated training in ICT and to computerize government agencies. The government chose to focus on the foreign trade sector as a priority area where results could be achieved quickly, particularly in speeding up the clearance time for exports and imports. The objective was to enhance the competitiveness of Singapore's economy, an issue that became more urgent in 1985, when Singapore experienced its first recession.
The authorities made the Singapore Trade Development Board (officially renamed International Enterprise Singapore in April 2002) responsible for coordinating the aims, concerns, and activities of the trading community. The board reviewed trade documentation and proposed reducing the multiple trade document requirements to a single online form that would serve nearly all the country's trade documentation needs. The board viewed this task as crucial, because automating the multiplicity of forms and data requirements that prevailed at the time was virtually impossible. The challenge of coordinating the different agencies involved and their data requirements into a set of coherent and simplified procedures that could be automated was in many cases more political than technical.
In December 1986, the initiative received high-level backing when Trade Minister B. G. Lee, currently deputy prime minister, publicly endorsed the initiative and gave the TradeNet project full political backing. Lee announced that TradeNet would be launched in January 1989. In 1990, the government created Singapore Network Services (whose name was changed to CrimsonLogic in 2002) to own and operate the TradeNet system, with the Singapore Trade Development Board, the port and civil aviation authorities, and the international airport as stakeholders. Singapore Network Services carried out an intensive review of the proposed TradeNet system and prepared initial designs. This step permitted the launching of a competitive bidding process for a systems integrator. IBM won the contract to develop an electronic data interchange system that would allow computer-to-computer exchange of business documents among connected members of the Singapore trading community.
The focus was on accuracy and speed. The system was to be designed so that a trader would submit one document to TradeNet, which would then forward it to all pertinent agencies and partners. Agencies that needed to make decisions would then be able to do so promptly to permit the trade transaction to proceed smoothly.
The system became operational as of January 1, 1989, and traders were invited to adopt its protocols on a voluntary basis. By the end of the year TradeNet was being used for 45 percent of all air and sea shipments, a share that rose to 95 percent by mid-1991, when the use of TradeNet had become mandatory, two years earlier than originally planned. Extensive training and continued high-level political support sustained the adoption process for traders, particularly small traders.
Progress in linking all members of the trading community benefited greatly from the fact that many of them had already acquired substantial computer knowledge and were relying on sophisticated computer equipment for doing their work. This factor was in part an outcome of Singapore's well-implemented government strategy to foster the use of ICT. Publicizing TradeNet's benefits early on contributed to overcoming initial reluctance to participate among the various government agencies and the trading community.
In the 1990s, Ghana undertook fundamental trade policy reforms, a move that bilateral and multilateral donors strongly supported. The United States provided support through two trade and investment projects, and the World Bank and International Monetary Fund provided substantial adjustment lending as well as support for the development of private enterprises and exports. This reform drive benefited from the strong personal support of the minister of trade and industry, in line with the government's vision of a Ghana that was open to the rest of the world and that could Page 21 attract foreign direct investment and promote business competitiveness. The vision implied an open economy, low tariffs, and well-performing institutions. The reforms therefore included reducing and then eliminating import quotas and export taxes, lowering the level of import tariffs, and reducing the number of applicable tariff rates. Nontraditional exports were to be promoted so as to diversify the economy and create much-needed jobs.
By 1998, Ghana had implemented many of the policy reforms, but foreign direct investment was still lagging. A number of reviews by the World Bank, the International Monetary Fund, the Foreign Investment Advisory Service, and the Multilateral Investment Guarantee Agency, among others, suggested that for the policy reforms to have the desired impact on trade, foreign direct investment, and growth they had to be complemented by the lifting of a number of structural investment constraints. In particular, the government needed to improve the operational efficiency of frontline agencies at facilitating investment flows. Such frontline agencies included the customs service, the immigration authorities, the port authorities, and the Investment Promotion Council. The government took those suggestions to heart and decided to launch the Ghana Gateway Project, for which it solicited support from the World Bank. Ghanaian civil society, as well as the foreign donor community, broadly shared this vision of Ghana as the world's gateway to West Africa. The government envisaged that the project not only would enhance the competitiveness of domestic business entities but would also make Ghana the most competitive investment destination in West Africa, compared with other destinations such as Côte d'Ivoire, Nigeria, or Senegal.
Although Ghana was more competitive in terms of costs than Nigeria as a transit corridor for the Sahelian countries, its cost parity was about the same as that of Côte d'Ivoire, but Ghana lacked the Ivorian infrastructure backbone. Thus Ghana saw the introduction of an automated system for customs clearance, along with other reforms initiated for the frontline agencies, as steps that would bring Ghana up to Côte d'Ivoire's level, if not actually giving it a competitive edge over Côte d'Ivoire.
In search of new ideas and to investigate trade facilitation and promotion programs introduced elsewhere, official delegations visited Malaysia, Mauritius, New Zealand, and Singapore, countries with which Ghana enjoyed excellent...