Measuring the Attractiveness of Your Country – Trading Across Borders – Part 11
“A study in Sub-Saharan Africa estimates that reducing exporting costs by 10% through improvements in the efficiency of the trade process increases exports by 4.7%.”
Hoekman, Bernard, and Alessandro Nicita. 2011. “Trade Policy, Trade Cost and Developing Country Trade.” World Development 39 (12): 2069–79
This criterion is about exporting and importing goods across borders. Measures are time and cost necessary to complete all official procedures and the number of documents that need to be provided.
Although this sounds very much like a pure customs issue, it is far more complex. It comprises infrastructure issues as well as necessary inspections – like healthcare, for example. Banks may play a role in getting a letter of credit (for which you could make use of an shared credit information system). Even border management and the existence of logistical and other services fall in this area.
The relevance of the criterion is telling: if it is difficult and expensive to export and import, your access to international markets is limited, which again restricts the growth potential. Prices are higher thannecessary,and potential economies of scale cannot be taken advantage of. Domestic production could even be
stopped if delays occur.
Let us – in the role of an IT vendor – comment on the recommendations of Doing Business directly:
- E-submission and processing are home turf for SAP. Basically we are talking about payment processes, record or case management procedures, business rules, document and form management , and the like. These components can be used nationally or in a regionally aligned system environment. The solution comes with a highly sophisticated and standards-based interface technology. This is particularly important in a disparate IT environment, as is typical for export/import-relatedapplications. Complexity grows even more if we talk about regional data exchange.
- A one-stop shop: for all export/import-related processes and stakeholders is only a logical step further down the road of process automation. It could give direct access to the e-submission and processing solution and could be enriched by all relevant services independent of the government or private body offering the service. Doing Business also sees shrinking transaction costs due to more transparency, which helps to simplify the procedure.
Advisors may not be needed any longer.
- Inspections are needed everywhere alongside the process of trading acrossborders. The amount of cargo that can be inspected is limited (you cannot simply inspect all the containers crossing theborder).These days inspection is done with risk profiles. For valid profiles you need deep-diveanalytical tools that can check large amounts of data and find suspicious patterns that may require a (deeper) inspection. Technically you could also think about a black, grey, and white list of suppliers or goods. Private and public sector organizations around the world already use systems based on solutions for global trade from SAP, or systems supporting the checking of persons crossing borders, or trade control for Europe.
- The idea behind development of all relevant industries – or “sparking competition” as Doing Business calls it – is to push quality and decrease prices of services. For a government this would be a chance to develop special industry segments proactively, such as with grants or tax deductions. A target could be the market for logistical services. We lready pointed at a portal for starting businesses to develop a certain industry segment. Why not using the idea to do that in the export /import context as well? If the government wanted to set up a development program, the SAP Grants Management application would be an excellent choice. It also comes with online service capabilities to monitor and manage a grant throughout its entire lifecycle – including all financial payment processes. This application is used by an impressive and ever-growing number of public sector organizations worldwide.
Apart from the recommendations of Doing Business,you can also identify potential in the development of infrastructure and improved border services. The latter is supported by SAP for Public Sector solutions, but the former is broader. Usually the state doesn’t build infrastructure, it procures projects for building highways, for example– for which a public sector procurement system is needed. Since government’s task is mainly monitoring project progress, project management and performance management systems should be in place. In cases where the state actually run the roads, maintenance comes into focus. A client in central Europe runs a performance- oriented maintenance control with plant maintenance and geo-information system functionality from SAP, which even won an award.
All these different facets can be covered by our applications – proven in the public sector.