4.1.3 Different classification of goods. In ASEAN, the harmonized system code is in
place. As the taxes are different, shippers tend to arbitrarily classify their goods so as to
pay minimum tax. For example, some customs classify toys as plastic goods while others
classify them as decoration items. This misclassification is either due to the lack of
education among the customs authorities or due to logistics unfriendly practices. Also,
a transit delay occurs when the LSPs challenge the customs officials on the classification
codes. The logistics costs also increase because of detention, as the containers are
detained at the port thereby increasing port charges.
The classification of goods depends on the interpretation even at a country level.
For example, at the two ports of Malaysia where different customs checkpoints charge
different duties at these ports for same goods (15 per cent at Port Klang and 25 per cent at
Johor port). In Brunei, customs officials are not well educated in the classification
system. So, the shippers have to rely on whatever they say. In Brunei and Thailand,
customs official can change the classification codes arbitrarily and intentionally.
In Indonesia and Cambodia, there is language problem, as codes are in English and
customs official do not fully understand English. Also there is a lack of knowledge
among customs officials in Vietnam, Cambodia and Laos, especially regarding technical
goods such as electronics where addition of a new component to the product requires
change in classification. In addition, Indonesia and Thailand do not allow the import of
any used parts, which increases the potential of goods misclassification.
4.1.3 Different classification of goods. In ASEAN, the harmonized system code is inplace. As the taxes are different, shippers tend to arbitrarily classify their goods so as topay minimum tax. For example, some customs classify toys as plastic goods while othersclassify them as decoration items. This misclassification is either due to the lack ofeducation among the customs authorities or due to logistics unfriendly practices. Also,a transit delay occurs when the LSPs challenge the customs officials on the classificationcodes. The logistics costs also increase because of detention, as the containers aredetained at the port thereby increasing port charges.The classification of goods depends on the interpretation even at a country level.For example, at the two ports of Malaysia where different customs checkpoints chargedifferent duties at these ports for same goods (15 per cent at Port Klang and 25 per cent atJohor port). In Brunei, customs officials are not well educated in the classificationsystem. So, the shippers have to rely on whatever they say. In Brunei and Thailand,customs official can change the classification codes arbitrarily and intentionally.In Indonesia and Cambodia, there is language problem, as codes are in English andcustoms official do not fully understand English. Also there is a lack of knowledgeamong customs officials in Vietnam, Cambodia and Laos, especially regarding technicalgoods such as electronics where addition of a new component to the product requireschange in classification. In addition, Indonesia and Thailand do not allow the import ofany used parts, which increases the potential of goods misclassification.
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