TICA - A new way to do Business

Esta nota fue publicada en la revista AmCham's BUSINESS (volume 14, #18, Sep 2007). Si leo esto de otro sistema, pienso que es una nota pagada para propaganda. Hasta lo que se, nadie pagó por esto....

TICA es la implementación de Concepto del GIA en Costa Rica.

Costa Rica's managment of imports has changed radically with the advento of TICA, an import-monitoring system now being used in all Costa Rican ports of entry.

Kevin Ludeke

The TICA custom system is much more than a new computer program. It represents a new way of managing sutoms and as such it augers well for Costa Rica's future. All the particpants in import an export activity - shippers, importers, customs agents, custom officials, banks - have felt the difference.
The roll-out of this new way of doing things has been very delibertate, starting with the relative small Pacific port operation of Caldera in June of 2005, then followed in late 2005 and all of 2006 by the Central Custom Office, Juan Santamaría airport and the border stations with Panama and Nicaragua. Finally, Atlantic port operations of Limon and Moin, through with about 80% of imports are shipped, began using TICA just five month ago, in May of 2007.
The steady progression in implementation proved to be a key factor in the successful launch of TICA in Limon and Moin. Those sister ports represent such a high percentage of import and export volume that TICA could not possibly be considered to be implemented without them, yet by the time TICA was about to be implemented in Limon even skeptics acknowledged that implementation of th system was a fait accompli. Given the traditional difficulty of instituting anything new and innovative in Limon, the manner in wich TICA was introduced provides a valuable lesson in successful innovation.

Less Contact, Less Fraud.
"I would summarize the recent history of Customs in 3 stages," says Juan L. Zuñiga, a former functionary who now works as commercial and customs consultant. "Before the 90s whe migrated to an automated system in which pass-through of goods [in which many shipments where not inspected] was privileged, more than what you'd expect from an equilibrium between control and efficient handling. It was an extreme, and fraud increased. Now with [TICA]," Zuñiga goes on, "the idea is to find that balance. Facilitate commerce, don't slow down un-risky operations and institute much more focused control. This is a new concept [for Costa Rica]."

"The [private] customs agent used to follow the merchandise physically," says Desiderio Soto, Costa Rica's Director of Customs. "He took documentation to customs, and to wherever the merchandise was stored, making joint inspections with customs. That's no longer the case. He makes a sworn customs statement from wherever he is, using both his own observation and data that his customer gives him. Then he waits for the Customs administration to tell him wheter those goods are subject to physical inspetion, green light or yellow light. It is estimated both globally and in Costa Rica that 85% don't need to be physically inspected when it is imported since the trend worldwide is towards inspection after the fact."

Soto notes that under TICA, private customs agents "no longer have the immediacy of contact with Customs, and the opportunity to come to agreement - 'Lets agree on a story' ". Soto goes on to say that, "in his logbook it say when, why, how, all the steps that were taken and the information that was delivered. This has generated much information for the Customs Administration and creates very hig risk for him [the customs agent] if he loses documents. Before, a lot of documents got lost, now they don't.

New Personnel
Juan Zuñiga notes that there was initially considerable opposition to TICA "above all among the mid-level and low-level goverment employees because they felt as though the change was going to affect their jobs, and in some cases they feared losing their jobs because automatization is generally felt to imply that people get fired."

Nevertheless, Roberto Acuña, the customs official responsible for TICA, notes that "we've actually added personnel." He explains that "together with TICA, wich is a technological tool, ther has been a parallel structural reform of the customs and administrative process. We have created a new deparment called 'Customs Risk Assessment'. This is one of the 'best practices' encouraged by the word customs organization in roder to facilitate commerce and concentrate controls on what actually represents a risk. Since the law gives us 4 years to review [the accuracy of the import declaration], TICA has all the information." Acuña explains that Customs use various techniques in analyzing such information and determining when to investigate further. Some investigation after-the-fact might take place just days or month later. "After that, we have analysis of tendencies among different groups, corporations, importers..."

Transparency
In reference to such analysis, Desiderio Soto comes back to the fact that "Customs has changed from verification of merchandise [before TICA] to verfication of prcesses and data [under TICA]." He explains that "the behavior of one compay is contrasted against a similar compay or with a competitor. The competitor sys ´these items are classified as X' and so when we investtigate we find that one of them is tending to classify correctly and pay duties while the other isn't. We find these tendencies through [analysis of] processes and information. Not through [inspection of] merchandise."

Soto explains that "our legislation permits [companies to] change their declarations at any time. Any importer can change declarations from 4 years back whenever he wants. This has one of two consequences. If the customs administration hasn't started an investigation of the company, then the company is forgiven 75% of the possible fines. If the customs administration has started an investigation, then the company pays all the fines."

Soto expresses a preference for letting a company know that Cusoms may be interested in reviewing the company's import recodrs, thus giving the company a chance to conduct an internal review and make correction if they're needed.

Likewise, companies are given the option of making "anticipated declarations" of imported merchandise in order to hear Customs' opinion regarding the classification of merchandise or the value of that merchandise. Soto notes that "we see fines as a way to ensure [proper] behavior, not as a rule in most cases."

Collections
Monetary benefits of TICA to the Customs Administration fall into two categories. The relatively easy savings to quantify are those generate by the cnage in payments procedures. Previous to TICA banks charged a percentage of the taxes collected as commission. Under TICA taxes are paid directly form imports' accounts to the Customs Administration, with a much lower per-transaction fee levied by the bank. The results are quantifiable and considereble. The accompanying chart shows that through June 30 the Customs Administration has realized a saving of C 1.681 millon colons (roughly $ 3.2 millon) in bank commission through TICA.

The other category of savings might derive from better imports controls under TICA, but such savings are more difficult to quantify. The Customs Administration has attempted to illustrate the magnitude of such savings by drawing a straight percentage comparison of the income under TICA versus the income for the most recent same-month period under the previous system. [See table below.]

Doing Something Right
"Tica was the death word," says Jeff Ducheneau, General Manager of AeroCasillas, "before it was launched. We thought customers wer going to panic, they weren't going to buy anything anymore because they weren't goint to want to pay taxes on every single item." AeroCasillas is one of several companies that provied P.O. boxes in Miami, and like its competitors has found itself importin increased volumes of Internet purchases for its customers through the Juan Santamaria airport.

"Well, you know what? TICA is probably the best thing that has happened in our business," Ducheneau goes on to say. "I really do mean that honestly. We operate in 30 countries. So whenever I travel outside of Costa Rica I'm reminded that I forget how bureaucratic Costa Rica Customs used to be. You used to have to fill out a form or piece of paper for every single item."

In this sense, Juan Zuñiga calls TICA "the essence of [Costa Rica's] obligations under CAFTA." By with he means that any free trade agreement is meant to guarantee the legal and institutional conditions necessary for facilitate free trade, and TICA provides the technical framework necesary to ensure those conditions.

For those citizen and residents wondering if the Costa Rican government is capable of any major reform, TICA provides a heartening illustration of what can go right. Despite doubts and complaints from shippers and importers, the system's implementation has been strategically calculated, remarkably smooth and demonstrably cost-saving.