The Government is Fundamentally and Comprehensively Reforming Specialized Inspection Activities

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The Ministry of Finance (Department of Vietnam Customs) is submitting the Scheme “Reforming the model of quality inspection and food safety inspection for imported goods” for Government approval. The Scheme aims to fundamentally and comprehensively reform specialized inspection (SI) activities for imported goods according to the policies and instructions of the Government; cutting administrative procedures, reducing resources, reducing costs, reducing customs clearance time, and creating favorable conditions for Enterprises.

In recent times, with the drastic direction of the Government, SI work for imported goods has achieved certain results, but still fails to meet the requirements of administrative reform, still contains many inadequacies, and remains a burden for Enterprises.

To comprehensively reform SI procedures for imported goods, the Government has assigned the Ministry of Finance to preside over the development of a Scheme to reform SI in the direction that the Customs authority is the focal point for performing specialized inspections at the border gate, while specialized management ministries perform post-clearance audits.

The Scheme “Reforming the model of quality inspection and food safety inspection for imported goods” applies to goods subject to quality inspection and food safety inspection at the border gate, except for the following goods:

(i) Goods subject to inspection and management related to security, national defense, quarantine, culture…;

(ii) Goods that are subject to both quarantine and other specialized inspections managed by the Ministry of Agriculture and Rural Development;

(iii) Goods in the List of state inspection of quality after the goods have cleared customs, or goods in the category of state inspection of quality where specialized management Ministries and sectors stipulate that inspection is performed through the review of the importer’s declaration of conformity according to the measures: (i) Results of self-assessment of conformity by organizations or individuals; (ii) Results of certification or inspection by registered or recognized certification or inspection organizations in accordance with the law (measures 2a, 2b according to the provisions in Clause 3, Article 1 of Decree No. 74/2018/ND-CP amending and supplementing Clause 2, Article 7 of Decree No. 132/2008/ND-CP of the Government detailing the implementation of a number of articles of the Law on Quality of Products and Goods).

For imported goods in the List of goods subject to state quality inspection after customs clearance, in cases where the enterprise does not apply the quality inspection procedures according to the New Model in the Scheme, they may choose to apply post-clearance inspection.

Imported goods subject to quality inspection/food safety inspection do not have to undergo quality inspection/food safety inspection if they fall into cases exempt from quality inspection/food safety inspection.

7 Major Reforms

According to the Scheme model, many inspection procedures under the New Model are simplified thanks to the information sources and databases of importers being concentrated at a single focal point, which is the customs authority. Accordingly, when goods are eligible for exemption from quality inspection or reduced inspection, the customs electronic system automatically updates, and the importer does not have to perform procedures to apply for exemption or reduction as currently required; this reduces many overlapping documents between customs dossiers and quality inspection dossiers. The Scheme includes 7 major reform contents as follows:

Reform 1: Assigning the customs authority as the focal point in quality inspection and food safety inspection for imported goods

Accordingly, the customs authority will be the focal point for receiving quality inspection (QI) and food safety (FS) inspection dossiers for imported goods; Performing dossier inspections, performing inspections using machinery and equipment at the scene or requesting expertise, testing at conformity assessment/inspection organizations designated by the specialized management Ministries and sectors; Notifying the results of state inspection of quality and food safety for customs clearance; Presiding over and coordinating with specialized management Ministries and sectors to build databases, complete information technology systems, and apply “integrated” risk management in QI and FS inspection, ensuring transparency, connection, and information sharing with relevant agencies.

When receiving and checking dossiers for imported goods subject to QI and FS inspection, the customs authority will aggregate information sources and databases on goods and importers of goods subject to QI and FS inspection, from which it will build a database source and complete the information technology system to ensure the implementation of contents according to the New Model.

At the same time, the customs authority will announce the list of items applied with normal inspection and reduced inspection methods on the National Single Window Portal to facilitate enterprises in performing imported goods procedures and to facilitate agencies in coordinating and deploying related tasks.

Reform 2: Synchronously applying 3 inspection methods for both QI and FS fields

This method aims to reduce the number of imported shipments that must be inspected, including: Strict inspection (which is the inspection of dossiers combined with taking samples for certification, expertise, or testing); normal inspection (which is the inspection of QI and FS registration dossiers); reduced inspection (which is the random inspection of dossiers not exceeding 5% of the total shipments subject to reduced inspection from the previous consecutive year).

Goods that have met import requirements 3 consecutive times under the strict inspection method will switch to the normal inspection method; goods that have met import requirements 3 consecutive times under the normal inspection method will switch to the reduced inspection method.

The synchronous application of 3 methods—strict inspection, normal inspection, and reduced inspection—for both quality and FS fields is one of the reform contents the Scheme aims for, thereby significantly reducing the number of imported shipments subject to QI and FS inspection.

Reform 3: Simplifying QI and FS inspection procedures for imported goods

According to the New Model, QI procedures have been simplified, cutting process steps compared to the current process, specifically:

For goods that already have a certificate of conformity, having the customs authority act as the focal point for QI reduces 2 process steps out of a total of 6 steps compared to the current process (where specialized management Ministries and sectors perform QI).

For goods that do not yet have a certificate of conformity, having the customs authority act as the focal point for QI reduces 3 process steps out of a total of 10 steps compared to the current process (where specialized management Ministries and sectors check the expertise results of the designated Inspection Organization and issue a Notice of QI results meeting import requirements for the customs authority to clear).

Quality inspection is carried out at a single focal point, which is the customs authority; through the National Single Window Portal, enterprises can know the inspection results or the reasons for not yet having results, as well as the status of whether the declaration has been cleared or not, simplifying the need to track and contact a third party, which is the specialized inspection agency. This also simultaneously reduces the workload for the customs authority in tracking and urging enterprises and coordinating information exchange with specialized inspection agencies.

Procedures for food safety inspection under the New Model are also simplified, cutting process steps compared to the current process, specifically:

For goods subject to normal inspection: Having the customs authority act as the focal point for food safety inspection reduces 2 process steps out of a total of 5 steps compared to the current process (where an agency assigned/designated by the specialized management Ministry or sector performs the food safety inspection).

For goods subject to strict inspection, although the fact that the customs authority acts as the focal point for food safety inspection does not reduce the number of procedural steps compared to the current process, it will achieve objectives such as: the sequence of food safety inspection procedures is performed strictly in accordance with the provisions of the Law on Quality of Products and Goods; food safety inspection procedures are simplified because information sources and databases on the legal compliance level of importers are concentrated at a single focal point, which is the customs authority; helping businesses be proactive in choosing a food safety inspection process suitable for their business conditions.

QI and food safety inspection procedures under the New Model are simpler than the current Model. Businesses transact with a single focal point, the customs authority, to simultaneously perform customs procedures and QI and food safety inspection procedures. Maximum application of information technology systems in registering for inspection, performing inspection, and converting inspection methods.

Reform 4: Applying inspection by item to reduce the number of shipments subject to inspection

One of the reform contents of the Scheme is to apply the conversion of QI and food safety inspection methods from strict inspection to normal inspection, and from normal inspection to reduced inspection by item to minimize the shipments that need to be inspected. The application of the conversion of QI and food safety inspection methods applies to identical goods, regardless of the importer.

The system automatically determines the goods for which the inspection method is converted based on the enterprise’s inspection registration dossier; available information, data, and inspection history for identical items.

Reform 5: Fully and substantively applying risk management principles in QI and food safety inspection for imported goods to ensure the role of state management and improve business compliance

The principle of risk management in QI and food safety inspection for imported goods under the New Model is expressed through the following contents: The system automatically decides the inspection method, the conversion of the inspection method, and cases of inspection exemption; The customs authority performs random inspections of no more than 5% to evaluate the legal compliance of enterprises importing goods subject to QI and food safety inspection.

Specifically, the Scheme proposes to fully and substantively apply risk management principles in QI and food safety inspection for imported goods, including:

(i) Risk assessment at the import stage, accordingly, assessing according to selection criteria for exporters and manufacturers abroad. Through this activity, SI agencies will have information sources to create a long-term, full database to identify goods according to different risk levels from the time they are imported into Vietnam, thereby having appropriate management measures and preventing risks from afar;

(ii) Assessing the legal compliance of enterprises importing goods subject to QI and food safety inspection. Through this activity, SI agencies base on the QI and food safety history for imported goods to identify which importers comply well with the law and which importers frequently violate the law or have high risks in importing goods subject to SI, to thereby create favorable conditions or strengthen inspections for importers according to different risk levels;

(iii) Building a List of risky goods for each specialized management field: through analysis and evaluation activities to identify which items originate from where, which items are frequently violated and have high risk, which items have medium risk, low risk to focus inspection resources, or exempt risky items from inspection…

According to the Scheme, risk management principles are implemented deeply and substantively, expressed through the management agency applying a system of measures and professional processes to identify, evaluate, and classify risk levels as a basis for arranging and organizing reasonable resources to inspect, supervise, and support other professional tasks effectively. Accordingly, the customs authority will focus resources to inspect and control goods of enterprises that do not comply with the law, engage in commercial fraud, or high-risk shipments likely to involve violations. For organizations and individuals that comply well with the law in import-export activities, shipments with no risk will be applied with simple inspection methods, thereby reducing clearance time and costs for import procedures.

In order to improve business compliance and ensure the control role of state management agencies, the Scheme proposes to apply risk management principles in QI and food safety inspection for imported goods through performing random inspections of no more than 5% of goods subject to QI and food safety inspection, specifically: The customs authority performs QI and food safety inspection in cases where there are signs of violation or randomly (not more than 5%) to evaluate the legal compliance of the customs declarant.

Performing inspections as above plays a role in improving the legal compliance of enterprises because the customs authority can perform inspections at any time, even though the imported goods fall into the case of inspection exemption, or the imported goods have been converted to apply the normal inspection or reduced inspection method.

Reform 6: Expanding the subjects exempt from quality inspection and food safety inspection, with the expected addition of 18 groups of subjects to reduce state management costs and business costs

The expansion of exempt subjects under the New Model is proposed on the principle that subjects exempt or reduced in this Decree (Decree No. 15/2018/ND-CP, Decree No. 132/2015/ND-CP, Decree No. 74/2018/ND-CP, Decree No. 85/2019/ND-CP) will be considered for exemption in the other Decree and vice versa, while adding a few more cases and replicating the application commonly for all QI fields, which will increase the subjects and shipments that do not have to undergo QI.

18 cases exempt from quality inspection and food safety inspection:

(1) Moving assets of organizations or individuals within the tax-free quota; gifts and presents within the import tax-free quota according to tax laws;

(2) Imported goods within the tax-free quantity according to the law serving the work and daily life of foreign individuals/organizations enjoying diplomatic immunity and privileges;

(3) Goods in transit, border-gate transshipment, transshipment, temporary import for re-export, or sent from abroad into bonded warehouses for export abroad;

(4) Goods that are samples for advertising with no use value, samples for testing or research with a quantity suitable for the purpose of testing or research confirmed by the organization or individual;

(5) Goods temporarily imported for display at fairs or exhibitions;

(6) Goods temporarily imported for sale at duty-free shops;

(7) Goods exchanged by border residents within the tax-free quota;

(8) Imported goods sent via postal or express delivery services with a customs value exempt from tax according to tax laws;

(9) On-the-spot imported goods;

(10) Goods temporarily imported for repair or recycling;

(11) Imported goods specialized for security and national defense purposes;

(12) Goods that have been granted a Certificate of receipt of product declaration registration (for goods subject to food safety inspection);

(13) Goods that are products, raw materials, or components imported for the production or processing of export goods;

(14) Goods that are products, raw materials, or components imported to directly serve the production of the importer;

(15) Imported goods that are single items for warranty or replacement; goods that are parts of a synchronous equipment line;

(16) Imported goods from manufacturers that have been inspected at the source by competent Vietnamese authorities, as announced by Ministries and sectors from time to time;

(17) Goods produced with advanced technology and originating from countries or territories with high quality standards expressed through quality labels (e.g., goods labeled with CE, KC, FDA…) as announced by Ministries and sectors from time to time;

(18) Imported goods serving emergency requirements under the direction of the Government or the Prime Minister.

Reform 7: Application of information technology systems in the New Model to reduce time and support businesses and relevant agencies

Maximum application of information technology to ensure that the National Single Window Portal, the automated clearance system, and the risk management system perform features: Identifying subjects subject to inspection, exemption, or reduction of inspection; deciding on inspection methods; providing guidance for businesses to perform stages in SI combined with customs inspection; supporting businesses in declaring standards/regulations that their goods meet; connecting and sharing dossiers and data for related parties; sharing existing information as well as additional clearance information from the customs authority to serve the state management work of the management Ministries.

Impact of the Scheme on the economy and stakeholders

Innovating inspection methods according to the Scheme is expected to help businesses reduce costs, reduce the points of contact between businesses and agencies and organizations, and at the same time, not have to participate in the process of quality inspection and food safety inspection for imported goods.

The new model will help the Government save the budget by cutting administrative procedures, cutting resources, and reducing costs for a cumbersome quality inspection and food safety inspection apparatus, reducing goods clearance time; Helping to raise the sense of responsibility of enterprises in complying with laws on quality and food safety of goods.

The Trade Facilitation Project funded by USAID has evaluated the impact of the Scheme on the economy, on import-export enterprises, and stakeholders.

For the economy, when the New Model is implemented, it will help cut the number of shipments that need to be inspected, thereby minimizing trade costs due to reduced requirements for inventory and capital, allowing for more efficient production and business. Simultaneously, it will encourage growth, especially for manufacturers and distributors, promoting exports and increasing final output, bringing more efficient opportunities for the economy.

For enterprises, it saves time in performing QI and food safety inspection procedures because: (i) they mainly transact with one focal point, (ii) inspection procedures are integrated into customs procedures, (iii) maximum digitalization is applied to the inspection process; It facilitates resolving inquiries when problems arise due to unity regarding the final responsible agency before clearance; It saves costs when shipments are exempt from or subject to reduced inspection (the subjects exempt from inspection are expanded); The business environment is more competitive and equal because imported goods will be more strictly controlled, transparent, and objective.

For the Government: Unifying the inspection focal point with the implementation of customs procedures is an international trend, contributing to better integration, increasing the Government’s prestige, improving administrative reform indicators, and contributing to raising Vietnam’s ranking on prestigious world rankings for competitiveness and the business environment. The Government saves the budget by cutting administrative procedures, cutting resources, and reducing costs for a cumbersome QI and food safety inspection apparatus, reducing goods clearance time.

For specialized management Ministries and sectors: They still perform the management role regarding quality and food safety as they do now, only transferring the inspection function at the border gate to the customs authority. Accordingly, it requires strengthening connection and information sharing with the customs authority, supporting professional training for customs officers, and reorganizing resources to perform tasks of inspecting and checking the quality of imported goods during production and circulation on the domestic market. Ministries and sectors must strengthen post-clearance inspection work.

For the customs authority: Strengthening the role of the customs authority in quality inspection and food safety inspection, specifically as the inspection focal point.

For Conformity Assessment Organizations: The role of conformity assessment organizations basically remains unchanged compared to the present. However, under the new model, it requires the synchronous application of information technology between agencies and organizations related to QI and food safety inspection, such as returning results on the National Single Window Portal…

For consumers: In the long term, commodity prices may decrease because the costs spent by enterprises for QI and food safety inspection decrease, and clearance time is improved, creating conditions for fast distribution of goods and increasing business opportunities.

Reference: https://www.customs.gov.vn

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