Madagascar is making a major stride in improving business conditions for companies large and small by agreeing to two new projects with the Global Alliance for Trade Facilitation that will simplify trade processes and make them more transparent and predictable, cutting costs and saving time for businesses.
The National Trade Facilitation Committee (le Comité National de Facilitation des Echanges or CNFE) and the Alliance today signed memoranda of understanding to allow the two projects to proceed.
The new projects stem from the government’s drive to boost its trade competitiveness, and spur business growth by digitising procedures and cutting the expense and time in trade processes. The streamlined customs procedures will be more relevant and less burdensome to both exporters and importers and will encourage greater tax compliance.
One project will digitize phytosanitary certificates that are essential for trade in plant and plant products. These establish where the shipments came from and how they meet the health standards of each country. However, as with many other nations, Madagascar has long relied on traders filing paper certificates and examining them on arrival at its ports of entry, slowing shipments that can be damaged or spoiled by delays.
The Alliance will assist Madagascar in adopting electronic phytosanitary certificates (or ePhytos), an electronic solution pioneered and operated by the International Plant Protection Convention Secretariat through its ePhyto Hub system. The Alliance has already helped introduce the ePhtyo process in Morocco and Madagascar will become one of a small but growing group of African countries to have used this approach.
Smoother, cheaper, more easily understood trade processes will be a boon for plant and plant product companies of all sizes in Madagascar but will particularly benefit small and medium enterprises that are often deterred from entering trade markets because of daunting red tape. Plant and plant products represented 35% of total exports from Madagascar in 2019 but this initiative could help companies drive this contribution even higher.
A second project will introduce a system of advance rulings on tariff classification and customs origin, removing the need for customs to make these determinations at the border. Traders will be able to request an advance ruling on the application of customs laws knowing that the resulting legal opinion will be binding, uniformly applied by customs and valid for a set period, usually several years.
Both projects are being implemented in conjunction with Madagascar’s National Trade Facilitation Committee, which comprises members from both the public and private sectors. The Alliance is already working on a centralised advance ruling approach in Colombia that will benefit the automotive sector there by making it easier and more cost-effective to import the parts they need.
“The National Trade Facilitation Committee of Madagascar has set itself the vision of reducing the time to cross borders by 50% and the costs of customs clearance by 15% by 2023,” said Ernest Zafivanona Lainkana, Director-General of Customs. “This is in order to boost the competitiveness of businesses and significantly improve the business climate. The challenges are significant, but projects such as advance rulings and ePhyto, which will be implemented in partnership with the Alliance, will help to make our vision a reality.” “Through these two projects, Madagascar is taking a giant stride toward helping local businesses enjoy far easier and less costly trade processes,” said Philippe Isler, Director of the Global Alliance for Trade Facilitation. “The government has committed to introducing global best practices in two areas of trade facilitation that will make a real difference in improving business conditions, while the ePhyto project also offers a significant boost to its agri-business sector. We at the Alliance look forward to working with them in realizing these ambitions.”