This paper traces the
trajectory of digitalization and innovation reforms undertaken by Pakistan
Customs to facilitate cross-border trade, with special focus on Faceless Customs
Assessment (FCA), the latest initiative of the Government of Pakistan under the
Prime Minister’s Transformational Plan for FBR. Data of over 144,000 goods
declarations (GDs) of red (non-facilitated) and yellow (semi-facilitated)
categories filed in 180 days, pre-intervention ninety days, and ninety days
post-intervention, is analysed to assess the impact of this initiative on trade
facilitation and quality of assessments. Pre-post data of assessment time,
documents calling, and referrals to physical examination, reviews filed, and
clearance-related complaints are evaluated to assess the impact on trade
facilitation. The results conclusively suggest that under the new initiative,
trade facilitation has increased remarkably. For determining the impact on the
quality of assessments, analysis of assessed value (AV) vis-a-vis declared
value (DV) is conducted. The results suggest that revenue did not witness any
dip, and the quality of assessments improved due to FCA intervention. The
positive impact on revenue (collected as additional revenue), though marginal
in comparison with the increase in trade facilitation, further confirms that
the quality of assessments has increased in the post-intervention period.
Impliedly, it also suggests that the quantum of import-stage lost revenue
through undervaluation and collusion is much less than generally perceived and
reported in the press. The paper argues that the abolition of interaction
between the assessors and customs brokers, embedding an element of anonymity in
the process of assessment of GDs, and innovation in the internal management of
the organization, are the key determinants of the positive outcomes. AI-driven
risk evaluations and assessments of GDs and the use of a Blockchain-based
framework are suggested to further enhance trade facilitation and to improve
the quality of assessments.