WORLD TRADE  
ORGANIZATION  TN/TF/W/50 
14 June 2005 
 
 (05-2498) 
Negotiating Group on Trade Facilitation Original:   English 
  
 
COMMUNICATION FROM MALAYSIA 
  
 The following communication, dated 13 June 2005, is being circulated at the request of the 
Delegation of Malaysia for consideration at  the Negotiating Group meeting of 13-14 June. 
 
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TRADE  FACILITATION:  MALAYSIA'S EXPERIENCE  
 
 
I. INTRODUCTION 
1. The WTO Doha Ministerial Declaration identifie d four areas related to Customs in its work 
programme:  Rules of Origin, Customs Valuation,  Trade Facilitation and Capacity Building.  The 
work program on trade facilitation will be  benefici al for both the trade and Customs communities.  
With regards to Customs in particular, this can provide for political will and commitment which is 
indispensable in pursuing Customs reform and th e simplification of procedures, thus ensuring 
predictability within the trading system a nd providing a basis for good governance.   
2. The Articles in GATT 1994 set out the high principles for formalities and procedures for 
movement of goods, transit of goods and publicatio n and administration of trade regulations.  On the 
other hand, the instruments of Customs as guided by the WCO instruments, including the 
International Convention on the Simplification a nd Harmonization of Customs Procedures (Kyoto 
Convention), through its legal provisions and im plementation guidelines, provide the basis and 
practical guidance and information for the implementation of these high principles.   
3. The purpose of this paper is to focus on Article VIII of the GATT 1994, looking at the 
integration of the principles of the Article with  the standards provisions in the Revised Kyoto 
Convention 2000 and other WCO instruments.  These integration principles become the basis for the 
Malaysian Customs to supporting nati onal approach to trade facilitation. 
II. MALAYSIA'S APPROACH TO TRADE FACILITATION
1 
4. Trade and business facilitation, effective deliver y of services and reducing the cost of doing 
business have always been key concerns of the Mala ysian Government. This includes the need for an 
efficient civil service delivery system to ensure expedient and effective im plementation of national 
development policies and to encourage furthe r development of productive and assertive export-
oriented businesses.  Malaysia is firmly committed to  the use of ICT in all areas including in trade 
facilitation.  The Government has put in place, and is  consistently up-grading,  the physical and legal 
infrastructure to support an environment for trade and commerce using the electronic media. 
                                                      
1 APEC 2004, Malaysian Individual Action Plan (IAP) for Chapter 6: Customs Procedures and Trade 
Facilitation. TN/TF/W/50 
Page 2  
 
 5. In March 2004, the Government agreed on the development of a Trade Facilitation Portal 
(TFP).  The TFP will provide a common web-based pl atform for the trading community, including the 
Customs, to share and access all trade-related info rmation and services via the internet.  The TFP will 
be electronically linked to the Customs Portal. The Ministry of International Trade and Industry (MITI) is overseeing the development of the TFP,  including the identification of the best-fit 
operational model and implementation methodology. It is envisaged that the private sector will drive 
the TFP as it is basically a business-to-business (B2B) portal.   MITI has already started work to 
review all existing e-commerce initiatives, with th e objective of formulating a comprehensive and 
coordinated framework for e-commerce in th e supply chain and trade facilitation.  
6. To enhance efficiency and effectiveness in  the delivery of goods and services, the 
Government is also promoting the growth of integr ated logistics services.  The provision of effective 
logistics services will increase efficiency in dist ribution and reduce productio n costs as manufacturers 
can adopt just-in-time practices and outsource their logistic requirements.  
III. ARTICLE VIII OF THE GATT 1994: FEES AND FORMALITIES CONNECTED 
WITH IMPORTATION AND EXPORTATION 
1. Text 
 1. (a) All fees and charges of whatever char acter (other than import and export duties and 
other than taxes within the purview of Article  III) imposed by contracting parties on or in 
connection with importation and exportation sh all be limited in amount to the approximate 
cost of services rendered and shall not represen t an indirect protection to domestic products 
or a taxation of imports or  exports for fiscal purposes. 
 
  (b) The contracting parties recognize the need for reducing the number and diversity of 
fees and charges referred to in sub-paragraph (a). 
   (c) The contracting parties also recognize the need for minimizing the incidence and 
complexity of import and export formaliti es and for decreasing and simplifying import and 
export documentation requirements. 
  2.   A contracting party shall, upon requ est by another contracting party or by the 
CONTRACTING PARTIES, review the operation of its laws and regulations in the light of the provisions of this Article. 
 
 3.  No contracting party shall impose subs tantial penalties for minor breaches of customs 
regulations or procedural requirements.  In pa rticular, no penalty in respect of any omission 
or mistake in customs documentation which is  easily rectifiable and obviously made without 
fraudulent intent or gross negligence shall be  greater than necessary to serve merely as a 
warning. 
  4.  The provisions of this Article shall ext ent to fees, charges, formalities and requirements 
imposed by governmental authorities in conn ection with importation and exportation, 
including those relating to: 
 
  (a) consular transactions, such  as consular invoices and certificates; 
  (b) quantitative restrictions;   (c)  licensing;   (d)  exchange control;    (e)  statistical services; 
  (f)  documents, documentation and certification;  TN/TF/W/50 
 Page 3 
 
 
   (g)  analysis and inspection; and   
  (h)  quarantine, sanitation and fumigation.  2. Basic  Obligations
2 
7. Article VIII seeks to limit the costs and complexity of the importation and exportation process 
by imposing specific legal obligations on Members w ith respect to the fees and charges that may be 
charged in connection with importation and exporta tion and the penalties that may be imposed for 
minor breaches of customs procedures; as well as by  explicitly recognizing the need to reduce the 
number and complexity of import and export-related fees and formalities. 
8. Article VIII requires each WTO Member to ensure that: 
(i) the non-tariff fees and charges that it imposes on or in connection with importation or 
exportation: (a) are limited in their amount to the approximate cost of the regulatory activities performed by that Member in  connection with such importation or 
exportation; and (b) do not represent indirect protection to domestic products or taxation of imports or exports for fiscal purposes; 
 
(ii) upon request by another Member or by the relevant WTO Body, it reviews the 
operation of its laws and regulations in the light of the provisions of Article VIII; and 
 
(iii) it does not impose substantial penalties for minor breaches of customs regulations or 
procedural requirements, in particular wh en such breaches are th e result of mistakes 
that are rectifiable and do not resu lt from fraud or gross negligence. 
 
9. In Article VIII, Members also "recognize", but undertake no explicit obligations with respect 
to: 
(i) the need to reduce the number and diversity  of the fees and charges addressed by 
Article VIII; and 
 (ii) the need to minimize the in cidence and complexity of import and export formalities, 
and to decrease and simplify import and export documentation requirements. 
 
IV. THE ALIGNMENT OF ARTICLE VIII WITH THE REVISED KYOTO 
CONVENTION AND OTHER WCO INSTRUMENTS. 
10. Revised Kyoto Convention (RKC) adopted by the WCO in 1999 is the single WCO 
instrument which covers all the Customs pro cedures and formalities related to importation and 
exportation of goods as well as other procedures.  It c ontains international best  practices and standards 
that provide predictability and efficiency in modern trade and commerce requirements. 
11. The RKC and its provisions and other WCO inst ruments are completely aligned with and 
respect the requirements that are set out in Article VIII (I) (a & c) of GATT 1994 in so far as they can 
be addressed by the Customs.  These relate to th e fees that are to be charged and the procedures and 
formalities to be applied to the goods that are imported or exported.    
12. The alignment of Article VIII with some of the provision in RKC and other WCO Instruments 
are as follows: 
                                                     
 
2 WTO National Seminar on Trade Facilitation, Kuala Lumpur Malaysia, 28-29September 2004: 
Secretariat Paper : 'Article VIII of the GATT 1994 – Scope and Application' . TN/TF/W/50 
Page 4  
 
  
  
GATT   
RKC / Others Instruments 
 (i)  
Article VIII (1) (A) – Fees and charges to be limited to the 
approximate cost of services 
rendered   
General Annex Chapter 3 – Clearance and Other Customs formalities – 
Standard 3.2 
 
 (ii)  
Article VIII (1) (C) – Requirements for minimizing the incidence and complexity of import and export formalities 
and for decreasing and 
simplifying import and export documentation.  
General Annex Chapter 3 – Clearance and Other Customs formalities – Standard 3.3 (Border agencies coordination
) 
Standard 3.4 (joint controls at common border 
crossings) - Standard 3.5 (juxtaposed customs) office). 
    
  
GATT   
RKC / Others Instruments 
   
  
Standardization and simplification of the goods 
declaration and supporting documents  
 
Standard 3.11 (conform to UN Layout key). 
Standard 3.12 (limit data to only necessary for assessment/collection of duty/tax) Standard 3.14 (provisional incomplete declaration) Standard 3.15 & 3.16 (limit no. of copies & supporting documents) 
Standard 3.17 (allowing submission via electronic means) 
Standard 3.18 (translation not required) Standard 3.25 (allow lodge, register/checking prior  to arrival) Standard 3.27 (allow amendment of declaration) 
Standard 3.28 ( allow withdrawal of goods declaration 
lodged.  WCO guides on Immediate Release; based on 
categorization of consignments: 
- category 1: correspondence and documents 
- category 2 : low value with no duties / tax 
- category 3 : low value dutiable consignment 
- category 4 : high value consignments. 
 
WCO guidelines on Express Consignment Clearance 
 
 
   
Special procedures for authorized persons/traders . 
 RKC Transactional Standard 3.32 
- release of goods on the provision of the minimum  TN/TF/W/50 
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 information necessary to identify the goods and 
permit subsequent completion of final declaration. 
 
- Clearance of goods at the declarant's premises or 
another place authorized by the Customs,  
 - and in addition, to the extent possible, other 
special procedures such as: 
 
 
  
GATT   
RKC / Others Instruments 
   
  
- Allowing a single goods declaration for all 
imports or exports in a given period where goods 
are imported or exported f requently by the same 
person. 
 
- Use of the authorized person's commercial 
records to self-assess their duty and tax liability 
and, where appropriate, to ensure compliance 
with other Customs requirements; 
        -    Allowing the lodgement  of goods declaration by  
means of an entry in the records of the 
authorized person to be supported subsequently.  
 
   
Co-ordinate intervention (Convergence of official 
control)  
 Standard 3.35 of General Annex Chapter 3 
Requires that Customs should ensure that their 
inspections are co-ordinat ed with other competent 
authorities and are carried out at the same time.  It could establish an inspection service or compliance verification process that is integrated with other authorities. Such a convergence of controls into a single control to meet all 
government requirements is an important trade 
facilitation measure.    
   
Use of Risk Management Techniques.  
 Chapter 6 General Annex 
 
 
Standard 6.3 – 6.10  (The importance and requirements to use risk management, risk analysis supported by information technology as tools for Customs control)  TN/TF/W/50 
Page 6  
 
 V. MALAYSIAN  CUSTOMS PRACTICES IN TRADE  FACILITATION (BASED ON 
ARTICLE VIII OF GATT AND RKC/WCO GUIDELINES) 
1. Based on Article VIII of GATT and RKC/ WCO guidelines, the Malaysian Customs has 
been practicing the following procedures  and formalities for trade facilitation, 
categorized by the those guide lines / agreements / standards. 
(a) Article VIII (1) (A) : requirements for minimum / limited fees and charges. 
 Malaysian Customs has fulfilled this require ment of the WTO to have reasonable and 
appropriate fees and charges for any services re ndered.  Standard 3.2 of Chapter 1 General 
Annex (Revised Kyoto Convention) has been practiced.  The current issue is "over time 
charges". Malaysia has already abolished over time charges since 2001.  Therefore, Customs 
services are now rendered on request, including outside the designated  business hours or / 
and away from Customs office; without charges for overtime services.   
 
(b) Article VIII (1) (C) : Requirements for minimizing the incidence and complexity of 
import and export formalities and for decreasing and simplifying import and export 
documentation. 
(i) Border agencies coordination
 
Malaysian Customs cooperates with ne ighbouring countries to have Customs 
presence to ensure compliance with impor t and export requirements.  Currently, 
Malaysia and Thailand have been coor dinating on a single inspection system, 
information technology interfacing and sharing of cost for equipment. 
 
(ii) Standardizing and simplification of trade / clearance procedures  
Malaysian Customs forms are aligned according to the UN layout key. Most of the 
Customs procedures and documentations fo r import/export are done electronically via 
the EDI system.  Import permits from MITI are transmitted electronically to the 
Malaysian Customs.  Efforts are currently be ing undertaken to link the rest of other 
permit issuing agencies to submit their import and export permits electronically to Customs depending on their readiness.  Malaysia's export transactions are paperl ess in the major seaports and airports. 
 
(iii) Immediate release based on categorization of consignments
 
Malaysia has done some improvements to ex pedite the process of Customs clearance 
such as:  a. Direct release of non-dutiable express shipments below RM2,000.00 without 
formal declaration. 
 b. Consolidated declaration for non-dutiable express consignments for export. 
 
c. Express consignments with de minimus value of RM500.00 exempted from 
payment of duties. 
 
d. Post release submission of Customs form for express consignments to free zones. 
  TN/TF/W/50 
 Page 7 
 
 
 The services for immediate release facilitation are rendered through the Express 
Handling Unit (EHU) at all major International Airports to cater for the release of express consignments. The EHU operates on a 24-hour basis.  Malaysia also participates in the ASEAN Customs Clearance Services (ACCESS) 
project since year 2000.  Apart from KLIA, the services has been extended to 
Airports at Bayan Lepas Penang, Senai Johor, Kota Kinabalu Sabah and Kuching 
Sarawak.  (iv) Special procedures for authorized persons / traders
 
Malaysia has implemented a special procedure to expedite clearance for some 
authorized trader who have shown a good record of compliance.  This procedure is called the Customs Golden Clients programme  and it allows for trusted traders to 
import goods without going through the normal physical examination or minimum Customs intervention. 
 
Malaysia's Customs Golden Client programme does not discriminate between Multinational Companies (MNCs) and Small Medium Industries (SMIs).  (v) Coordinate intervention (convergence of official control)
 
Standard 3.35 of General Annex Chapter 3 in line with Article VIII (1) (C) requires 
the Customs to ensure that their inspections are co-ordin ated with other competent 
authorities and are carried out at the same time.  It could establish an inspection service or compliance verification process that is integrated with other authorities.   The Malaysian Customs has provided this facility and operates on a 24 hours basis at 
major exit and entry points.  However, th is requirement should be made on a best 
endeavour basis, not to be made mandato ry, as some permit issuing authorities might 
have stringent procedures in inspection for valid reason. For example, inspection 
procedures by the Department of Health and Quarantine.  (vi) Use of Risk Management Techniques
 
Malaysia introduced the risk assessment on a selective basis in terms of examination 
of goods at the points of import/export.  Risk assessment is done based on the 
sources/information obtained from previous  records of post-audit and preventive 
cases.  A Customs Intelligence Center (CIC) is located  at the Customs Head Office since its 
establishment in August 2003 and performs its function on an on-going basis. An 
"Operational Risk Management Committee" is  been set-up in all states of Malaysia. 
 (vii) Collateral or monetary security
 
 
The Malaysian Customs has considered an enhanced clearance system that includes 
security provisions (bonds, financial guaran tees, surety bonds) or other forms of 
collateral to ensure the obligations to cu stoms of importers, warehouse operators or 
international transporters of good record, ar e properly discharged.  The system can be 
used to secure payment of duties and taxes where payment is deferred or where goods 
are provisionally released pending comp letion of final clearance procedures. 
  TN/TF/W/50 
Page 8  
 
 For these facilitation, the Malaysian Custom s has provisions for deferred payment for 
specific clientele.  Electronic Fund Transfer (EFT) for duty payment has been introduced and is currently practiced in Port Klang, Selangor and Federal Territory of Kuala Lumpur.  
 2. Other Trade Facilitation Initiatives: [Highlig hts of APEC 2004 trade facilitation work in 
Individual Action Plan for Malaysia – related to Customs Procedures]. 
(i) Malaysia implemented the Container Security Initiative
 in March 2004 to facilitate 
movement of goods and enhance legitimate trade. 
 
(ii) Malaysian Customs conducts a Biannual Cu stoms-Private Sector Consultative Panel  
exercise to obtain feedback and recommenda tions from stakeholders.  There is a 
feedback mechanism on action taken. 
 
(iii) Permits for imported vehicles  are transmitted electronically via SANCRT 
(International Movement of Goods G overnment Regulatory Message) from the 
Ministry of International Trade and I ndustry to Customs Department. Paperless 
export is already being implemente d at major ports and airports. 
 (iv) Re-engineering of customs procedures
 in a paperless environment is in progress.  The 
Customs Information System will be modified accordingly. 
 
(v) The Government has agreed that the Mala ysian Customs also develop a web-based 
Customs Portal , to give users the choice of two electronic means to access the 
Customs Information System; either through the Customs Portal or the existing EDI system. 
 
The Customs Portal will provide all Customs related services, which include electronic transmission of import/export Customs declarations, interactive services, information services, and information exch ange services with relevant Government 
agencies in the country as well as foreign Customs authorities.   
 
Work is currently underway to develop the Customs Portal
 to: interface with the 
national trade facilitation portal  towards the establishment of a "single window " for 
cross-border trade; provide informational as well as transactional services over the internet; and to interface w ith Permit issuing Agencies
 and other government 
agencies. 
 
VI. CONCLUSION 
13. As stated by a study on future customs environment3, the main aim of Customs' long term 
vision is the development of a harmonized simplified process, which facilitates the movement of goods internationally and assists in the enforcement of Customs laws.  This is to be achieved by 
recognizing that an international shipment is bot h an export and an import, using international 
standard data in automated data processing, allowing  traders to supply info rmation once in a seamless 
integrated process, minimizing the impact of Cu stoms information requirements on business, by 
limiting the Customs information needed for authorized traders for non-controlled or restricted goods and utilizing commercial system and data stream. 
                                                     
 
3 Appendix 7 Draft Cargo Processing Model : Case Study by H.M.Customs and Excise, United 
Kingdom on International Trade – a blueprint for future Customs environment.  TN/TF/W/50 
 Page 9 
 
 
 14. Malaysia as a founding member of the WTO by virtue of its membership in the GATT since 
1957, and as in the process to Revised Kyoto Convention accession, has already made and 
continuously in on-going effort to adhere to its WT O obligation in facilitating the international trade.   
 
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