Impact of Digitalization on Trade Facilitation and Revenue: Evidence from Pakistan

Abstract

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 90 days, and 90 days post-intervention, is analyzed 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 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.