Sri Lanka’s Customs Department’s infamy for corruption is long-running. A recent news report highlighted police filing criminal action in cases involving seven Customs officers suspected to have obtained billions of rupees illegally.
According to the report, several of these prosecutions are a result of Customs officers allegedly sneaking out detained goods or stuff earmarked for re-export. Corruption is only one of the problems afflicting the department. Another is a perverse rewards system that benefits Sri Lanka Customs employees at the expense of everyone else. State departments, such as Sri Lanka Customs, are taxpayer funded and should be serving the interest of the citizens. However, the over 150-year-old Customs Ordinance (enacted in 1869), the law that governs Sri Lanka Customs, has several provisions that serve the interests of its officers ahead of the public.
Section 127 of the Customs Ordinance grants power to Customs officers to arrest any individual who is ‘under suspicion of commission of an offence’. The officer conducting the investigation can file a B-report before the magistrate and have a suspect remanded. Court then has no jurisdiction to grant bail to a suspect, although a magistrate will remand a suspect based on the B-report outlining the evidence that customs department files. The enquiring Customs officer, who frames the charges has power to pass judgment and determine the penalty.
An officer can impose a penalty up to three times the value of the duties and levies deemed to have not been paid or evaded of which the officer is automatically entitled to claim a third, as a reward. Greater the penalty the higher the reward for the officer imposing the penalty. When a Customs officer has personal financial gain from a judgement he delivers, expecting justice is unrealistic.
Not all perverse incentives for customs officers’ stem from laws the governing enacted a century and a half ago. In 2004, the Ministry of Finance approved incentives for Sri Lanka Customs, allowing officers to receive 60% of income from the sale of trade data. In 2017, Customs earned Rs8.6 million from the sale of import and export statistics, 60% of which, or Rs5.16 million, would have been distributed among officers involved.
Sri Lanka Customs accentuates several familiar problems at government institutions. One such common but poorly understood problem is how government agencies treat data as their exclusive preserve. Open access to data collected by government agencies ensures higher returns for the investment made by public authorities, using public funds to collect the data, highlights Verité Research, a public policy think tank.
In a policy note, Verité highlights data collected by government agencies is often ‘non-rival’; meaning it can be used by many at once for different purposes without diminishing its value. Second, it says, greater usage creates greater value similar to an investment in tangible goods; greater usage determines the return on investment.
Open access to government data is now one of the most vibrant and promising areas of public policy. In addition to enabling evidence-based policy making, other users of data like the private sector, research outfits and academia will also benefit. Open access to government data is now one of the most vibrant and promising areas of public policy. In addition to enabling evidence-based policy making, other users of data like the private sector, research outfits and academia will also benefit.
To succeed, a nation must be adept at managing information. From imposing taxes, enforcing laws, to raising an army for war, all rely on a nation’s ability to manage information. Data collected by government agencies is a public good.
A government is a huge data generator, collector and also user. It generates data about tax, the economy and everything else from regulations to licenses. It also records data about birth, marriage and death and many other events in the lives of citizens. It then uses this data to formulate policy and inform decision making. Government departments tend to keep data tightly locked, sometimes making it difficult for even other state agencies to access it.
In some countries, the obstacle for more open data is that the ethos of democracy, the rule of law, and transparency rules like a Freedom of Information act, are unavailable or not well established. Despite this, the culture of secrecy is changing. Many countries are moving towards more transparency in government and realization is growing that opening access to data can achieve policy aims more effectively. Rich countries have mostly opened access to government data and emerging markets are now coming around to the idea.
Reliable, irreversible and real-time access to government data has spawned startups. These businesses are using the open access to transport timetables, property tax records, weather reports and pollution readings to build products. In this way, data allows governments to serve citizens better and power innovative new businesses. In making the case for open data in Sri Lanka, Verité Research highlights the potential for free online access to the Customs Department collected trade data. Customs is the only agency with access to detailed trade data, both import and export, although several other government departments also deal with trade, for instance like the Export Development Board.
Traded products are identified by an international classification referred to as the HS Code, an eight digit number, which disaggregates the data to a high level. Yearly and monthly trade data in CSV-file, a format readable by computers, will impact three stakeholders. The first are policymakers and trade strategy setters, the second are businesses which will want to identify opportunities, and the third are foreign buyers and potential investors.
Countries are also providing their trade data to international agencies which in turn provide free online access to these numbers. Businesses, investors, policymakers and researches use these databases. Countries with up to date data benefit from greater trade and investment. However, analysis by Verité Research finds Sri Lanka lags the world and the region in its data transparency (see chart 1 and 2).
Sri Lanka’s trade data on international databases are more outdated than those of Afghanistan, the Maldives, India and Pakistan. Of South Asian countries only Bhutan’s and Bangladesh’s data are more out of date than Sri Lanka’s. Some data, like trade statistics, are useful in aggregate. Exporters researching potential markets refer to trade data to assess the potential market size, identify untapped ones and assess the level of competition.
Imports are a critical source of Inputs to domestic production and the ability of producers, by referring trade statistics, to evaluate sources of imports, their prices and quantities will be important for businesses. In the region, India has led data transparency. India’s Ministry of Statistics and Programme Implementation in a 2019 memo on the free online access to microdata observed that “Official statistics are key inputs for decision making and policy intervention and become public assets for conducting research both in the public and private sphere.
Recognizing the potential of data, the Ministry of Statistics and Program Implementation, the Government of India, has decided to provide free of costs, single-point access and support to microdata of census and surveys conducted by the Ministry to students/ researchers/institutes in India and abroad through its National Repository from 1st April 2019”.
Verité identifies four key challenges in Sri Lanka Customs’ data dissemination policy, one of which is the incentive structure in place for Customs officers which acts as a disincentive to provide free online access to data.
Second, to even obtain data at a fee, the Customs website does not reveal what data is available and how to get about filing a request to obtain it.No details are available about price, the time taken to provide the data and who to contact. Not disclosing information about available data and how the public can access it, is a violation of regulations in the Sri Lanka’s Right to Information Act (Chart 3).
When an organization or person does contact Sri Lanka Customs for trade data by visiting their offices, the data is not free. This is the third challenge. A month’s Customs returns cost Rs20,000 at least and import or export statistics for just one month for any one country costs between Rs9,000 to Rs13,000. Timeliness also matters. The fourth challenge is that data cannot be accessed online and payments cannot be made online. For a resident, a visit to the Sri Lanka Customs office to request and pay for trade data, will be inconvenient. For anyone from overseas that process would be a deal-breaker.
For potential investors scouting opportunities or foreign buyers scoping suppliers, limiting trade data access impairs their ability to make informed decisions, while other countries are proactively making such statistics available online. The Customs Department is only one example albeit a critical one. Government’s may fear releasing more information about the goings-on will highlight their own shortcomings. There are also questions about how the data should be processed instead of supplied raw and how it can be displayed. The challenges with data will differ from one department to another. However, for a government willing to kick start the process, there is possibly no better and or impactful place to start than Sri Lanka Customs.