DPL40053:EXPORT AND IMPORT DOCUMENTATION WAN NUR INTAN FARZANA BINTI WAN MOHD SUKRI (02DLS21F1023) SITI MASTURA BINTI AHMAD FAWZI (02DLS21F1027) HASYA DINI BINTI HAIRUL ANUAR (02DLS21F1039) DEV INDER A/L JAYASHANKER (02DLS21F1084) PREPARED BY NAME: PREPARED FOR: PUAN NORHUDAYA BINTI MASROM E-BOOK CHAPTER 3
CONTENTS E D I - E L E C T R O N I C D A T A I N T E R C H A N G E E F T - E L E C T R O N I C F U N D T R A N S F E R L E T T E R O F C R E D I T B I L L O F L A D I N G C U S T O M S F O R M S 1
C H A P T E R 3 : D O C U M E N T A T I O N (EDI) Electronic data interchange 2
Saves time and money No data entry, so less human error More efficient personnel and fasterthroughput Streamlined processes forimproved trading relationships EDI Electronic Data Interchange (EDI) is the electronic interchange of business information using a standardized format; a process which allows one company to send information to another company electronically ratherthan with paper. Business entities conducting business electronically are called trading partners. ADVANTAGES OF EDI o Lower operating costs o Less Errors = More Accuracy o Increased Productivity o Fastertrading cycle DISADVANTAGES OF EDI ❖High Dependence on the participation of trading partners ❖Costly for smaller companies ❖Difficult to agree on standard to be used ❖Hackers 3
(EFT) Electronic fund transfer 4
EFT is a system of transferring money from one bank account directly to another without any paper money changing hands.EFT (electronic fund transfer) is used to move money from one account to another. The transaction is completed electronically, and the two accounts can be at the same financial institution or different financial institutions. THE BENEFITS OF EFT ➢ Provide complete invoice detail ➢ Accuracy ➢ Faster ➢ Automate input to payables/receivables systems ➢ Provide the ability to combine multiple invoices in one payment ➢ Improve cash forecasting and cash flow ➢ No need for cheques or cash ➢ Streamline transaction processing ➢ Reduce operating costs ➢ Improve business relationships DISADVANTAGES OF EFT (i) a lot of money must be spent of security of networks (ii) hackers may monitortransactions and obtain confidential information (iii) very expensive to develop such types of information systems 5
LETTER OF CREDIT 6
DEFINITION A letter of credit, or "credit letter" is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. It may be offered as a facility There are several types of letters of credit, and they can provide security when buying and selling products or services. - Seller protection: If a buyer fails to pay a seller, the bank that issued a letter of credit must pay the seller as long as the seller meets all of the requirements in the letter. This provides security when the buyer and seller are in different countries. -Buyer protection: Letters of credit can also protect buyers. If you pay somebody to provide a product or service and they fail to deliver, you might be able to get paid using a standby letter of credit. That payment can be a penalty to the company that was unable to perform, and it’s similar to a refund. With the money you receive, you can pay somebody else to provide the product or service needed. BASIC TYPES OF LETTER OF CREDIT ❑ Revocable Letter of Credit (L/C): - If the Letter of Credit (L/C) can be cancelled or modified at any time with out consent of the exporter, it is called revocable Letter of Credit (L/C) ❑ Irrevocable Letter of Credit (L/C) : - If the Letter of Credit (L/C) can not be cancelled or modify with out consent of the exporter, it is called irrevocable Letter of Credit (L/C) 7
BENEFITS OF A LETTER OF CREDIT To The Exporter/Seller • Letters of credit open doors to international trade by providing a secure mechanism for payment upon fulfillment of contractual obligations. • A bank is substituted for the buyer as the source of payment for goods or services exported. • The issuing bank undertakes to make payment, provided all the terms and conditions stipulated in the letter of credit are complied with. • Financing opportunities, such as pre-shipment finance secured by a letter of credit and/or discounting of accepted drafts drawn under letters of credit, are available in many countries. • Bank expertise is made available to help complete trade transactions successfully. • Payment for the goods shipped can be remitted/submitted to own bank To the Importer/Buyer • Payment will only be made to the seller when the terms and conditions of the letter of credit are complied with. • The importer can control the shipping dates for the goods being purchased. • Cash resources are not tied up. A beneficiary is the person you're sending money to - also known as a recipient. A beneficiary bank is the bank which holds the account you're sending money to Applicant means a person at whose request orfor whose account a letter of credit is issued.The term includes a person who requests an issuer to issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer. The issuing bank is the institution that gives ultimate irrevocable and conditional payment guarantee to the beneficiary. All other banks are acting according to the instructions and authorization that they have received from the issuing bank Advising Bank is the bank that advises the letter of credit to the beneficiary. Advising banks act upon the request of issuing banks. 8
BILL OF LADING 9
DEFINITION Acting as a contract between all parties, the bill of lading contains all pertinent information about a given shipment. Forinstance, it lists the names as well as typically the addresses and phone numbers of shippers and consignees. Also, it includes an itemized list of the goods being transported. This list should include the quantity as well as weight of the cargo 3 main function ❖ Receipt for Goods - It is a receipt for goods received carriage - Once shipped on board endorsement has been added (ifrequired) it becomes a receipt for goods on the nominated vessel. ❖ Evidence of the contract of carriage - It is the contract - Howeverthe fact if not being issued does not mean that no contract as the contract commence at the time of booking and subsequently issue of the B/L merely confirm this arrangement and provide the evidence of the contract there by agreed. ❖ Transferable document of title to Goods - This means that goods can be bought and sold merely by the passing of a B/L consigned “to order” whether of the shipper or of a named consignee. - Provide that all the endorsement is in order. TYPES BILL OF LADING ➢ Received for shipment B/L ➢ On Board B/L ➢ Clause B/L ➢ Order B/L ➢ Stale B/L ➢ Third Party B/L ➢ House B/L ➢ Straight B/L 10
❖ Order Bill of Lading A negotiable bill of lading made to the order of the shipper, who can legally sell it to anyone. An order bill of lading allows the shipper to collect for the shipment before it reaches its destination. Also called negotiable bill of lading. ❖ Straight Bill of Lading In this importer/consignee/agent is named in the bill of lading, it is called straight bill of lading. It is a document, in which a seller agrees to use a certain transportation to ship a good to a certain location, where the bill assigned to a certain party. It details to the quality and quantity of goods. A nonnegotiable written receipt provided by a shipper for a consignment that must be delivered directly to the specified party 1.SHIPPER (From) - Enter the company name and address of the shipper (Consignor). 2. POINT OF ORIGIN (At) - Enter the city and state of the actual shipping point. 3. DATE OF SHIPMENT - Enter the date of the shipment; that is, the date the Carrier took control of the merchandise. 4. TRUCK/FREIGHT - Check the truck block if the shipment is to move by truck, or the Freight block if the shipment is to move by rail. 5. SHIPPER'S NUMBER - Enter a unique control number to reference the shipment with the Carrier. 6. CARRIER - Enter the name of the company which will take initial control of the shipment and cause its delivery to the consignee. 7. AGENT'S NUMBER - Enter Carrier's control number, if known or required. 8. CONSIGNED TO - Enter the full of the final recipient of the shipment, the ultimate consignee, if different than destination, for Carrier notification purposes. 9. DESTINATION - Enter the street address, city, and zip code where the Carrier will make delivery to the Consignee in Field 8. 11
CUSTOMS FORMS 12
CUSTOMS FORMS The regulation 69 (1) of the Customs Regulations 1977 has listed the type of Customs Declaration forms prescribed as per section 142 (12) of the Customs Act 1967 forthe purposes of declaring goods imported, exported, transshipped and transported. Types of Customs Forms The following are the Customs declaration forms commonly used and their nature of transaction. A) Custom form no.1 (K1) • Used by importerto import goods from other country • All the information required in this from when enable to determine the details of the goods imported to Malaysia • Also to ease from custom process to release import shipment at the port or border b) Custom form no.2 (K2) • Used by exporter who wanted to export their goods overseas • It is contained all information details of the goods for export. • Details are similarlike Custom Form No.1 • Will enable custom to process and release for export at load port or Malaysia border. c) Custom form no .3(K3) • This form used by the company who wanted to export to east Malaysia(Domestic Export) • It is require fortransit purpose before the good discharge orloaded at the particular state • Full details to be completed and foreasy process by the custom. • Use only by air or sea d) Custom form no.8(K8) This form used as an application / permit to transship / remove goods as follows:- a) Approval / permit to transship duty/tax not paid goods in accordance with Section 23(2) Customs Act 1967 and Regulation 12, Customs Regulation 1977; 13
b) Transit by road, i.e. the movement of duty/tax not paid goods in transit from the neighboring country via Malaysia to another country. Eg. From Thailand to Singapore via Malaysia road.(north-south highway)(Regulation 13 Customs Regulation 1977), c) Movement of imported (duty / tax not paid) goods from a custom port or airport to an inland Customs station (Regulation 14 Customs Regulation 1977); d) Movement of duty/tax not paid goods from one bonded area (licensed warehouse) to another bonded area (licensed warehouse). (Regulation 30) e) Movement of duty/tax not paid goods from the licensed warehouse for export (Regulation 31 Customs Regulations 1977). f) Movement of duty/tax not paid goods from/to the Free Zones for purposes of export / import. (Regulation 27 and 28 Free Zone Regulation 1991 e) Custom form no. 9(K9) (Regulation 29 Customs Regulation 1977) • This form is used as a permit / approval to remove dutiable goods from Customs Control and licensed warehouses such as Customs Warehouse, Public & Private Licensed Warehouses and Licensed Manufacturing Warehouses afterthe payment ofrelevant customs duty/ tax. • This form is used forthe declaration, payment of duty/tax and release of goods from the Licensed manufacturing Warehouses for sale to the local market / consumption • This also facilitates the partialremoval of goods in small consignments / lots. However should one whole shipment be released, then a Customs No.1 should be used to substitute a Customs No. 9 14
Supporting documents forthe declaration forms are as follows: 1. Delivery order 2. Packing list 3. Original invoice (commercial invoice) 4. Bill of lading 5. Certificate of origin 6. Import licenses which may be required by a proper officer of customs 7. Letter of credit / Bank Guarantee Tariffs Is defined as a form of duty ortax levied on goods for protective purposes and revenue purposes when they are transported from one customs area to another. Duty Is a form of taxation levied on certain goods, services, or othertransactions that are imported and exported. Must be paid first before the goods can be released from customs control. Tax is a mandatory fee orfinancial charge levied by any government on an individual or an organization to collectrevenue for public works providing the best facilities and infrastructure. According Layman's term K1 - Import for dutiable and non-dutiable goods. K2 - Export for dutiable and non-dutiable goods. K3 - Import & Export of dutiable and non-dutiable goods within Malaysia. K8 - Declaration of duty not paid goods a) By rail - Pasir Gudang declared K8 to rail the containersfrom Pasir Gudang to Port Klang without paying the duty. Port Klang declared K1 to clearthe containers by paying duty. (Dutiable cargo) b) Transhipment - From one port tranship from another port. K8 can move containerfrom Westport to Northport and vice versa without paying duty. K9 - Clear dutiable cargo slowly out from bondedwarehouse. K8 declares forthe containertruck into bonded warehouse and K9 clears the cargo partial by partial out from the warehouse probably due to high duty charges. 15
DOCUMENTATION 16
WHAT IS DOCUMENTATION ? -material that provides official information or evidence orthat serve as a record. -Documentation can be provided on paper, online or digital or analog media,such as audio tape or CD. -Classical documents is set of documents printed on paper. THE BENEFITS OF DOCUMENTATION 1.Conveying information from one person or company to another. 2.Also serve as permanent proof of tasks 3.Actions undertaken throughout the export process 4.Documentation is not only required forthe business purposes and business partner 5.Also to satisfy the customs authorities in the both countries 6.To facilitate the transportation of and payments for goods sold. IMPORTANCE OF DOCUMENTATION IN EXPORT AND IMPORT -Easy for exporter/importerto check the delivery -Help exporter/importer analyze sales performance -Prepare information forthe purpose of estimation -Help country control flow of import and export product PROBLEMS WHEN HANDLING DOCUMENTATION • Takes up a lot of space - The biggest downfall to manual document filling is the amount of space it can take up. • Prone to damage and being misplaced - Manual document filling means placing faith in the people handling the flies. - There are so many ways they can be damaged, lost or misplaced. • Hard to make changes - When working with paper documents it is much harderto make changes. - Every time if we want to make a change we will have to make a copy. • Access Time - Manual document filling is very time-consuming - Store the flies but hunting down the information when it is needed can take time. • Lack of Security - Paper document filling can be less secure than electronic filling systems. • Higher Cost - When using paper documents the costs are going to be higher because of paying forink and paper. 17
THE CATEGORIES OF EXPORT AND IMPORT DOCUMENTS. A. Trade Documents - This category are the documents needed to support the information relating goods exported orimported. B. Contract Documents - The category is a document setting out the rights and responsibilities of manging export and import process. C. Official Documents - This category is a documentrequired by the authorities of a country for purposes of control and out of goods. THE DOCUMENTATION NEEDED IN THE EXPORT AND IMPORT INDUSTRY • Proforma invoice - Invoice provided by a supplierin advance of providing the goods or services. - Invoices basically contain of much of the same information. - Advantages of proforma invoice to show his government forforeign currency allocation • Commercial invoice - The exporter must prepare a commercial invoice, after proforma invoice. - Required by both the exporterto obtain the necessary export documents to enable the consignment to be exported. - To prove ownership and to enable payment • Consularinvoice - Documentary of proof of invoice value that is approved by the consulate office - Which is a representative of a government stationed in foreign soil. - The process of authenticating a consularinvoice is called Consularization. - The main purposes is to provide a complete and detailed description of goods to foreign customs authority. 18
THE MARINE AND CARGO INSURANCE -Insurance covering loss of damage to goods at sea. -Marine insurance compensates the owner of merchandise forlosses can be legally recovered from the carrier. -most losses occur on the way to orfrom the ports. • Export Permits - A legal document that is necessary forthe export of goods controlled by Government of export country. • Import Permits - Allows an importerto bring in a specified quantity of certain goods during a specified period. • Packing List - Is a document prepared by the shipperlisting the kinds and quantities of merchandise - A copy of the packing list attached to shipment itself and another copy sent directly to the consignee • Weight List - Document issued commonly by customs authorities of the exporting country - Certifying the correct gross weight the goods being shipped • Certificate of Origin - Is a document widely used international trade transactions which attests the product list - A certificate of origin is generally and prepared and completed by the exporter orthe manufacturer - The certificate of origin contains information regarding the product, its destination and the country ofreport. WHERE TO OBTAIN COO ? -The Malaysian International Chamber of Commerce and Industry(MICCI) is authorized by the Ministry of International Trade & Industry(MITI) to issue Certificates of Origin for goods exported to any country in the world. 19
• Health And Safety Certificate - This certificate will verified that all products are safe and free from any pollution - Usually issued on agricultural products orlivestock, such as vegetables, meat and unprocessed agricultural products - For example, meat, egg, fish and fishery products, laboratory, and pet food and animal feeds ❑ ATA Carnet A combination of French and English phrases “Admission Temporaire / Temporary Admission” A carnet is an international custom document commonly known as the merchandise passport that allows temporary importation into member countries without the payment of duties or value added taxes (VAT) Advantages of using Carnet: Simpler border entries, or exits bring certainty and reduce hassle. Costs are reduced by eliminating duties, taxes, VAT and securities. A reduction in red tape allows the time to be used more profitably. We can visit more than one country, perhaps choose a betterroute. An ATA Carnet can be used for several trips during the three months term. Returning the goods to our home country is more straightforward. Benefit for Economy ATA Carnets help local business, exporters, etc. tocompete with foreign traders on equal terms on the world market. ATA Carnets facilitate the conduct of business overseas and stimulate trade (foreign and domestic). ATA Carnets contribute to encourage and stimulate technical progress ATA Carnets contribute to promote economic expansion: To create jobs, To increase tourism , To stimulate investments Benefits to Business Saves time and money Partial and split shipments are possible Easy to obtain Competitively priced increase business for professionals: e.g., film and TV crews, entertainers, theatrical troupes, musical groups, athletic equipment, technicians, business travelers with samples, exhibitors at trade fairs 20
❑ Consignment notes a document that shows the details of goods that have been sent from a sellerto a buyer, and that travels with the goods: rail/air/road consignment note Document prepared by a consignor and countersigned by the carrier as a proof ofreceipt of consignment for delivery at the destination. Used as an alternative to bill of lading (specially in inland transport), it is generally neither a contract of carriage nor a negotiable instrument. Consignee/Recipient Information Who is the recipient, where is delivery address, and any contact information. Please make sure that postal/zip codes are provided. Telephone numbers are important, preferably mobile phone numbers of the recipient. Specify the contact person on the receiving end in the “Attention” field. If consignee is a corporate entity, indicate the department which is supposed to receive the shipment. 21
❑Air way bill Also called as air consignment note is a receipt issued by an international airline for goods and an evidence of the contract of carriage. It is not a document of title to the goods. The air waybill is non-negotiable. Its serves as a : (1)receipt of goods by an airline (carrier) and (2) as a contract of carriage between the shipper and the carrier. It includes : (a) conditions of carriage that define (among otherterms and conditions) the carrier's limits of liability and claims procedures, (b) a description of the goods, and (c) applicable charges The main functions of an air waybill are: Contract of Carriage: Behind every original of the Air Waybill are conditions of contract for carriage documents. Evidence of Receipt of Goods: When the shipper delivers goods to be forwarded, he will get a receipt. The receipt is proof that the shipment was handed overin good order and condition and also that the shipping instructions, as contained in the Shipper's Letter of Instructions, are acceptable. After completion, an original copy of the air waybill is given to the shipper as evidence of the acceptance of goods and as proof of contract of carriage Freight Bill: The air waybill may be used as a bill orinvoice together with supporting documents since it may indicate charges to be paid by the consignee, charges due to the agent orthe carrier. An original copy of the air waybill is used forthe carrier's accounting Certificate of Insurance: The air waybill may also serve as an evidence if the carrieris in a position to ensure the shipment and is requested to do so by the shipper. Customs declaration: Although customs authorities require various documents like a commercial invoice, packing list, etc. the air waybill too is proof of the freight amount billed forthe goods carried and may be needed to be presentedfor customs clearance 22
➢ Bill of Lading (BOL, B/L) A document issued by a carrier, orits agent, to the shipper as a contract of carriage of goods. It is also a receipt for cargo accepted fortransportation, and must be presented fortaking delivery at the destination. Among otheritems of information, a bill of lading contains : (1) consignor's and consignee's name, (2) names of the ports of departure and destination, (3) name of the vessel, (4) dates of departure and arrival, (5) itemized list of goods being transported with number of packages and kind of packaging, (6) marks and numbers on the packages, (7) weight and/or volume of the cargo, (8) freightrate and amount. Delivery Order A delivery orderis a document that can be issued by the owner of freight, consignee, shipper or a carrierto deliverthe goods to another party. A delivery order should be differentiated from the bill of lading. The delivery orderis not a negotiable document and it does not act as evidence orreceipt of goods. 23
THANK YOU 24