Quick Win No. 7
Simplify and digitize border processes to improve SME access to e-commerce
In most countries, SMEs are the backbone of the economy, driving growth and employing a significant number of the working population. With the onset of the COVID-19 crisis, businesses had a matter of weeks to expand or create their online operations and find new markets to survive the accelerated shift toward e-commerce.
According to the OECD, between February 2020 and April 2021, 70% to 80% of SMEs across 32 countries lost between 30% and 50% of their revenue. Thanks to their resiliency and ingenuity, many SMEs have been able to weather the storm despite these losses. However, as markets become increasingly digital, SMEs’ recovery and success in today’s dynamic market hinge on their ability to trade across borders.
Buyers, sellers, and intermediaries now rely on technologies that enable commerce at a speed, scale and efficiency unimaginable just a few decades ago. Yet, government policies or border rules have not caught up with these shifts. For example, according to the Global Express Association’s Customs Capability Database, 64 of 139 countries measured annually (46%) do not accept or electronically process the data required for release of inbound shipments in advance of their arrival, which has become a global benchmark for efficient and secure customs processing.
Customs procedures still rely heavily on hardcopy paper documents, manual and inefficient processes, and other relics of a bygone era ill-suited to e-commerce. And while SMEs face the same trade barriers as larger firms, they shoulder disproportionate burdens because of this complexity, particularly in delays and the added costs presented by outdated customs procedures.
Governments have the capacity to enhance e-commerce, especially for small businesses, by applying the following border processes:
Enable electronic submission of customs documents;
Simplify & digitize processing of duties and taxes for low-value imports;
Streamline processes for cross-border returns based on initial import data;
Publish procedures to clarify country customs procedures on-line.
Digitalizing trade can play a positive role in creating more resilient SMEs and help government authorities to mitigate border bottlenecks.
UPS recently commissioned an SME survey across key global markets. The report shows that e-commerce is a top priority for SMEs, and that customs procedures remain a major impediment. The survey also looked at the relative experiences of women-owned and men-owned businesses. Across most markets, the surveyed women-owned SMEs were more likely to be selling online than men-owned SMEs, both prior to the pandemic and at the time of the survey.
If we are to truly create an inclusive, prosperous, and sustainable economy in this moment of post-pandemic recovery, we must first seek to ensure that SMEs can leverage the benefits and opportunities generated by engaging in global markets to the greatest possible extent.
Strong economies and thriving businesses are the very foundation of prosperous communities; we can’t let this opportunity to set a new course for global trade slip by.