Case Study: Streamlined Goods Movement Between PCA and Free Zone
Background:
The client secured a contract with an international Maintenance, Repair, and Operations (MRO) company to temporarily store their engine parts. Although the MRO company had imported the parts, operational delays prevented them from processing them, necessitating a secure storage solution. The client had available warehouse space; however, it was located within the Kuala Lumpur International Airport (KLIA) Free Zone, while the MRO operated in the Principal Customs Area (PCA).
Challenges:
Challenge 1: Moving goods from the PCA to the Free Zone is considered an export in Malaysia, requiring a customs export declaration form (K2), even though the MRO was not exporting the parts but simply storing them.
Challenge 2: The client relied on various customs agents to facilitate the movement of goods but encountered inconsistencies due to the agents’ lack of understanding of the specific regulations.
Compliance Issues: The unclear guidelines regarding the requirements for transporting goods between the PCA and the Free Zone added to the confusion and compliance risks.
Operational Complexity: The complexities of customs regulations created significant administrative burdens, delaying the efficient movement of goods.
Solution:
Baryk Partners provided a comprehensive solution tailored to address the compliance challenges faced by the client:
Compliance Framework Development: Developed a clear compliance framework outlining the specific requirements for the temporary storage of goods within the Free Zone, ensuring adherence to Malaysian customs regulations.
Understanding Regulatory Governance: Clarified that the movement of goods between the PCA and the Free Zone is governed not only by the Customs Act but also by the Free Zone Act. The movement of goods into the Free Zone from the PCA is declared using an administrative form issued by the Royal Malaysian Customs Department (RMCD). Although this form is not a gazetted form, it is permissible for moving undutiable goods from the PCA to the Free Zone.
Streamlined Processes: Established streamlined processes for documenting and reporting the temporary storage of goods, minimizing administrative burdens and facilitating smooth operations. Additionally, arrangements were made with customs officials to verify and certify the processes to ensure smooth movements.
Results:
Baryk Partners’ intervention resulted in significant improvements for the client:
Compliance Rate Improvement: Achieved high compliance rate with customs regulations following the implementation of the tailored strategies.
Efficiency Gains: Reduced processing times for moving goods between the PCA and the Free Zone facilitating quicker access to stored parts when needed.
Review:
"Baryk Partners provided invaluable insights into navigating the complexities of customs compliance. Their expertise allowed us to streamline our operations and ensure we were compliant, ultimately saving us time and resources."