they lack the resources to give officials incentives for participating in reform. One novel approach to salary supplementation for border management, a formality service fee, is discussed in box 12.4. For officials who must use special skills, and who can demonstrate through special training requirements that they have those skills, it may be possible to persuade central agencies to create a separate job category with a higher salary range than the standard one. The approach may be limited by disparities across agencies, but it offers possibilities. A variation is to place the special category higher within the job category. Th is solution sometimes gains more support from central agencies because the disparities are Box 12.4
The introduction of a formality service fee by Thai Customs
International studies have identified and discussed the problem of corruption in government agencies operating at the border. Of all government agencies, customs is often cited as being among the most corrupt. To battle such corruption, most commentators highlight the importance of establishing appropriate human resource management strategies—strategies contributing to an environment that fosters integrity and offers staff appropriate incentives to perform in a professional and ethical manner. One key element of this approach to combating corruption in border management requires government agencies to ensure that remuneration levels afford a reasonable standard of living for officials. Unfortunately, while commentators recognize the issue, few have offered any practical means for increasing remuneration in environments with limited financial resources and where it is difficult to quarantine public sector pay increases to border management officials. The novel approach adopted by Thailand’s customs agency is an interesting attempt to address the issue in a practical way. Thai Customs has been attempting to tackle the problem of corruption for many years. It initiated reforms aimed at simplifying formalities and modernizing systems and procedures, both to limit corruption opportunities and to eliminate incentives for traders to offer bribes to officials. While these efforts were partly successful, it became clear that the very low wages paid to customs officials posed a significant barrier to meaningful progress in eliminating corruption. After exploring a number of options, Thai authorities decided to pilot the collection of a formality service fee (FSF), with the proceeds used to supplement
Managing organizational change in border management reform
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quarantined within one agency without touching the central agencies. Another variation is to add skill and responsibility loadings on top of ordinary salaries. Such loadings might be available to specialists, to staff on special task forces and projects, or to staff with difficult or dangerous assignments. Many further variations on this general approach can be identified by senior managers with some imagination. Bonus schemes are another way to reward outstanding performance. But care must be taken to ensure that bonus schemes do not reward only officials deployed to certain positions—and that they reflect government objectives. For example, in countries where customs is part of a revenue authority,
B O R D E R M A N A G E M E N T M O D E R N I Z AT I O N
salaries (95 percent) and to finance the introduction of new technology (5 percent). A fee of 200 Baht (approximately $6.20) is applied to each import or export entry, with an additional fee of 70 Baht (approximately $2.20) per entry for recording data in the customs electronic clearance system. The Thai FSF was introduced following extensive consultations with all key stakeholders, including relevant ministries and the private sector. It is tied to a series of other reform and modernization initiatives. Since its introduction it has been subject to regular, independent evaluation. The results so far appear very positive, with reported complaints regarding misconduct by customs officials falling from 92 in 2006 to 69 in 2007 and just 36 in 2008. Traders, though required to pay the FSF, are generally positive about its introduction as it is predictable, nonnegotiable, and subject to a formal receipt—thus eliminating the time and costs incurred in negotiating the informal arrangements that previously applied. According to a survey conducted in August 2008 by Associate Professor Dr. Ratana Sursakdis Amorn in association with Thai Customs, 85.7 percent of economic operators agreed with the continuation of the FSF provided that the modest fee amounts were maintained. Introduced as a pilot in 2004, the FSF is now being reviewed to determine whether it should be continued. The positive feedback from the private sector so far indicates that the pilot has been successful in tackling one of the most difficult anticorruption issues facing border management reformers. Source: Personal communication with Thai Customs officials.