Using a Free Trade Zone (FTZ) can benefit any importer or exporter - from large manufacturers to sole proprietors. Operations within an FTZ can help in significantly reducing costs from customs duties, taxes and tariffs; improve global market competitiveness; and minimize bureaucratic regulations. In the United States, an FTZ is also known as a Foreign-Trade Zone.

​Below are some benefits of using an FTZ.
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Elimination, deferral or reduction of certain duties.  Companies can bring goods into the FTZ without duties or most fees, making FTZs the most attractive Customs program for importer/exporters.
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Raw material vs finished goods tax. In some cases, locally produced component items or imported raw materials have a higher duty rate than the finished product, putting a local manufacturer at a cost disadvantage to an importer of finished items. However, by participating in an FTZ, the local manufacturer pays the duty on the finished item only as it enters the local market. In many cases the tariff of the manufactured good is zero, eliminating any costs associated with importing raw materials and goods. As bonded warehouses do not allow for manufacturing on their premises, the only way to take advantage of this tariff-saving method is to operate within an FTZ.
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Improved compliance, inventory tracking, and quality control. Physically going to the grocery store allows you to get a better feel of the goods you buy. In a similar sense, operating in an FTZ allows companies to better track their inventory, without incurring additional inspection costs. By bringing goods into an FTZ warehouse that you control, you can identify and classify goods at the warehouse instead of at the port at a Customs control location or only getting to inspect the goods after duties have been paid then finding discrepancies.

Indefinite storage. A company can hold its goods indefinitely in an FTZ until an opportunity to export, re-export or if there are local quotas on a particular type of goods. Once the quota has been lifted or becomes available, they can enter into local commerce.

No SST or customs duties on zone-to-zone transfers. The really useful thing about FTZs is that goods can be transferred from FTZ to FTZ without incurring duties or, for the case of Malaysia, any otherwise applicable sales tax thus saving money on the overall manufacturing cost. While most companies are focused on using FTZs for exports, FTZs can also be used to take advantage of crossdocking and transferring goods from one FTZ to another without paying Customs duties. 

​While activities in the FTZ are independent of the Customs department, they still have the right to conduct regulatory audits to determine whether FTZ operator declarations, procedures and recordkeeping systems are in conformity with rules and regulations.

​Larger companies may want to consider using automation to help alleviate the burden of managing the FTZ process, particularly since with high-volume operations it can be extremely difficult, if not impossible, to manage manually. The data needed for classifying goods, for example, is voluminous and frequently changes and must be pulled from country-specific lists. Software that has this information in a central repository with automatic updates can pull information from different systems, such as import/export and warehouse management systems, and use that data for Customs filing and inventory management.

​The Royal Malaysian Customs Department (RMCD) is in the midst of launching a new system called the uCustoms – it is meant to be a ubiquitous portal to streamline their operations which are now a mix of manual and automated procedures. Essentially, the process of clearing customs remains the same with the exception that within the RMCD, cases are managed electronically thereby allowing for faster and more accurate processing.
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This brings us to the importance of appointing a professional customs broker to take care of your customs clearance needs.
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​Information regarding complex administrative requirements

​​Depending on the country of export or the item you are importing, there may be complex administrative prerequisites which might tempt you to hire a headcount just to ensure all the submissions are done correctly and on time.

However, not all organisations can afford to do so.  In this case, a better option would be to appoint a licensed broker for customs clearance services.
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Companies like Alien Logistics offer a total arrangement of export/import solutions, including logistics, cargo shipping, warehousing and distribution, in addition to clearing customs so you can rest assured that your shipment is well managed from end to end.

​Skilled navigation of the customs clearance process

​There is a reason why you need a license to clear customs. Customs clearance specialists need to be aware of the import and export restrictions and requirements so that all permissions required by the various authorities are sorted out and the appropriate harmonised code is used.

​The laws regarding movement of goods are updated all the time and it is the clearance agent’s duty to be in the know so as to provide advice to their clients.

Professional customs clearance agents like Alien Logistics listen to your business model and will be able to advise you on workable import, export and transhipment strategies to help you balance your stock and cash flow.
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Help avoid unnecessary expenses

​As the importer on paper, the Customs Department will look to you as the final party for the customs declarations.  To avoid potential errors, black-listing, Customs audits, fines and expensive penalties, ensure your submissions are checked and confirmed by an authorised customs agent.
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On the positive side, there are cost savings when your items are going into a country for a temporary basis before returning home, for example demo products for an exhibition, a car for travels, or even specialised equipment on loan for scientific experiments (like tracking UFOs in the jungles of Borneo, perhaps?). Declared under temporary import, you can avoid paying taxes for these items going into the country of import and again when it comes back home. One of these methods is to use an ATA Carnet.

​Suitable identification of the goods - knowing the HS Code

​Every item entering a country is categorised under the Harmonised System Code, also known as the HS Code or a tariff code. The code is broken down into paragraphs and sub-paragraphs and the final code assigned will have its duty, tax and import/export permits assigned to the product.








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​In the event you are bringing in a product with an ambiguous HS Code, your customs broker can also assist you to have it formally categorised with Customs, so as to standardise its customs clearance treatment every time it enters the country.

​This mandatory procedure can be time-consuming as paperwork submitted for endorsements require a certain level of detail and sequence. Not to mention the time taken to wait in line. 

Why does customs clearance sound so complex?
Well, the world is getting smaller and governments have to protect their local economies from negatives ranging from smuggling to pests. So checks and balances have to be put in place.

That is why working with professional customs clearance agents in Malaysia like Alien Logistics is your best bet to hassle-free cross border shipments.

​Psst… we’d love to meet you for tea to talk about your customs clearance requirements, just click on the button below