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On the 19th of August 2019, the Jordanian Government issued
a significant change to the customs regulation tariffs on personal package imports.
The Government's actions are said to stem from a need to equalize
opportunities between e-commerce websites and traditional retailers. We
understand the need for such equalization, however, we believe that there
are more modern alternatives and processes to prove to the industry and
public that the actions and approach taken by the government are justified
and fair to all.
The new regulation hurts e-commerce in Jordan beyond the goal of
equalizing it with traditional retailers. In protest, we decided to stop
accepting orders from customers in Jordan for the time being. We aspire to
be a part of a professional, data-driven, transparent and trust-worthy
digital economy in Jordan. We do not only worry about the effort and
sacrifices we have spent in making CashBasha the customer-centric company
that it is, but we also worry about Jordan’s global positioning and
reputation in the eyes of our peers. At a minimum, we kindly expect that
the government also take a customer-centric approach to serving their
citizens and growing industries.
Furthermore, we decided to take an active role and highlight in specific
what the issues are, and what some alternatives would be, which you will
1. The Customs Online Platform
The online platform does not consider many use-cases, for example:
Online shoppers often do not
know how items in their orders are going to be split by the
e-commerce fulfillment operations amongst packages. (i.e. The
number of packages arriving is often unbeknown to the customer.)
The customer often does not
know what shipping company an e-commerce seller uses to deliver
packages to their address, and e-commerce business often rotate
between partners at random.
The seller sometimes does not
provide tracking information to the customer, or the non-tech savvy
customer does not know how to locate this information.
Customers who do not speak
Arabic will not be able to use the platform, since the only
supported language is Arabic.
Customers that are not
residents of Jordan (e.g. visitors) will not be able to sign up.
Recipients might not be aware a
package is being sent to them (e.g. in case of a gift), or might
not know all of its details.
In light of public reports by
early users, the user experience on the new customs portal is
designed in a way that is not-self explanatory and we believe that
the customs department has not taken the full measures to design
public service announcements to support the process.
For the sake of a seamless
shopping experience, there is no way for an e-commerce website today
to connect to the online platform provided by the government. The
current model does not allow e-commerce providers to seamlessly log
the necessary information on behalf of the customer. This would be
possible, for example, by designing a platform where the customer
could link their account on the customs online platform with
e-commerce websites (through OAuth).
Apply the new regulation without
the online platform.
If the concern is linking
packages to individuals, this can be done when the package arrives,
for example, during delivery.
If the online platform is seen
as a must, cooperate with the private sector to design an online
platform that is more suitable, for example, by employing globally
transparent standards with Electronic Data Interchange (EDI)
linkages between the shopping websites, shipping companies and
2. Lack of Predictability and Visibility
Even Prior to The New Regulation
The Jordanian customs code is
complex. However, with the data we observe, it appears that the
revenue generated from customs follows the Pareto
principle: a few categories contribute to most of the
revenue, and most categories only contribute a small fraction of the
revenue. There is room to simplify the customs code.
Our data shows frequent
inconsistencies in applying the customs code: we have many cases in
which two packages around the same time, containing the same item,
but different customs are applied to them.
The calculation of customs is
perceived as a black box from the point of view of the customers;
there are a lot of factors involved, some of which are even hard to
explain or defend (e.g. weight is a factor).
Such a complex customs code
makes it hard for e-commerce websites to provide landed final prices
that are accurate. Customers expect a final price on a website, and
with predictions being very hard, either the e-commerce company will
suffer (i.e. predict the customs, and take a loss if it is
incorrect), or the customer experience will suffer (i.e. ask the
customer to pay for the difference between the prediction and the
real customs value).
Now that all items will always
have customs applied to them, the problem is severely exacerbated.
With the new regulation, the
maximum allowance (of 500 JOD) becomes another important variable in
estimating customs on an item. However, since e-commerce platforms
do not have access to the customer's history, it is impossible to
know if they are above or below their allowance.
Design a simpler customs code
that does not affect the revenues much, for example, the categories
that generate most of the revenue remain unchanged, and all other
categories have X% customs always (e.g. 10%).
Remove the allowance, or bring
it back to a higher value.
If neither of these are
possible, at least allow e-commerce platforms to integrate with the
online platform to get visibility into the history of a customer, or
at least, whether or not they have reached their allowance.
3. Mechanism of Applying The Regulation
New regulation was applied very
fast, the time between announcing it and applying it was just 48
This meant that the regulation
will be applied to packages that arrive, even though at the time the
customer ordered them, the regulation was not known to the
e-commerce company. This will cause either companies to cover a lot
of expenses it was not aware of, or it will cause a bad customer
experience by asking its customers to pay them.
The staff at the customs was not
trained properly, resulting in a halt of shipments and delays.
No time was given for
alternatives and suggestions to be discussed, and there was no
proper consultations with the private sector (especially to
understand if they have any suggestions or objections regarding the
form of the new regulation).
Lack of proper studies and
trust-worthy data around the size of the market and realistic effect
that e-commerce has had in comparison to traditional channels of
trade or how e-commerce has contributed to the digital economy
through employment, trade activity, customer service level or
overall shopper satisfaction.
Absence of public studies or
simulations illustrating the relationship between customs
alterations and their effect on the Jordanian economy and e-commerce
Lack of a publicly announced
incremental roll out of the new customs regulation and evaluation
Delay the application of the new
regulation until the necessary, fair and comprehensive studies have
been carried out and informed to the public and private sectors with
Consider the input from the
private sector for a solution that serves the goals of the
government but doesn't stop the e-commerce companies dead in their
4. The Tiered System
The new regulation contains a
tiered system for 4 categories (if the item is between 0 and 50 JOD,
the customer pays 5 JOD, and if it is between 50 and 100 JODs, the
customer pays 10 JOD). This creates two issues:
Unreasonably high fees for very
cheap items (below 5 JOD). For example, importing an item of value
1 JOD would result in 500% in fees.
A discontinuity at the border
of tiers, e.g. at JOD 50. For example, an item of value of 49 JOD
will have roughly 10% in fees, but an item of value of 51 JOD will
have roughly 20% in fees.
A simpler customs code (as per
our suggestions above) would solve the problem.
Alternatively, remove the tiers
and replace them with a percentage (e.g. 10%).
If the worry is that processing
the items takes some effort and therefore there must be a minimum
for the fees, the fees can be structured as: 1 JOD + 10% of the