Guru Speak

In Asean, Singapore has its Strategic Goods (Control) Act of 2003, and other AsiaPacific countries are developing similar programmes.

Given Singapore's status as a transhipment hub and home to 4,200 regional headquarters of foreign multinationals, the controls have affected businesses operating there in many ways. Even more so, with the passage in March of the new Strategic Goods (Control) Order 2009, greatly increasing the list.

The control list closely resembles those of other nations and is divided into two parts - military goods and dualuse goods.

The latter includes a host of ordinary commercial goods seemingly unrelated to the production of weapons of mass destruction but which could be used or modified for the purpose.

Since the act came into force, Singapore customs has prosecuted breaches. Apart from the obvious example of weaponry, of greatest concern to most companies are violations involving "dualuse" items.

One company has already been penalised for exporting integrated circuits without a permit.

With the expanding scope of export controls, companies doing business in or with Singapore should reexamine their operations.

Many products used, produced and traded in Singapore contain technology - in particular, USorig¬inated technology - and are therefore subject to both Singaporean and US licensing rules and controls.

The additional layer of trade complexity obliges companies to devote sufficient attention and resources to this key area of compliance, to ensure business continuity, avoid costly penalties and maintain a good reputation.

Many areas require attention in this respect. Some present acute challenges in the AsiaPacific region, for example, effective management of a rapidly growing volume of internal technical data and avoidance of "unintended" technology transfers in daytoday transactions.

One risk area, often overlooked, is the failure to address requirements for intangibles while focusing on compliance for tangible goods.

Access to technology developed abroad is often necessary to fulfil business requirements, but many such technologies are controlled even for use within a company. If employees need training in technologies overseas, this also needs special attention.

Managing the Trade Compliance Function

An effective export management system (EMS) or internal compliance programme (ICP) is essential to manage trade compliance risks properly.

Senior management must devote sufficient resources to develop inhouse capabilities or else buy advice from specialists.

A good compliance programme must be a proactive part of business planning and decisionmaking, effective in supporting daily operations, and productive in enhancing overall competitive strength.

Japan, Korea, China, Hong Kong, Taiwan, India, Australia and New Zealand all have export control legislation. Other countries, including Thailand, are developing it.

Export controls programmes are challenging, with complex rules covering both core and noncore business operations. Companies with regional operations will be increasingly affected as countries introduce local requirements. Now is the time to develop a coherent regional strategy promoting compliance in a costeffective manner, to avoid penalties and denial of export rights.

He can be reached at paul.sumner@th.pwc.com.