Southeast Asia is gaining more spotlight as a sourcing alternative and for its growing economies. Director of Customs in South Asia, Manal Sakr Bradnam, talks about how customs could be affected and what a push for stronger enforcement and compliance looks like as global organizations take interest in expanding to Southeast Asia.

Chris Parker: Hello, everyone. And welcome to the Expeditors Podcast, where we look at the logistics and freight-forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker. And today's topic is Southeast Asia customs, and its natural evolution to address the needs and expectations of global organizations, either bringing finished goods out from manufacturers or importing goods to a growing middle class. With me today is our Director of Customs in Southeast Asia, Manal Sakr Bradnam. Manal, welcome to the podcast.

Manal Sakr Bradnam: Thanks, Chris. Good to be here. Thanks for having me.

Chris Parker: Absolutely. It is a pleasure to have you. So Manal, you're based out of Singapore, but you're not from there. You're a US citizen. You've moved around, sounds like to a couple of other places. Could you walk me through your career with Expeditors and before, and what you do as Director of Customs in South Asia?

Manal Sakr Bradnam: Yeah, sure. Yeah. That's right. So, I am based in Singapore, but the accent says otherwise, right? So, I am originally Lebanese, actually. I was born and raised there, and then I moved to the US as a lot of people did moving out of Lebanon for various reasons at that time. So, my parents took us to the US, and I was there, became a US citizen, so I lived more than half of my life in the US. I started with Expeditors in New York. I was a management trainee is what we'd call, and just did the rounds across the different departments and landed in customs and compliance. And then from there, was there for about five years and then moved to London, where I got to work with a great team there as the Director of Trade Compliance for Expeditors in Europe then, decided to move to New Zealand, where my husband's from and made it back to Singapore within a few months where I joined the customs team here.

So it's been exciting. And so what I do, I've always been in customs, over 13 years now with Expeditors. It's one of those things, when you get into customs, you just fall in love with it, and you just don't want to ever leave it. So you don't see yourself anywhere else. So going into customs in South Asia, I oversee the operation day to day with our teams. We've got obviously the Y team all across overseeing our growth, our business development, and just making sure that we are running compliantly and basically meeting our client's expectations from a brokerage perspective.

Chris Parker: So, when you say you fell into customs, what about it held on to you?

Manal Sakr Bradnam: I think it's the fact that it's into everything. So, when you think of supply chain, you have the ocean movements, your air movements, you've got your local deliveries, your warehousing distribution. Well, every aspect of it, customs exist in just about all of it. And I'm a very nosy person. It is absolutely not a lie; I get into what I'm not supposed to get into. And customs allow me to do that and have an angle to do that. And it's quite interesting because it changes every day. You've got different regulations, but then you've got different nuances to the regulations as well. And it just keeps it interesting. So, it's just that constant change that keeps me coming back and in customs.

Chris Parker: Yeah. And one of the changes is something that we're talking about today is Southeast Asia customs, in general, changing. Could you walk me through, or at least paint a landscape here of what Southeast Asia customs have been like for the last, I don't know, 10 years or so? And then, what are some signs that customs regulatory standards are changing now or progressing or evolving?

Manal Sakr Bradnam: That's a great question. And actually, a lot of the evolution in customs, I guess in markets is very much based on the country's evolution and development. And so, when we look at Southeast Asia, in the last few years, it has and continues to become a highly emerging market. You've got various populations, you've got different ethnicities, but you also have various regulatory bodies and expectations. And you've got a very growing middle class. You've got a lot of manufacturing that is moving to Southeast Asia. There's a lot of infrastructure that's being built up by the government. There are a lot of factors that are making it a very enticing market for organizations, whether local or global, to really come into this market. And that need and that growth are what drive the need for evolution from a customs perspective as well. Because of that growth, because of that shift, then we see greater trade facilitation required in these markets.

And we see authorities now showing greater interest and collaboration with authorities overseas as well, right? So that leads to more free trade agreements, cooperation, partnerships, and frameworks getting set up in order to facilitate that transition and that growth into Southeast Asia. There are a few reasons why a global organization would move somewhere and would shift all of their manufacturing or sourcing of raw materials or whatever it may be. And one of those is the ease of trade, how attractive is it for them, and the benefits that they receive. So, most countries in Southeast Asia have done a good job of picking up on that trend and working towards facilitating that trade, as I said.

Chris Parker: Can you think of any, I guess, recent events or any agreements that have happened lately that really, I guess, signify that things are changing?

Manal Sakr Bradnam: There are probably a few examples of that. One that comes straight to mind, and only because we did a couple of seminars on this end, is the Vietnam - EU free trade agreement. So that came into place a couple of years ago now, maybe a little less than that. And the goal of it is to again, provide greater benefit for European companies moving their production and their manufacturing into Vietnam, but also it provides for requirements in order for these European organizations and the requirements are placed upon Vietnam. And expecting obviously Vietnam to provide the same level of compliance that European organizations enjoy in Europe to be able to function again correctly, and compliantly in Vietnam. This is the kind of example where you see overseas governments influencing what is happening and the standards that are put into place in countries in Southeast Asia.

And that happens quite globally. That happens really on a daily basis around the world. And this is how countries evolve, and this is how countries grow and they move from an emerging market to now a developed country and so on. So, this is how these things, I guess, function in the background.

Chris Parker: Yeah. And that leads me to the next question, is what are some of the, I guess, factors or conditions that are really contributing to this change? Why is this happening?

Manal Sakr Bradnam: The quickest answer to give is trade wars are impacting this shift massively. There is a need to find places where you can get lower duties, places when... Let's say you're manufacturing in Southeast Asia, and then you're importing into the US, for example, right? You're going to be more likely to enjoy lower duties than if you were coming from another place in Asia at the time. There are also cost-minimization benefits. You are dealing with a labor market that, although inflation is increasing labor prices, that's happening around the world. So, Southeast Asia, specifically in certain countries, continues to be markets where you can get labor at lower costs. So that makes it appealing as well. It could also be cheaper to source raw materials because there are a lot of natural resources, in fact, in Southeast Asia.

And so, again, that shift is organizations looking to lower their costs in such a volatile market. You look at the supply chain globally now, margins are really, really squeezed. Transportation costs because of the war in Ukraine, which is impacting fuel prices as well. All of that is increasing the cost of production and increasing the cost of doing business. And just looking for any savings is what's really leading a lot of companies into Southeast Asia. On top of that, you also have a youthful population in most countries. Not only is it a growing middle class, but you also have young, capable employees that are ready to go to work. And so, you have a... The market is saturated with people looking for work, which is great for organizations because recruitment and keeping that talent becomes a little bit easier than in other places where that might not be the case, where you have maybe an aging population.

I think that's the gist of why it's happening. Where I talked about the rise in fuel prices as well. And that's going to continue, I think, to impact things quite widely across the world, but also across the region here. And maybe we'll get to this in a little bit, but that might be one of the issues that we're facing as well.

Chris Parker: Yeah. Okay, so you're talking about sourcing changes, more manufacturing, and more affordable labor. That's a lot of output coming out of South Asia. Are imports changing at all too?

Manal Sakr Bradnam: Yes. Yeah. Along with the fact that you have a... It kind of goes hand in hand. When the youth is now working and making money, that means they have a disposable income, which makes that consumer market a lot more attractive as well.

Chris Parker: Right.

Manal Sakr Bradnam: Because they are looking for the latest trends. They're looking for the latest technology, and they're willing to pay for it because, guess what? They now have the money to do that. So, yes, from an import perspective, it actually is growing as well. Now, take the consumer part away. The import market is growing because also if manufacturing is in Southeast Asia, you still have to import sometimes raw materials from other places. So again, it's very much hand in hand, that import and export piece. You import in order to re-export as well to the rest of the world.

Chris Parker: Okay. So, then, what does evolution look like? What does changing to meet these expectations, to do things compliantly, and to meet a certain standard, what does that look like? Or what needs to be done for some of these logistics providers?

Manal Sakr Bradnam: Well, so there is a greater need for compliance, and the compliance levels vary across the board. And when global organizations move into Southeast Asia, they're looking for, and they have to meet in fact, the same standards as their home countries. For example, take the US; you have a US organization. They still have to follow the FCPA laws everywhere, no matter where they are. And I think that is also leading local governments to pay greater attention to the compliance area, which then, in turn, commits local brokers, global brokers, whoever is providing logistic services in that market, to have the same standards. And in order to do that, there's a lot of investment that needs to take place. So, there's a lot of investment that needs to take place in processes and refining those, infusing technology and adopting the latest technology in order to provide not only the visibility but also the accuracy of the declaration, whether it's on the import or export end.

There is also the possibility that a broker may need to, in fact, become a partner with a greater organization because of the cost that it takes to get to a certain level that is required in order to continue to compete. And so we see that happening, and that's probably going to happen a little bit more. That's not a bad thing, though. And I'll tell you why, because-

Chris Parker: Yeah, please.

Manal Sakr Bradnam: As a global broker ourselves, we find it quite necessary, in fact, to have that local understanding and familiarity, because it is, at the end of the day, still an in-country service. You're still providing, whether it's an export or import brokerage piece, it's still at that country level. And so, it's really important to continue to harbor that knowledge, that local knowledge, and just infuse it with that global compliance flavor.

Chris Parker: Do you see a lot of growing pains happening then? Where can mistakes happen? And what do those look like right now?

Manal Sakr Bradnam: Yeah, mistakes can happen; as you said, they happen to everyone. And one of the pieces that are growing as well, which I think is impacting a lot of brokers, maybe even importers in many countries is greater enforcement. So, there's always been regulations, right?

Chris Parker: Sure.

Manal Sakr Bradnam: In place. And it's whether they were enforced or not. And that's what's starting to impact importers and brokers like exporters. So, the last couple of years, we've had a really tough couple of years. We've had COVID maybe it's almost three years now. Gosh, we keep saying two years, and it's, I think, three years.

Chris Parker: Time doesn't mean anything.

Manal Sakr Bradnam: Who knows what time and what day it is anymore? But we've been stuck in this COVID circle, and then we also then have trade wars and Ukraine and Brexit and all of this stuff. And what's happening is that revenue's getting lost. So, when revenue gets lost and goes down, governments look for ways to do that. And a lot of times, the customs authority's department sits within the revenue department or ministries of finance for a reason because they're revenue generating. And what better way to increase revenue than to enforce some of the regulations that you have? So, we see that happening. And so, where maybe folks didn't realize that there are certain regulations in place, or maybe where enforcement was not quite up before, it's now increased. And so, importers, brokers alike, I think, have to watch out for that, have to truly understand the risks that come with operating and with having any brokerage activity in those different markets. And these regulations vary across markets. So, keeping that in mind is key as they continue to move into Southeast Asia.

Chris Parker: I imagine as changes are happening, we need to be updated. The brokerage community and the business community at large need to be updated on these kinds of things. How do we know that we're working in an up-to-date fashion? And I'm trying to get at technology here. What does a technology investment look like in customs?

Manal Sakr Bradnam: What do you do to know you're operating compliantly and you're working compliantly? I'll tell you. You got to ask questions, and you've got to do the research, and you really got to put in the hard work.

Chris Parker: Got to be nosy like you, right?

Manal Sakr Bradnam: Got to be nosy. Exactly. Exactly. And the thing is, you do have to invest in things like technology because technology is not what makes you compliant. It's the right use of technology. So, things like ensuring that you have automated your declaration process as much as possible so that data that you are putting forth for an import or an export declaration is truly correct, eliminating and reducing as much of that human entry element as possible. And allowing the human brain to work and focus on the knowledge piece of things. Again, freeing up... I always say, our brains are like computer memory, and the less you can use up space-wise for data entry, the better because then we can truly use that space to work on the knowledge piece. And I think that's what needs to happen.

Another thing is making sure you're partnering with the right parties. So, having the right brokers or logistics providers who are integrated, again from a technology perspective, with customs authorities or with third-party customs providers, what does that do? That allows, again, the accuracy of the data to flow through from A to Z correctly with the least interruption. And it allows you then to be able to automate some of the requirements that are based maybe on the classification, maybe I need a license that is required. Or maybe I need to apply a certain free trade agreement, whatever it may be. You can automate a lot more of that piece. So again, you are making sure you're getting not only the most compliant declaration, but you're getting the most cost-efficient declaration and the benefits that you can gain from that.

There's also the fact that you get that data back from customers. Now, very key, is being able to audit yourself. Being able to conduct these reviews and making sure that your partners are conducting these reviews is just as key. And that's what's going to allow you from a technological perspective. Again, having those, what we call entry details back from customs authorities allows you to use that to create more of a risk-based review approach because otherwise, you don't have that data in your system. So those are some of the aspects that technology can provide in way of compliance. Every declaration has the same elements. Every declaration has invoices that need to be entered, different line items, different values, and pretty much the same elements, along with the reference data, which is your classifications, your countries of origin, and so on. So, automating all of that takes away the possibility or eliminates the possibility for errors.

Chris Parker: And Southeast Asian countries are changing their customs frameworks or their standards to meet more of a, I guess, global expectations, and they're increasing their enforcement. Do you see a tumultuous time ahead? Is it hectic right now, or are things smooth? It's just a natural progression right now? What's your take on it right now?

Manal Sakr Bradnam: I wish things were smooth. I don't think things are smooth anywhere in the supply chain. Not to sound negative. It's a very, very chaotic time for everybody. But in a good way, I think this market is going to continue to grow, which is a good thing. But there is some volatility, I guess, ahead. Again, we talked about fuel prices increasing. That's going to affect the price and the cost of doing business, not only for importers and exporters but for brokers as well. So, there is that piece of it. You also have growing regulatory changes and standards, so you not only need to know who you are, but you also need to understand whom you are dealing with and who is your partner's partner. And so that cost of due diligence as well, which is extremely important, but reality also. And so, I think that those growing demands and expectations again will create a greater increase in the cost, again, of doing business.

Chris Parker: So then, in order to avoid this volatility, importers will have to be looking for good strong partners to work with. What would you say are the qualities that a strong customs partner has?

Manal Sakr Bradnam: I think someone that has consistency at the core and compliance at the core. And one of the ways to do that is to make sure that your partner has a wider reach. It's really hard to manage so many countries and so many different entities and parties. As we said, the demands are growing, and the due diligence process of your partner is becoming bigger and bigger. And so, rationalizing the number of providers you have is key to being able to continue to have control over your operation. So, reducing the parties that your brokers deal with, will lead to greater communication benefits, and a more streamlined approach. It'll also lead to, again, that consistent process across countries. Now, regulations may change. And that is absolutely taken into consideration and should be taken into consideration when looking for a partner, but that doesn't mean there can't be an overarching, consistent process across all of the countries. It improves the compliance posture to have maybe a single broker. And I know a single broker is a hard concept to grasp.

Chris Parker: Yeah. What does that mean?

Manal Sakr Bradnam: Yeah. So, it's basically having one broker dealing with all your work across maybe a country or a region, or a whole globe. That comes with its own risks as well. And so, what I would say is if I was in an importer's shoes, I would have a single broker, but I would definitely have a backup just in case.

Chris Parker: Sure, sure.

Manal Sakr Bradnam: It's always good. But the thing with brokerage as well is if you have a single broker, then at least you know they're going to follow your processes the same way everywhere. They're going to follow your expectation. And you're able to cherry-pick whom you want to work with and partner with someone that has the same values that you do. And I think that is absolutely key. Not only values in the way of doing things compliantly, which is extremely important, but also the values of how you treat your employees, and how you react to situations. So, all of that is quite key when you're looking for a partner in order to be successful not only, I would say, in Southeast Asia, but really anywhere in the world. Just the basics of having that. I could talk for ages, Chris.

One of the things as well that comes with doing that is you are able to have a uniform way to receive your data, and in order to have visibility truly to what is happening. If you have to deal with 20 different providers, makes it really, really tough to manage things. But if you have the same provider or maybe two providers maximum across, then again, it makes it a lot easier. It makes you more agile in changing your expectations and your procedures.

Chris Parker: I've got one last question for you, and I feel like it's a big one. It's got three parts to it.

Manal Sakr Bradnam: Okay. Go on, then. Hit me with it, Chris.

Chris Parker: Yeah. So, I'm curious to understand, as these regulations are evolving, as they're progressing, as they're growing, what's at stake with that change? And then, down the line, what does that growth look like for people in South Asia? And affecting consumers? I'm really curious, too, as to why should consumers care, be excited, or at least pay attention to this change in customs? It's a lot.

Manal Sakr Bradnam: That is a lot. Yeah, I even forgot the first part of your question. That was such a long question.

Chris Parker: Sorry.

Manal Sakr Bradnam: Let's see. Let's start with the last piece. Why should consumers care? Consumers, I think, should care because they're potentially going to be able to get lower prices for goods because of this shift. So, when you look at your big organizations, you should be rooting for them and say, "Yes, go into Southeast Asia because that may mean I'm going to have to pay less for some of the products that you are selling to me." But I think also we have to think of the more altruistic bigger goal is you're empowering an emerging market by supporting this move or this shift as a consumer. You're empowering young individuals in these countries by supporting organizations that are providing them an opportunity to grow as individuals.

And I think that's the more altruistic goal, but I think that plays a big deal when we are looking at how global the world is right now and how we really want everyone to do well. We want women to get into the workforce more, and that is happening because of this growth in Southeast Asia. We want to empower the young to take on bigger positions and grow. And this is one way that a consumer can do that, by supporting the output as well as the input into Southeast Asia. So that's the last part of your question. The first part of your question is-

Chris Parker: What's at stake?

Manal Sakr Bradnam: What's at stake? I think at stake is a lot of populations or a lot of countries that have put a lot of investment into educating their people, developing their infrastructure, adopting digital transformation, into basically supporting this rapid urbanization. And what's at stake is that all of that effort could be for nothing if the growth doesn't follow, right?

Chris Parker: Right, right.

Manal Sakr Bradnam: It's like the chicken and egg. What do you do first? And you can't have people coming into your country and organizations coming into your country without having the right infrastructure in place, and so they've done that. A lot of the countries here continue to invest and will continue to invest in the future. And it's key that there is that demand, that growth being met. And that things do come in and that countries and organizations, sorry, do think of Southeast Asia as a place to go. I think that will continue to happen. Positivity says, "You know what? It's going to be even a much, much more growing market." And we don't see that changing anytime soon. Hopefully.

Chris Parker: Yeah. Well, it certainly sounds like an exciting time. I hope it doesn't get too hectic on your side of things.

Manal Sakr Bradnam: I love it hectic. It's okay. That's all good. As long as it's positive chaos, then it's all good.

Chris Parker: It's better to be busy than bored, right?

Manal Sakr Bradnam: Exactly. That's right. That's right.

Chris Parker: Well, Manal, thank you so much for your time. I really appreciate it.

Manal Sakr Bradnam: Thank you, Chris. Thanks so much for having me. Again, it's a pleasure.

Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed to whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.