The Bureau of Customs’ US$97.82-million modernization program has been approved by the National Economic and Development Authority’s (NEDA) Investment Coordination Committee-Cabinet Committee on March 6.
The Philippines Customs Modernization Project seeks to improve trade facilitation, increase BOC revenue collection, and reduce processing time and trade costs.
The project will be partly financed by the World Bank. Of the total cost of P5.44 billion, 84.58% will be financed through official development assistance loan, while the remaining 15.42% will be financed through local funds.
BOC said the project will run for five years beginning 2020, with partial implementation to start on the fourth year or 2023, and with full completion in 2024.
Customs Commissioner Rey Leonardo Guerrero in January 2020 said BOC submitted last year the project’s feasibility study, hoping for approval in the first quarter of 2020 and implementation starting this year.
READ: Full automation tops BOC’s 10-point priority list for 2020
The project still requires approval by the NEDA Board, chaired by President Rodrigo Duterte.
The “poor trade facilitation performance of the BOC is due to outdated infrastructure and inadequate business practices”, according to the project’s Combined Project Information Documents/Integrated Safeguards Datasheet available on the WB website.
It noted that the challenges faced by BOC include the following:
- an outdated customs processing system;
- lack of key capabilities needed for effective customs administration such as risk management, intelligence, valuation, and post clearance audit;
- inadequate access to and use of non-intrusive inspection technologies;
- lack of performance monitoring and evaluation capabilities and inadequate operational statistics;
- lack of proactive dialogue and effective coordination with stakeholders, including port operators, other border management agencies, and the private sector; and
- an operational environment in which almost all key customs activities are vulnerable to corruption.
The project involves three components: modernization of customs operations, organizational development, and project management and implementation support.
The project aims to modernize frontline and back-office functions of the BOC through a Customs Processing System (CPS) and the Administrative Back-Office Enterprise Resource Planning (ABERP).
The CPS will encompass all features and functionalities of the current E2M customs module; a strengthened value-added functions and an integrated system for both imports and exports to be operated over a single environment platform capable of paperless transaction processing. The ABERP will complement the modernization of the frontline services through integration, management, and automation of the BOC’s back-office functions related to technology, services, and human resources.
This component also involves enhancing fraud- and contraband-detection capabilities, eliminating waiting time for scanning, streamlining overall inspection processes, reducing time to release legitimate trade, modernizing BOC inspection processes, and improving trader perception of BOC business processes.
The organizational development component will support BOC’s move toward modern customs administration by implementing, through the CPS, updated customs procedures that will create new responsibilities for and demands on BOC’s workforce.
The third component creates a Project Management and Quality Assurance consultancy that will be working with BOC in managing the project and providing quality assurance support during project implementation.
BOC, an attached agency of the Department of Finance, will implement agency, and will be primarily responsible for project execution and ensuring the project development objectives are met. BOC will have to establish a project implementation unit with the overall responsibility for project implementation.
In a press statement, NEDA said the modernization and process reengineering of the BOC is pursuant to Section 109 of the Republic Act 10863 (Customs Modernization and Tariff Act) which directs the bureau to utilize Information & Communication Technology (ICT) in enhancing customs control for a cost-effective and efficient customs operation geared towards a paperless environment.
The project is part of the Build Build Build project of the administration, centered on building the ICT infrastructure of the BOC.
The project supports the BOC leadership’s 10-Point Priority Program anchored on organizational efficiency, upgrading individual proficiency and strengthening institutional capabilities through automation of processes and integration of systems for ease of doing business. This covers streamlining of operations, development of systems and deployment of ICT infrastructure, in line with international standards.
It also aims to support key border management agencies to reform and achieve transparency, accountability and predictability; reduce time to process imports and exports; lower trade transaction costs ; and improve revenue collection performance, while strengthening controls associated with community protection and national security objectives.
