The Bureau of Customs (BOC) hopes to finish by the middle of this year the requirements that will lead the World Bank (WB) to approve a proposed project to modernize and automate the customs agency.
“We have been doing the requirements we’re given by the World Bank,” Customs commissioner Isidro Lapeña told PortCalls in a recent chance interview.
The Customs chief said BOC is “on track, on schedule” with its timelines, as it aims to finish the requirements in time so that the modernization program is among the loan projects WB approves by the middle of the year.
Earlier, Lapeña said he was eager to implement WB’s US$200 million Philippines Customs and Trade Facilitation Project (PCTFP) that aims to support export-led economic growth by assisting BOC to reduce trade costs, improve transparency, and increase revenue collection.
But the project is still in WB’s pipeline of projects and up for review by the lender’s Board and, since it’s a loan, by the Philippine government as well.
Last January, BOC and WB concluded a workshop that ushered “a series of stages” leading to the approval of a customs modernization project being prepared by the lending institution.
Lapeña said that on BOC’s part, it has already approved the budget for certain project requirements, and is scouting for a place for the Customs Academy, which is part of the project. The WB is suggesting Subic or Clark for the site, but Lapeña said available land in the two locations is small. He said they are looking for a 6- to 10-hectare site to fit all the necessary facilities of the envisioned academy. Lapeña noted that in a recent chance visit to Malaysia’s own Customs Academy, he saw how such a similar institution can help transform BOC.
Lapeña earlier acknowledged that BOC’s computer system was slow compared to those of customs administrations in other countries. He hopes the WB project will put BOC standards on a par with global standards, as it did with other customs administrations.
In the Project Information Document/Integrated Safeguards Data Sheet available on WB’s website, the lender said the PCTFP “will support the modernization of systems, procedures and operational activities in line with accepted international standards for the processing and clearance of imported and exported goods.”
“This will be especially beneficial for traders from outside Manila (i.e. Visayas and Mindanao), which will be able to deal with Customs without having to complete their processes at the capital,” the concept paper stated.
It added that this, in turn, will increase the Philippines’ trade competitiveness, facilitating export growth and diversification.
WB said that in a more competitive international environment, key to rapid, inclusive, and sustained economic growth is adopting trade reforms.
Moreover, modernizing the BOC will lead to a more transparent and accountable governance.
The project will be funded via investment project financing that will provide International Bank for Reconstruction and Development loan and International Development Association credit/grant. Board review for the project is set for July 12, 2018.
Three components of modernization
The project will consist of three operational support components, namely, institutional development, trade facilitation, and ICT modernization, as well as one project management component.
The regional coverage of the project will include Manila and Mindanao. Financing will range from $120 million to $150 million, depending on the agreed scope of work prior to project appraisal.
Institutional development, which will cost from $25.5 million to $50 million, will support the transformation of BOC into a professional organization that is transparent, accountable, and more responsive to the needs of public and private stakeholders.
This will be achieved through reviewing the organizational structure, supporting strategic and operational planning, developing client service standards, preparing integrity assessments and mitigation strategies, and supporting human resource management and development reforms.
The trade facilitation component, which will cost $2.75 million, will support the implementation of internationally agreed standards in processing imported and exported cargo, consistent with World Trade Organization, World Customs Organization, and Association of Southeast Asian Nations commitments.
This will be done by reviewing and redesigning business processes, implementing the customs provisions of the WTO’s Trade Facilitation Agreement, improving voluntary compliance, and developing or strengthening a range of critically important value-added functions including intelligence, post-clearance audit, enforcement, and anti-smuggling and compliance-based risk management. This also includes the effective implementation of the Customs Modernization and Tariff Act.
The third component, which is the costliest at $95 million, will support the modernization of BOC’s core ICT systems, related technical infrastructure, and internal capacity to manage and operate a sophisticated ICT operation.
This is to ensure that the ICT system and related infrastructure contribute to improving operational effectiveness, integrity, accountability, and organizational performance. It will also see the development of a long-term ICT strategy on the connection and interoperability with whole-of-government National Single Window system and port community systems.
Since most advanced functions, such as post-clearance audit and the Authorized Economic Operator (AEO) program will need efficient ICT, the WB said its project will devote significant attention to fast-tracking the design and implementation of the core ICT system and related infrastructure.
The last component, project management, will support project implementation and establish a project-implementing unit within BOC to provide fiduciary support for quality assurance, together with monitoring and evaluation functions to assess progress in meeting the project’s development objective. The IT infrastructure will cost $3 million. – Roumina Pablo
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