$200-M loan eyed for Customs rehab

The World Bank is firming up a $200-million loan for a project aimed at modernizing the graft-laden Bureau of Customs.

Documents obtained by the Inquirer showed that the World Bank plans to pitch for its board’s approval in July next year financing for the Philippines Customs and Trade Facilitation Project.

The project’s development objective is to “improve the efficiency, effectiveness and transparency of the BOC,” the World Bank said.

The Washington-based multilateral lender will finance the entire $200-million project cost.

Project appraisal will start in November this year.

The World Bank noted that the Philippines’ export competitiveness was being impeded by high trade costs, hence also slowing the ability to generate high-quality jobs.

“The call for higher rates of export-led economic growth will continue to put customs and other border agencies in the spotlight. Today, the trading community uses just-in-time supply chains to maximize competitive advantage and it demands that border management agencies do not disrupt those chains by employing outdated practices and procedures and imposing excessive red tape. However, the poor performance of the BOC hampers the Philippines’ capacity to use trade as a vehicle for inclusive economic growth, job creation and poverty reduction,” the World Bank pointed out.

The Philippines is currently ranked 95th in the Doing Business (Trading Across Borders) indicator and is ranked 78th on the Customs and Border Management component of the 2016 Logistics Performance Index, having fallen 31 places since 2014, reflecting not only its poor performance but the efficiency and effectiveness gains made by competitors, the World Bank added.

The multilateral lender blamed the BOC’s poor performance mostly to outdated information and communications technology (ICT) infrastructure as well as “inadequate” practices under “an operational environment in which almost all key customs activities are vulnerable to corruption.”

Noting that the current administration wanted to lower the costs of trade and increase the trust in government institutions such as the BOC,” the World Bank said it would finance the proposed project to support the second biggest tax-collection agency “reduce trade costs, improve transparency and increase revenue collection.”

Specifically, the project will have three operational as well as one project management support components, namely institutional development (with an indicative cost of $25.5-50 million), trade facilitation ($2.75 million), ICT modernization ($95 million) and project management ($3 million), the World Bank said.

The project will mainly be implemented at the Port of Manila and regional BOC offices in Mindanao, according to the World Bank.