World Bank approves $88.28 million loan for customs modernization

MANILA, Philippines — The World Bank has approved an $88.28-million loan to finance the modernization of the country’s customs administration.

The Philippines Customs Modernization Project is aimed at reducing the transaction costs and enhancing the predictability and transparency of the clearance process at the country’s borders.

Specifically, this project will pave the way for the streamlining and automation of the procedures of the Bureau of Customs, as well as for the development of a world-class customs processing system (CPS).

This project will directly benefit traders, exporters, importers, port operators, shipping companies and transport providers, many of which are small and medium enterprises.

“Improved efficiency at the Bureau of Customs will reduce trade costs and support the Philippines’ competitiveness,” said Ndiamé Diop, World Bank country director for the Philippines.

“Automation will reduce face-to-face interactions and delays, and increase accountability, all of which strengthens efficiency and improves the business environment.”

With the new CPS, crucial processes like trade management and registration, cargo inspection, duty payment and clearance and release, among others, would be integrated in a seamless online system.

It would also improve adherence to international standards and conventions for customs processing, including an audit trail for transactions, allowing for greater transparency and less opportunity for corruption, the World Bank said.

The pandemic threatens to undo the country’s economic gains in recent years partly because of inefficiencies in trade facilitation and customs processes.

For instance, it takes longer for containers in the country to clear customs at 120 hours compared with 56 hours in Vietnam, 50 hours in Thailand and 36 hours in Malaysia.

The ease of clearance in neighboring countries provide a competitive advantage for their firms vis-à-vis their Filipino counterparts.

World Bank noted that the unfavorable business environment for firms in the country reduces the incentive to engage in export, foregoing opportunities for expansion and job creation.

Domestic firms export only 3.5 percent of their output compared with 26 percent in Malaysia and Thailand. Foreign firms based in the country, meanwhile, export only 25.5 percent of their output compared with 78.7 percent in Vietnam, 84 percent in Malaysia and 93 percent in Thailand.

BOC recently started reforms in its trade procedures covering the digitalization of its paper-based systems to align it with

regional and international standards, as well as the improvement of its critical capabilities such as risk management, intelligence, and post clearance audit, and other transaction processes that were vulnerable to corruption.