Trade Logistics Advisory Program: Easing Access to Markets Presented by Uma Subramanian, Product Leader, Trade Logistic

1. IFC- FIAS Trade Logistics Advisory Program: Easing Access to MarketsPresented byUma Subramanian, Product Leader, Trade LogisticsSoren Lennartsson, E-Commerce Expert International Single Window Conference African Forum on Single Windows November 5, 2008

2. Context: Some snapshots • Global logistics industry -- US$3.5 trillion • Logistics costs in OECD countries < 10% of GDP Developing countries average between 11% and 16% of GDP with many as high as 30% of GDP. • It costs roughly the same to ship a container from Dakar to Rotterdam (5000 km distance) as it does from Singapore to Rotterdam, a distance of about 17,000km. Low cost and faster times to market imply a real and important competitive advantage. Impacts include greater private investment flows, more jobs.

3. Import delays lead to higher inventory levels…cutting into scarce working capital Tanzania 59 Madagascar 49 Madagascar 58 Kenya 37 Kenya 43 Tanzania 30 Korea 10 Korea 24 Germany 7 Germany 19 0 20 40 60 0 20 40 60 80 Days for Imports Days for Inventory

4. …pattern reflected among firms within countries too… 20 15 Days to Clear Import Customs 10 5 0 Korea El Salvador Cameroon Tanzania Guatemala Colombia Inventory Level Moderate: A Week to a Month Low: Less than a Week High: More Than a Month

5. What is the Trade Logistics Advisory Product? • Approved in July 2008 • Advisory Program to assist countries improve access to markets through efficient, easy and accountable import and export procedures. • Is a direct extension of the Doing Business “Trading Across Borders” indicators: • Goes well beyond to provide implementation assistance of deep systemic reforms in response to client demands • Explicit Business Environment focus with strong synergies with: WB/IFC infrastructure departments and potentail IFC investments (warehouses, cold chains, ports); IFC trade finance; others • Expected impacts: • Increase in private sector investment • Cost savings to businesses associated with streamlined trade logistics procedures • Increase in trade volumes/ share of exports • Increase in formal employment

6. 40-60% of the time to trade is due to “software”

7. Three Focus Areas of the Trade Logistics Program • Simplification and harmonization of procedures including documentation; • Automation/ Single Window System • Technical support to introduce risk-based management systems for inspections

8. The Trade Logistics Advisory Product Response Model Client needs Trade Logistics Response How can we improve our Doing Business rank next year? Quick Wins: Phase I focus on quick wins including those that affect DB indicators (8-10 months) How can we become more competitive? Systemic Reform: Facilitate competitive supply chains (up to 3 years) What are the critical issues that we can solve quickly? BEE focus: Administrative and regulatory simplification How do I know it’s working? Measurable success: Continuous and quantitative measurement

9. Trade Logistics Business Model • Identify quick actions based on DB Trading Across Borders indicators and otherts • Create momentum builds credibility • Lay platform for launch of system wide reform PHASE I Outcomes tied to objective measurements: • Number of documents • Time to trade • Cost to trade • Number of signatures • Percentage of containers inspected Quick Wins 8-10 months PHASE II • Simplfied processes aligned with international best practice • Automation/electronic processing/ Single Window • Reduced inspection levels • Improved capacity within countries Systemic Reform Implementation Up to 3 years Impact Evaluation Component

10. Our Business Model Works! Early success! 21 reforms in 2 pilots! In 10 months! 11 reforms in Liberia 10 reforms in Rwanda

11. Country Pilots - Moving to automation … and SW • Reduce trade transactions time and cost • Move from entirely manual systems to submission and exchange of trade documents electronically for public and private sectors under a one-stop environment • Move toward electronic submission of charges and fees – as a way of increasing transparency • Creation of trade database/ statistics • Streamline enforcement and control.

12. What is the role of Single Window • A measure to facilitate trade • Many understand it as automation/ computerization • But it does not necessarily require ITC • Concepts like a single building/one stop shop can fix a lot! • Electronic Single window • Requires infrastructure, computer skills, … • Needs at least one dominant actor providing its core • Don’t build on transfer speed for cosmetic effect

13. How to organize Single Window • Some forms of Single Window • For export/import clearance • For handling licences/permit/quota • Portal initiatives, including trade promotion • e-Government services/Public procurement • It takes active coordination • The purpose of single window is cross-cutting • Multiple agencies/authorities involved • Requires private sector engagement • Only enforcement makes it take off?

14. Objectives and implications • The objectives for SW must be clear • Transparency? Monitoring? Efficiency? Capacity building? Other?… • Sustainability • Who will pay for the system? • Is there sufficient trade volume? • Are there mature (and enthusiastic) users? • Is the market ready to carry new costs? • Is it introducing a new divider? • For SME, for rural areas • Forcing use agents

15. The case of Liberia (1) Current status: • Reliance on pre-shipment inspection (PSI) and Destination Inspections • A one-stop shop is being introduced • In Monrovia Freeport • Some trade –related simplification has been implemented • Of customs clearance processes • But much remains to e done … more agencies need to be involved • Have started on computerization • Basic office computerization (Customs and parts of port operations) • Basic office network

16. The case of Liberia (2) Next steps: • Further simplification necessary • Introduce a SAD, starting with Customs • Simplification by other agencies • Re-engineer clearance procedures • Introduce risk management-based clearance • Eventually, eliminate pre-shipment inspection procedures and destination inspection by contracted agency • More significant computerization • Introduce Customs clearance system (Asycuda being explored by govt.) • Introduce an Electronic Single Window with clearance focus • It is vital that the Customs clearance system is operational • Then invite more parties: agents, private sector including major traders, other agencies, …

17. The case of Colombia (1) Current status: • VUCE – Colombia-developed electronic Single Window • for the application of licenses/ quota/ certificates • Involves some 17+ agencies plus traders • It was established through a series of decrees • Since 2005 for imports, since May 2008 for exports • But set without proper guidelines and an implementation deadline • The system involves: • Essentially a workflow system • Manual registration of applications with manual responses from relevant agencies

18. The case of Colombia (2) Issues: • Lack of coordination among agencies • Differing maturity levels • Some computerized, some partially, some not at all • Technical scope of agency systems • Duplicate applications/decisions • Interoperability issues • The full range of commodities • Private sector not engaged

19. The case of Colombia (3) Next steps: • Establishing a multi-agency steering committee • To set policies, prioritize, coordinate, monitor, etc • Strategy for key/ priority agencies • Use of individual agency system in relation to VUCE • Interoperability: Standards for information transfer • Strategy for remaining agencies • Develop systems or work in VUCE • Relating it to the plan of e-Government online

20. Some early lessons: • Technology is not panacea; needs to be combined with processes, coordination and capacity/ skill building • Commitment and drive at the highest level are critical factors • Regular stakeholder dialogue particular with private sector; explore innovative public-private partnership models for implementation • Tying results to objective measurements helps focus and align design where necessary • A strong communications strategy is essential – for external stakeholders but equally importantly, for internal stakeholders/ partners

21. Trade Logistics Advisory Product: Moving ahead FY08 FY09 FY10 FY11 Responsive model to address client requests Phase 1 3-5 pilot countries Global Rollout 2-3 pilot countries Full fledged

22. Where are the current/upcoming projects … rising demand Europe &C.Asia Liberia Armenia, Montenegro Albania Excellent momentum. Phase 2 has begun Guatemala Honduras Mexico Other? India Colombia Pre-pipeline Burkina Faso Pilot rolled out Starting Sudan Rwanda Phase 2 Initiated EAC

23. Trade Facilitation: Major Players IFC/FIAS IMF WCO WB Specialized Agencies UNCEFACT UNECE Regional Development Banks UNCTAD USAID USTR OECD International Financial Institutions International Trade Center

24. Some Ways to Partner Sequenced phases Joint Product Development 1 IFC/FIAS and partners sequence project phases IFC/ FIAS Project Cross support to WB or IMF staff and viceversa 2 Joint implementation team

25. Thank you! Please contact usubramanian@worldbank.org