InvestmentInvestment, , Trade and Trade and Transport Facilitation in Transport Facilitation in

ACMECSACMECS

The Southeast Europe The Southeast Europe ExperienceExperience

Baher El-HifnawiBaher El-HifnawiEast Asia PacificEast Asia PacificWorld BankWorld BankMarch 13, 2007March 13, 2007

(I) What is trade and transport (I) What is trade and transport facilitation?facilitation?

No standard definition-- TF, TTF,…No standard definition-- TF, TTF,…

The “plumbing” of international tradeThe “plumbing” of international trade

TTF broadly defined goes beyond the standard TTF broadly defined goes beyond the standard issues of administration, procedures, and issues of administration, procedures, and logistics at ports and customs; regulatory logistics at ports and customs; regulatory environments and standards, and IT to include environments and standards, and IT to include transport covering land access to ports and transport covering land access to ports and airports, maritime and aviation services, multi-airports, maritime and aviation services, multi-modal transport and services and transit and modal transport and services and transit and more recently transport security more recently transport security

0

2

4

6

8

10

12

14

16

18

20

0 2 4 6 8 10 12 14 16 18 20

(II) Why the Fuss about (II) Why the Fuss about TTF?TTF?

Transport costs often Transport costs often exceed tariffsexceed tariffs

Source: U.S. Bureau of Census

Transport cost incidence

Nom

inal

tari

ff

45°

Shipping cost cannot be Shipping cost cannot be explained by distanceexplained by distance

4500 5500 6500 7500 8500 9500 10500 11500 12500 13500 14500

Lima (Peru)$4,000

LaPaz (Bolivia)$6,500

Brasilia (Brazil)$4,000

Vienna (Austria)$4,000

Asuncion(Paraguay)

$6,500

Niamey (Niger)$7,000

Ankara (Turkey)$4,000

Yerevan(Armenia)$7,800

Ashkhbad(Turkmenistan)

$13,000

Peking (China)$13,000

Bujumbura(Burundi)$10,000

Kathmandu(Nepal)$13,000

Durban(South Africa)

$2,500

Dar es salam (Tanzania)$1,000

Mbabane (Swaziland)$12,000

kilometers

Shipping a container from Baltimore to …

Source: Carsten Fink, Development Research Group, World BankSource: Carsten Fink, Development Research Group, World Bank

Potential Benefits of TTFPotential Benefits of TTFBenefits to GovernmentBenefits to Government

Increased effectiveness of control methodsIncreased effectiveness of control methodsMore accurate, & most likely increased, tariff revenuesMore accurate, & most likely increased, tariff revenues

Benefits to the Private SectorBenefits to the Private SectorLower administrative and compliance costsLower administrative and compliance costsReduced processing/clearance timeReduced processing/clearance timePotential increase in investmentPotential increase in investment

Society at LargeSociety at LargeFaster growth due toFaster growth due to– Lower cost of imported capital goods & increased investmentLower cost of imported capital goods & increased investment– Increased exports as a result of the lower cost of trading Increased exports as a result of the lower cost of trading – Enhanced competitiveness & a faster shift towards higher-value Enhanced competitiveness & a faster shift towards higher-value

commodities due to reduction in inventory holding costscommodities due to reduction in inventory holding costs

Reduction in povertyReduction in poverty

Empirical Estimates TTF BenefitsEmpirical Estimates TTF Benefits

Electronic Documentation for trade can save 1.5% - 15% of Electronic Documentation for trade can save 1.5% - 15% of landed cost of an imported item; a 3% savings for intra-APEC landed cost of an imported item; a 3% savings for intra-APEC trade translates into US $60 billiontrade translates into US $60 billion..**

A 1% reduction in maritime and air transport services could A 1% reduction in maritime and air transport services could increase Asian GDP by US $3.3 billion.increase Asian GDP by US $3.3 billion.**

1998 estimate of trade facilitation benefits in Asia-Pacific 1998 estimate of trade facilitation benefits in Asia-Pacific region is 0.26% of GDP, compared to 0.14% for from trade region is 0.26% of GDP, compared to 0.14% for from trade liberalizationliberalization. .

Facilitating trade in less-efficient APEC countries (by raising Facilitating trade in less-efficient APEC countries (by raising their capacity halfway to the average) would increase global their capacity halfway to the average) would increase global trade by about 10%.trade by about 10%.

*. Source: Trade Note, The World Bank, December 8, 2003*. Source: Trade Note, The World Bank, December 8, 2003

(III) World Bank Efforts in Trade (III) World Bank Efforts in Trade and Transport Facilitationand Transport Facilitation

A)A) Analytical Work/Research/DisseminationAnalytical Work/Research/Dissemination

GlobalGlobal

Trade Logistics Group within the World BankTrade Logistics Group within the World Bank

Toolkits and HandbooksToolkits and Handbooks

Seminars and PublicationsSeminars and Publications

Global Facilitation Partnership (GPF) for Trade and TransportationGlobal Facilitation Partnership (GPF) for Trade and Transportation

Global Facilitation Partnership for Global Facilitation Partnership for Trade and Transportation (GFP)Trade and Transportation (GFP)Objective is to develop and disseminate latest Objective is to develop and disseminate latest knowledge, and to provide a platform for knowledge, and to provide a platform for discussiondiscussionIts core partners include UNCTAD, WCO, Its core partners include UNCTAD, WCO, UNECE, UNIDO, the IRU, TIACUNECE, UNIDO, the IRU, TIACIt has over 150 partners from developing and It has over 150 partners from developing and developed countriesdeveloped countriesOver 250 documents on web site (gfptt.org)Over 250 documents on web site (gfptt.org)Fora for discussionFora for discussion

The World Bank

(III) World Bank Efforts in Trade (III) World Bank Efforts in Trade and Transport Facilitationand Transport Facilitation

(cont’d)(cont’d)

A)A) Analytical Work/Research/DisseminationAnalytical Work/Research/Dissemination

Regional (within East Asia)Regional (within East Asia)

East Asia Integrates, 2004East Asia Integrates, 2004Trade and Logistics in East Asia: A Development Agenda, 2003Trade and Logistics in East Asia: A Development Agenda, 2003East Asia Ports in their Urban Context, 2003East Asia Ports in their Urban Context, 2003Vietnam: Logistics Development, Trade Facilitation & the Impact Vietnam: Logistics Development, Trade Facilitation & the Impact of Poverty Reductionof Poverty ReductionPhilippines Logistics StudyPhilippines Logistics StudyLogistics Development and Trade Facilitation in Lao PDRLogistics Development and Trade Facilitation in Lao PDRChina’s Lagging Provinces: Logistics Development/ Trade China’s Lagging Provinces: Logistics Development/ Trade Facilitation and impacts on poverty reductionFacilitation and impacts on poverty reductionLogistics Centers in ChinaLogistics Centers in ChinaTrade Facilitation in the context of the Integrated Framework Trade Facilitation in the context of the Integrated Framework (Cambodia 2001, Lao PDR 2006)(Cambodia 2001, Lao PDR 2006)Transport and Logistics Regulatory Review in VietnamTransport and Logistics Regulatory Review in Vietnam

(III) World Bank Efforts in Trade (III) World Bank Efforts in Trade and Transport Facilitationand Transport Facilitation

(cont’d)(cont’d)

B)B) Projects (a sample)Projects (a sample)

RegionalRegional

Trade and Transport Facilitation in South East Trade and Transport Facilitation in South East Europe (TTFSE)Europe (TTFSE)

Marine Electronic Highway in the Malacca Marine Electronic Highway in the Malacca StraitsStraits

East Africa Trade and Transport FacilitationEast Africa Trade and Transport Facilitation

Central Africa Trade and Transport FacilitationCentral Africa Trade and Transport Facilitation

(III) World Bank Efforts in Trade (III) World Bank Efforts in Trade and Transport Facilitationand Transport Facilitation

(cont’d)(cont’d)

B)B) Projects (a sample)Projects (a sample)Country levelCountry level

Pakistan’s Trade and Transport Facilitation Pakistan’s Trade and Transport Facilitation ProjectProjectMekong Transport Infrastructure Development Mekong Transport Infrastructure Development Project In VietnamProject In VietnamTrade Facilitation and Competitiveness in Trade Facilitation and Competitiveness in CambodiaCambodiaCustoms Modernization in VietnamCustoms Modernization in VietnamBrazil’s Competitiveness Reform LoanBrazil’s Competitiveness Reform Loan

(IV) The Trade and Transport (IV) The Trade and Transport Facilitation Project in South East Facilitation Project in South East

Europe (TTFSEEurope (TTFSE))

A) Overview of The TTFSE ProgramA) Overview of The TTFSE Program

Regional Investment Program: US$120 million, WB $78 millionRegional Investment Program: US$120 million, WB $78 million

Implementation started in 2001 in six countries then reached Implementation started in 2001 in six countries then reached

8 countries; one project in each8 countries; one project in each

Project components: TA for border agency modernization Project components: TA for border agency modernization (Customs), X-ray equipment, IT equipment (computers/network), (Customs), X-ray equipment, IT equipment (computers/network), TA for Single Electronic Window, border crossing improvements, TA for Single Electronic Window, border crossing improvements, training, website providing rules/procedures of border agenciestraining, website providing rules/procedures of border agencies

Main Program Goals are to facilitate legitimate trade by Main Program Goals are to facilitate legitimate trade by

a) reducing: a) reducing: (i) processing time for traders/transporters(i) processing time for traders/transporters, , (ii) (ii) ‘facilitation’ payments, (iii) corruption; & (iv) smuggling ‘facilitation’ payments, (iii) corruption; & (iv) smuggling

b) increasing effectiveness of controls at the borderb) increasing effectiveness of controls at the border

A) Overview of The TTFSE ProgramA) Overview of The TTFSE Program

Now in the second phase (TTFSE II)Now in the second phase (TTFSE II)Consolidating achievements of first phase, replicating them and Consolidating achievements of first phase, replicating them and scaling up.scaling up.Potential areas under consideration:Potential areas under consideration:– Admission of electronic documents , Air Transport and Airport Admission of electronic documents , Air Transport and Airport

Operations , Aligned Trade Documents , Border performance monitoring Operations , Aligned Trade Documents , Border performance monitoring systems , Control on animal and animal products , Electronic systems , Control on animal and animal products , Electronic standards/EDI , E-signature and certification authorities , Harmonized standards/EDI , E-signature and certification authorities , Harmonized System , Integrated border management , Landlocked countries System , Integrated border management , Landlocked countries access : corridor arrangements , Maritime Transport and Port access : corridor arrangements , Maritime Transport and Port Operations, Multimodal transport , Phytosanitary control , Public-private Operations, Multimodal transport , Phytosanitary control , Public-private partnerships , Rail Transport , Regional Partnerships , Single window partnerships , Rail Transport , Regional Partnerships , Single window environment , Standards and Conformity Assessment , Streamlining and environment , Standards and Conformity Assessment , Streamlining and harmonization , Trade Facilitation and competitiveness , Trade harmonization , Trade Facilitation and competitiveness , Trade Facilitation and SME development , Trade logistics and developing Facilitation and SME development , Trade logistics and developing countries , Trade Logistics practical measures , Transit facilitation and countries , Trade Logistics practical measures , Transit facilitation and logistics , TTF promotion , Use of ICT for Facilitation logistics , TTF promotion , Use of ICT for Facilitation

B) The TTFSE Program B) The TTFSE Program What Made it All PossibleWhat Made it All Possible

Commitment of Governments

Commitment and keenness of the private sector

European integration prospects

Strong donor support (SECI, US, Netherlands, Austria, France)

Peer pressure

High cost of inaction (transport cost/credibility as trading partners)

Commitment by World Bank Management to support regional efforts

C) Potential Benefits of the TTFSE C) Potential Benefits of the TTFSE ProgramProgram

Increased revenue collectionIncreased revenue collection

Reduced smuggling opportunitiesReduced smuggling opportunities

Reduced corruptionReduced corruption

Cheaper imported consumption goodsCheaper imported consumption goods

Cheaper imported capital goodsCheaper imported capital goods

More reliable business environmentMore reliable business environment

Savings in time and stockholding costs Savings in time and stockholding costs

Reduced errors and lower transaction cost when interacting Reduced errors and lower transaction cost when interacting with border agencieswith border agencies

Adoption of international standards and proceduresAdoption of international standards and procedures

Speeding up regional and global integrationSpeeding up regional and global integration

D) TTFSE 2001-2003D) TTFSE 2001-2003Sharing Some ResultsSharing Some Results

Significant Significant reduction in waiting timereduction in waiting time at border and at border and inland pilot points: from 23% to 89%inland pilot points: from 23% to 89%

Contribution to the large increase in Customs Contribution to the large increase in Customs revenue collectionrevenue collection: from 6.3$ to $10.8 billion: from 6.3$ to $10.8 billion

Contribution to large increase in Contribution to large increase in tradetrade values: from values: from $63 billion to $92 billion.$63 billion to $92 billion.

Reduced smuggling, increased Reduced smuggling, increased detection of frauddetection of fraud with X-Ray equipmentwith X-Ray equipment

Modernization of border crossing pointsModernization of border crossing points

Increase in Customs Revenues Collected

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

Am

ount

(US

$ m

illio

n)

2001

2003

Large increase in Trade Volume

05,000

10,00015,00020,00025,00030,00035,00040,00045,00050,000

US

$ m

illio

n

2001

2003

Pilot Sites : a Valid Concept …Pilot Sites : a Valid Concept …

Drastic Reduction in Clearance Times

050

100150200250300350

Jankomir term. Plovdiv Term. Banja LukaTerm.

Grude term.

Site Name

Min

ute

s

Project start Nov-03

……with resultswith results

Large Reduction in Border Crossing Times

0

50

100

150

200

250

Rousse Izacic Raca Macelj Gradiska

BCP Name

Min

ute

s

Project start

Nov-03

D) Sharing Some Results (cont’d)D) Sharing Some Results (cont’d)

Degree of success varied across indicators Degree of success varied across indicators and pilot sitesand pilot sites

Significant improvements, marginal Significant improvements, marginal improvements, no improvementsimprovements, no improvements

Why?Why?

E) Stakeholders/Required ExpertiseE) Stakeholders/Required Expertise

STAKEHOLDERS : a wide arraySTAKEHOLDERS : a wide array

Government side : Customs, Border Police, Veterinary and Phyto-Government side : Customs, Border Police, Veterinary and Phyto-sanitary agencies, Ministry of Transport…sanitary agencies, Ministry of Transport…

Users: road transport associations, freight forwarder associations, Users: road transport associations, freight forwarder associations, Chambers of commerce, large companies, relevant NGOs ..Chambers of commerce, large companies, relevant NGOs ..

International partners : IRU, FIATA, Development partners, UNECE, International partners : IRU, FIATA, Development partners, UNECE, WCOWCO

REQUIRED EXPERTISE : REQUIRED EXPERTISE :

Integrator, Institutional Specialist, Process Analyst, Customs Integrator, Institutional Specialist, Process Analyst, Customs Specialist, IT SpecialistSpecialist, IT Specialist

Ability to create links across various ministries/development Ability to create links across various ministries/development partnerspartners

E) Stakeholders (cont’d)E) Stakeholders (cont’d)Putting the Project Team TogetherPutting the Project Team Together

Country LevelCountry Level Regional LevelRegional Level Int’l LevelInt’l LevelNational CoordinatorNational Coordinator TFC Project ManagerTFC Project Manager US State DepartmentUS State Department

TTFSE Project ManagerTTFSE Project Manager Conventional Training Conventional Training ConsultantConsultant

World Bank Regional World Bank Regional CoordinatorCoordinator

Trade Facilitation CoordinatorTrade Facilitation Coordinator Distance Learning ConsultantDistance Learning Consultant World Bank Regional Customs World Bank Regional Customs SpecialistSpecialist

Website CoordinatorWebsite Coordinator Website ConsultantWebsite Consultant Working Group ConsultantsWorking Group Consultants

Working Group LeadersWorking Group Leaders Regional Steering CommitteeRegional Steering Committee Lead Professional AssociationsLead Professional Associations

Local Representatives of Local Representatives of Professional AssociationsProfessional Associations

UNECEUNECE

F) Main TTF Issues/ChallengesF) Main TTF Issues/Challenges

Raising awareness about the TTFRaising awareness about the TTF

Conflicting Objectives? - Revenue collection vs. facilitationConflicting Objectives? - Revenue collection vs. facilitation

Interagency Cooperation /CoordinationInteragency Cooperation /Coordination

Cross Border CooperationCross Border Cooperation

Dialogue with the private sectorDialogue with the private sector

Transparency regarding procedures/requirementsTransparency regarding procedures/requirements

Involvement of different government levelsInvolvement of different government levels

Agreement on/definition of performance indicators & targetsAgreement on/definition of performance indicators & targets

Keeping Automation simpleKeeping Automation simple

Cultural changes—Selective examinationCultural changes—Selective examination

G) Response to the ChallengesG) Response to the Challenges

Memorandum of Understanding and Regional Steering Memorandum of Understanding and Regional Steering CommitteeCommittee

Raising awareness : user survey, partnership with professional Raising awareness : user survey, partnership with professional associations and Chambers. associations and Chambers.

Performance measurement using clearly defined indicatorsPerformance measurement using clearly defined indicators

Top-down (strategy) and bottom up approach (pilot sites)Top-down (strategy) and bottom up approach (pilot sites)

Regional website Regional website ((www.ttfse.orgwww.ttfse.org) ) to provide to provide procedures/requirements onlineprocedures/requirements online

Stimulate exchange of experiences to induce cultural change Stimulate exchange of experiences to induce cultural change (advance declarations, selective processing, opening hours, (advance declarations, selective processing, opening hours, reducing opportunities for bribes…reducing opportunities for bribes…

H) Measuring Performance and Setting H) Measuring Performance and Setting TargetsTargets

www.seerecon.org/ttfse//RegionalInitiatives/TTFSE/TTFSE_Manual.pdfwww.seerecon.org/ttfse//RegionalInitiatives/TTFSE/TTFSE_Manual.pdf

Customs/clearance efficiency indicators (MOF focus)Customs/clearance efficiency indicators (MOF focus)

-- 6 measures of Customs performance/clearance6 measures of Customs performance/clearance

-- Allow for comparison (over time, regional)Allow for comparison (over time, regional)

-- Close attention needed in collectionClose attention needed in collection

Pilot site indicators (Trade Facilitation focus)Pilot site indicators (Trade Facilitation focus)

-- National Customs collecting data regionally and measuring the overall processing National Customs collecting data regionally and measuring the overall processing (from entry to exit)(from entry to exit)

-- Three indicators linked to covenants : Three indicators linked to covenants : Percentage of vehicles cleared in less than 15 Percentage of vehicles cleared in less than 15 minutes; percentage of declarations inspected; trucks opened at border. minutes; percentage of declarations inspected; trucks opened at border.

- Constant attention required to collect meaningful and comparable data while staff Constant attention required to collect meaningful and comparable data while staff rotatesrotates

Target set based on initial data measurementTarget set based on initial data measurement

I) Select Features of TTFSE ProjectsI) Select Features of TTFSE Projects

Highly client- and context-dependent Highly client- and context-dependent

Project cost from US$ 11 m to US$27 million Project cost from US$ 11 m to US$27 million

From 12 months to 24 months to prepare (identification-board)From 12 months to 24 months to prepare (identification-board)

From US$160 k to US$400 k to prepare, US$70 to 90k to supervise From US$160 k to US$400 k to prepare, US$70 to 90k to supervise per year (quite intense supervision)per year (quite intense supervision)

Regional economies of scale (surveys, training...)Regional economies of scale (surveys, training...)

One Program Team Leader, two TTL, one Sr. Customs Specialist, One Program Team Leader, two TTL, one Sr. Customs Specialist, one Institutional Specialistone Institutional Specialist

J) Tools AvailableJ) Tools Available

Global Facilitation Partnership-Facilitation Audit Toolkit at Global Facilitation Partnership-Facilitation Audit Toolkit at http://wbln0018.worldbank.org/twu/gfp.nsf http://wbln0018.worldbank.org/twu/gfp.nsf and related questionnaireand related questionnaireExample of facilitation audit carried out in the Caucasus at Example of facilitation audit carried out in the Caucasus at http://lnweb18.worldbank.org/eca/eca.nsf/d1e666886eb626e2852567d100165168/5dde058b18a92ca585http://lnweb18.worldbank.org/eca/eca.nsf/d1e666886eb626e2852567d100165168/5dde058b18a92ca5852568fc005bfaec?OpenDocument 2568fc005bfaec?OpenDocument

User survey : User survey : http://www.seerecon.org/RegionalInitiatives/TTFSE/ttfse-interim-http://www.seerecon.org/RegionalInitiatives/TTFSE/ttfse-interim-report.htmreport.htm

Performance Measurement ManualPerformance Measurement Manual

PRO-Committee definition and relation among participantsPRO-Committee definition and relation among participants(www.seerecon.org/ttfse site)(www.seerecon.org/ttfse site)

Sample tender documents at TransweblibraryecaSample tender documents at TransweblibraryecaNumber of Distance learning programs to be available Number of Distance learning programs to be available shortly under the GFP-DLI shortly under the GFP-DLI (road transport, forwarding, supply chain (road transport, forwarding, supply chain management…) www.gfp-dli.org management…) www.gfp-dli.org

K) Building Partnership with Private SectorK) Building Partnership with Private Sector

Essential for sustainabilityEssential for sustainability

Raise awarenessRaise awareness

Contribution (1Contribution (1stst year $150k grant, $150k local contribution) year $150k grant, $150k local contribution)

Draw on existing structure and initiative (local and international) Draw on existing structure and initiative (local and international) and support their strengthening (institutionalized but flexible)and support their strengthening (institutionalized but flexible)

Support public-private dialogue with direct private sector Support public-private dialogue with direct private sector contribution through professional associations/ Chambercontribution through professional associations/ Chamber

NGO to organize debate/training/and structure available NGO to organize debate/training/and structure available information (see www.ttfse.org)information (see www.ttfse.org)

Organize professional certification (IRU/FIATA)Organize professional certification (IRU/FIATA)

L) Regional or National?L) Regional or National?

Regional ties with individual country projects highly Regional ties with individual country projects highly preferablepreferable– Economies of scaleEconomies of scale– Generate increased cooperation/competition Generate increased cooperation/competition – Stronger potential support from donorsStronger potential support from donors– Joint training programs to give access to opportunitiesJoint training programs to give access to opportunities– Replication of successful experiencesReplication of successful experiences

But Regional is complex (frequent staff change, political But Regional is complex (frequent staff change, political instability) and requires strong commitment across all instability) and requires strong commitment across all countries.countries.

Opportunities to cooperate across regions as well Opportunities to cooperate across regions as well Caucasus/Iran/Central Asia/Afghanistan.Caucasus/Iran/Central Asia/Afghanistan.

Lessons LearnedLessons LearnedCommitment by high levels of government and the need for a Commitment by high levels of government and the need for a champion are vitalchampion are vital

Start small with pilot projects setting reasonable targetsStart small with pilot projects setting reasonable targets

(different targets for different countries) and scale up/replicate(different targets for different countries) and scale up/replicate

Success requires an active and proactive role from the private sector Success requires an active and proactive role from the private sector (pro committees)(pro committees)

Performance targets are necessary for monitoring progressPerformance targets are necessary for monitoring progress

Regional nature of the project creates peer pressure among countries Regional nature of the project creates peer pressure among countries as well as opportunities learn from one another.as well as opportunities learn from one another.

Implementation will be complex; expect it and plan for it!Implementation will be complex; expect it and plan for it!

Customs will be more effective and efficient using selective Customs will be more effective and efficient using selective examination.examination.

Physical investment at border crossings may be necessary but not Physical investment at border crossings may be necessary but not sufficient for reaching the desired levels of efficiency.sufficient for reaching the desired levels of efficiency.

Trade facilitation reforms need a change in culture which takes timeTrade facilitation reforms need a change in culture which takes time

Thank you!Thank you!

M. Baher El-HifnawiM. Baher El-HifnawiSr. Transport EconomistSr. Transport Economist

The World BankThe World BankMelhifnawi@worldbank.orgMelhifnawi@worldbank.org

The World Bank