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Manila Bulletin devider Business devider World Bank pulls loan for Philippine customs amid legal challenge

World Bank pulls loan for Philippine customs amid legal challenge

Published Dec 22, 2024 08:20 pm

FOR MONDAY

An ongoing court battle has forced the Philippine government and the World Bank to cancel a loan aimed at speeding up customs processes.

The World Bank disclosed on Dec. 20 that the Philippines Customs Modernization Project, for which the Washington-based multilateral lender committed $88.28 million back in 2020, is "no longer viable."

"The lawsuit filed by Omniprime, an unsuccessful bidder under a different, non-IBRD [International Bank for Reconstruction and Development]-related customs processing modernization project, has prevented the Bureau of Customs (BOC) from procuring the customs processing system (CPS), [which] was the project's most important activity," the World Bank noted. The IBRD is the World Bank's lending arm for developing country clients like the Philippines.

The World Bank added that the BOC last May decided to cancel this project via a letter addressed to its supervising agency, the Department of Finance (DOF), as the country's second-biggest revenue collector deemed the court case as "without a foreseeable resolution."

On top of this legal impediment, the World Bank cited that it took the BOC two years to procure its project support and quality assurance (PSQA), such that this project "suffered from multi-faceted delays."

Last November, the DOF confirmed the BOC's proposal to cancel the project, leading to the World Bank's decision to also end its loan.

Since the BOC already disbursed $4.48 million or 5.1 percent of the loan since project launch in 2021, the World Bank requested the Philippine government that "any remaining unspent amount on the designated account upon project closing will be returned to the IBRD within four months of project closing." The current closing date is on June 30 of next year.

In a separate Dec. 20 implementation status and results report, the World Bank said this project's overall implementation progress is "unsatisfactory," while its overall risk rating is "high."

"Only the PSQA activity, along with the acquisition of information technology (IT) equipment, was under implementation to date," the World Bank pointed out.

The World Bank also rated as "unsatisfactory" the progress towards achieving the project's development objective of improving the BOC's efficiency to ultimately reduce trade costs.

When the World Bank green-lit this loan four years ago, the Philippines targeted to slash the time to import and export to 80 and 30 hours, respectively, by 2025.

Back then, importation processes handled by the BOC were 120-hours long, while exportation took 42 hours.

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Bureau of Customs (BoC)
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