World Bank withdraws BoC support

THE World Bank has withdrawn its support for the modernization of the Bureau of Customs (BoC), citing legal issues, institutional capacity constraints, and the program’s slow progress.

In a note dated Dec. 27, the multilateral lender said it has pulled out its $88.28-million or P4.3-billion financing for the Philippines Customs Modernization Project (PCMP).

In October 2020, the World Bank’s board of executive directors approved its loan for the project designed to improve the BoC’s efficiency and lower trade costs.

The program was intended to support traders, exporters, importers, port operators, shipping companies, and transport providers.

It took effect on Jan. 28, 2021, and was launched on March 26 of the same year. It was later restructured in June 2022 as the World Bank updated the results framework and its monitoring and evaluation plan for the project’s key indicators.

A temporary restraining order issued before the project’s implementation prevented the BoC from procuring its customs processing system (CPS) and eventually stalled the project’s progress.

“This legal dispute created uncertainty in the viability for the entire project, given the relative importance of the CPS, and halted progress on essential ICT (information and communications technology) investments at the core of the modernization of customs,” the World Bank said, adding that the BoC and the Department of Finance later canceled the project amid a negative outlook on the issue.

The World Bank also noted that the project was delayed as Customs encountered issues with its staff.

It likewise attributed the program’s cancellation to slow disbursement and low resource utilization, noting that only 5% of the fund had been released by the time of the cancellation.

“The cancellation of the PCMP reflects the complex interplay of procurement, institutional, and legal challenges in large-scale ICT modernization projects,” the World Bank said. “The lessons learned from this experience should inform future operations in the Philippines and similar contexts, emphasizing the need for robust risk management, capacity building, and adaptive project design.”

The Customs modernization program costs $104.38 million or P5.45 billion. — Katherine K. Chan