Easing Access to Global Markets: Trade Logistic Project in Colombia

Transcription

1 Sistema Económico Latinoamericano y del Caribe Latin American and Caribbean Economic System Sistema Econômico Latino-Americano e do Caribe Système Economique Latinoaméricain et Caribéen Easing Access to Global Markets: Trade Logistic Project in Colombia Uma Subramanian Program Manager, Trade Logistic Investment Climate Department First Latin American and Caribbean Regional Meeting on Internacional Trade Single Windows Santafé de Bogotá, Colombia 25 y 26 March 2010 SP/MCIT/I-ERLC-VUCE/Di N Investment Climate Advisory Services

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3 Easing Access to Global Markets: Trade Logistics Project in Colombia Uma Subramanian Program Manager, Trade Logistics Investment Climate Department, Washington March 2010

4 What is the rationale for the Trade Logistics Advisory Program? Overarching rationale Globalization and the desire to be part of global networks Attracting private investment is a key objective for developing countries Faster, leaner & responsive supply chains that are essential for Improving export/trade performance Improved export competitiveness 2 Governments and private sector energized to improve trade logistics services

5 What is the focus and business model? Objective to assist countries improve access to markets through efficient, easy and accountable import and export procedures Focused and targeted areas of work: Simplification and harmonization of procedures including documentation Risk-based management systems for inspections Automation/ Single Window Systems for trade Identifies quick wins to jump-start deeper systemic reforms in response to client demands Explicit focus on investment climate with strong synergies with WBG departments and potential IFC investments (cold chains, ports, etc.), trade finance and others Ties results to objective outcome measurements. Examples: time, cost, number of signatures, number of documents, percentage of containers inspected. Ex-ante articulation of feasibility vs. relevance matrix with framework to measure Cost- Benefit ratio 3

6 Trade Logistics Advisory Program: Delivery Models Rapid Response Catalyze reform momentum through quick wins and high level championship (1 year program) Systemic Reform Regional Solutions Full Fledged projects and Solutions to systemic issues (3-4 years) Colombia Regional framework combined with country level implementation Greater reach and cost-effective solutions Caribbean 4

7 Highlights Since July 2007, 54 reforms achieved in 4 countries Early pilots received Corporate Performance Awards: Caribbean Liberia, Mali, Burkina Faso SEE Armenia Kazakhstan (Pre-pipeline) Honduras (Pre-pipeline) Colombia Peru Rwanda EAC Kenya, Uganda, Tanzania, Rwanda, Burundi 5

8 Reducing Transactions Time Has a Direct Impact on Trade A 10% reduction export time Increases Export of by Sub Saharan Africa 6.1% South Asia 5.8% East Europe & Central Asia 5.0% Middle East & N. Africa 4.1% East Asia and Pacific Islands 4.1% Latin America and Caribbean 3.5% OECD 1.7% For Colombia this is equivalent to US $740 millions At a global level this implies increased trade by over $600 billions Direct implications for growth, private investment, jobs and poverty reduction 6 Source: Forthcoming research paper (Subramanian, Anderson and Lee (2010)

9 Measuring Results in Colombia What does this reduction in time to trade mean for one Colombian firm? Time to Trade (days) Exports Imports Even conservative partial estimates of direct cost savings to a medium sized firm with $150 million revenue is $3.5 million Inferred value for the industry: $28 million Estimates of direct cost savings to a fertilizer plant with $260 million revenue is $2.7 million This includes: reduced inventory holdings (raw, intermediate, finished) in storage and reduced capital carrying charge in transit, and cargo loss/damage. Indirect benefits such as induced growth would add to this benefit well in excess of the estimates above. 7 Source: Ongoing research (Subramanian (2010))

10 Domestic logistics costs: Disproportionate burden on small firms Less than US$ 5 M US$ 5 M to US$ 50 M US$ 50 M to US$ 500 M More than US$ 500 M Inventory Management & Warehousing Transport & Distribution Source: Centro Logístico de Latinoamerica, Bogota, Colombia. Benchmarking 2007: Estado de la Logística en America Latina Anexo, María Rey LogisticSummit 2008

11 Supply Chain Analysis of Pineapples Imported into St. Lucia 60% of the landed cost is due to transportation and logistics US$/lb Ocean Transport + Port SL Duties Land Transport & Handling Land Transport + Storage Retail Profits + Other Costs 90% Landed cost Producer Price Land Transport Ocean Transport + Port CR Wholesale Consolidated Port Cost Miami Other Costs 10% Farm Gate price 0 Farm Gate (CR) CR FAS Ocean to Miami Miami Port Miami Miami FOBOcean to St. St. Lucia PortWholesale DistributionRetail Price Warehouse Price Lucia Costa Rica (CR) > > St. Lucia (SL) Source: Logistics, Transport and Food Prices in LAC (2009) and OECS Backward Linkages Study (2008)

12 Logistics burden: Wheat Supply Chain Saskatchewan, Canada to Quito, Ecuador US cents/kg % Milling Costs 55% Transport and Logistics costs % Farm Gate Price 0.00 Farmgate, Canada Ecuador Mill Customer (Quito) Saskatchewan Source: Logistics, Transport and Food Prices in LAC (2009)

13 Trade Logistics -- links with infrastructure and industries Tourism accounts for X% of GDP in the Caribbean! Efficient logistics implies easy access- a key factor for successful tourism destination! IFC: Investments in logistics parks, cold chains, warehouses, ports, ICDs WB: Lending projects for roads, transit facilitation, rail, ports Strong links: Logistics costs are a significant addition to landed costs of agribusiness commodities; big adverse effect on firm competitiveness 11

14 Genesis for the Trade Logistics Project in Colombia Request from the Government of Colombia through the Ministry of Trade, Industry and Tourism US Free Trade Agreement (FTA): Increasing demand for legitimate trade, traffic and travel to move seamlessly. Regional FTAs (Canada, Mexico, Chile, and Centroamerica) 2004 Presidential decree: mandating Single Window for Trade, Days Days Document Preparation Customs Time to export Terminal Handling Time to import Inland Transport Doing Business traction (3rd consecutive year in the top 10 reformers in the world and top reformer in the region) 10 0 Document Preparation Customs Terminal Handling Inland Transport Source: DB 2009

15 Colombia Trade Logistics Program 1. Operationalize Single Window for Foreign Trade (VUCE) Simplification and alignment of the technical control agencies processes and procedures with VUCE Systems integration (19 agencies) Launched in Sept Rationalize Inspections regimes in seaports Introduction of simultaneous non-intrusive inspections Creation of an integrated risk management system for inspections Launched in March

16 Colombia Program Team Effective implementation required strong championship and partnership from the government and equally strong partnership with private sector. (IC-AS, IFC) Ministry of Trade, Industry and Tourism 18 Government agencies Implementation Technical assistance Private Sector Monitoring and evaluation of results 14

17 Coordination essential 15

18 Improvements to the Colombian Single Window VUCE Accomplished 15 specific reforms since launch in 2008 Government has issued more than 25 different pieces of legislation solely aimed at facilitating trade Implementation of quick wins has decreased time in most export approvals by as much as 30% Phase 2 will be launched in April

19 Issues identified Findings from ASSENDA Uneven levels of systems development makes it difficult for smooth integration with VUCE. Incomplete processes Connectivity issues Interoperability issues among systems within agencies, across agencies and the VUCE 17

20 VUCE- Looking Ahead Implementation of BPM (Business Process Management) Updating the back-office and improving the procedures of the 18 technical control agencies connected to the VUCE Single Window for Foreign Trade VUCE- will be fully integrated and functional by 2011 Savings in transactions time to trade and transparent procedures - directly enhancing competitiveness of Colombian firms 18

21 Monitoring and Impact Evaluation Framework Time Cost # Documents 19 Performance Indicators For VUCE Component: Response rate (applications answered as percentage of total number of applications) Average response time for applications (calendar days and working days) Number of system failures per month and per monthly transactions Help desk performance (number of complaints, average response time, etc) For Inspections Component: Percentage of inspections Rate of positive results from inspections Rate of simultaneous inspections Percentage of containers using non-intrusive inspections equipment (e.g. scanners) Firm level: Impact Indicators Reduction in inventory costs and carrying costs of goods in transit Reduced losses due to damaged or lost merchandise Lower rejection rate at destination Reduction in personnel costs Economy level: Increase in volume of trade / share of exports in international markets Increase in investments in trade logistics infrastructure Increase in private investments in key sectors Increase in productive jobs in key tradeable sectors

22 What have we learned in Colombia? Strong government commitment driving the reform momentum Effective public-private dialogue has allowed for greater momentum in the implementation of reforms. All parties feel part of the decision and implementation process. Clear communication at all levels of government keeps people informed in a transparent manner. Government has requested broadening the initial scope of the program given the effectiveness of the program in demonstrating results. Facilitate internal champions to support reforms: through strong communication among stakeholders at all levels 20

23 Gracias! 21