70. The Colombia Trade Logistics Advisory Program (564767) was approved on 30 September 2008. The project has centered on helping the Government of Colombia (GOC) to strengthen an existing on-line system for import and export licenses and to establish a comprehensive risk management system for the inspection of goods entering and existing the country. The total budget for the project is US$ 1.2 million.125 Through 30 June 2011, IFC had spent a total of roughly US$720,000. The project was scheduled to end in December 2010, but is still ongoing.
Background
71. The GOC has been taking steps to improve trade procedures for some time. For example, in December 2004, the Ministry of Trade, Industry and Tourism (MTIT)126 issued a decree (Decree 4149 of 2004) that aimed to streamline trade procedures. 127 The decree, inter alia, called for the following:
Establishment of the Single Window for Foreign Trade (Ventanilla Unica Comercio Exterior – VUCE) – a web-based system through which businesses could obtain all licenses, permits, certificates and other authorizations needed for importing and exporting.
Adoption of a single electronic form (FUCE) that businesses could use to register with different control agencies that would be linked to VUCE.
Establishment of an electronic link to the databases maintained by DIAN (Registro Unico Tributario) and by the Chambers of Commerce (Registro Unico Empresarial).
Adoption of simultaneous physical inspection of goods entering and leaving the country through ports, airports and border crossings.
72. The decree placed authority for VUCE under the Ministry of Trade, Industry and Tourism (MTIT/MCIT) and instructed that resources for the development of VUCE and related systems be made available through the "Connectivity Agenda Program." MCIT subsequently hired two companies to develop the software application for the VUCE system. The import module developed by SERTISOFT was launched in 2005 and the export module and single form module developed by a consortium led by Microsoft were launched the following year.
73. In May 2008, the GOC issued another decree (Decree 1520 of 2008) calling for the simultaneous physical or non-intrusive inspection of goods entering or leaving the country.128 As part of this process, the decree required the establishment of systems to share information among the relevant control agencies and automate scheduling of inspections.
74. Doing Business 2008 suggests that Colombia made substantial progress in improving trade logistics. It showed the country jumping 36 places in “Trading across Borders” from 141st in 2007 to 105th in 2008. The report attributed this improvement to an increase in port operating hours and the adoption of more selective
125
Figure includes roughly US$100,000 of parallel funding from the Government of Colombia. 126
Ministerio de Comercio, Industria and Turismo (MCIT) 127
CIC/FIAS was not involved in the issuance of Decree 4149 of 2004. 128
customs inspection in Cartagena.129 The reform memo prepared by the Doing Business Reform Advisory (DBRA) team recommended that GOC take further steps to consolidate various trade documents into a single customs declaration form and to improve the roads between Bogota and the Port of Cartagena.130
75. After the release of Doing Business 2008, the GOC expressed interest in receiving assistance from IFC/WB on efforts to streamline administrative procedures and increase transparency in trade. In response, the Trade Logistics Advisory team conducted a two-day “scoping mission” in Colombia in early April 2008.131 The team met with an informal working group previously established by the GOC to coordinate activities related to VUCE, which was chaired by the Director of Foreign Trade in the Ministry of Trade, Industry and Tourism. The team also met with representatives of other agencies and business associations. While substantial work on VUCE had already been completed, implementation of the system had not progressed as rapidly or as smoothly as the GOC wanted. Of particular concern was the lack of functional connections between the “back office” operations of control agencies and VUCE.132 In addition, the GOC recognized that effort was needed to establish a better risk management system to govern the physical inspection of goods at the ports, airports and border crossings. The need to strengthen VUCE and risk management was motivated by the government’s interest in increasing efficiency and transparency as well as by its need to meet specific requirements under the pending Free Trade Agreement (FTA) with the United States.133
76. In August 2008, the Minister of MTIT, Luis Guilliermo Plata Paez, sent a letter to Pierre Guislain (CIC) requesting assistance. Specifically, the letter asked CIC/FIAS to provide help with the following: VUCE: optimize and align processes of control agencies in order to achieve greater efficiency; and
evaluate, recommend and implement a “software solution” to integrate the internal systems of control agencies with VUCE in order to reduce response time.
Inspections: help implement international best practices for simultaneous physical inspection of goods; explore options to implement an integrated risk-profiling system; identify information that should be shared among control agencies with the aim of building an information system to improve risk analysis; and develop a single payment point for inspections fees.
77. Approximately one month later, IFC approved the advisory services project in Colombia. The AS-PDS Approval document states that the government “requested assistance for filling specific gaps and helping with implementation to make their systems fully functional, modern and integrated.”134 In keeping with the
129
Doing Business in Colombia: Reform Memo, December 2007 130
Ibid. 131
AS-PDS Approval, Version 1, 30 September 2008. 132
Written comments, 28 June 2011. 133
Chapter 5 – Customs Administration and Trade Facilitation – of the FTA includes the following provisions with respect to information technology and risk management: Article 5.3 literal B - Each Party shall endeavor to use information technology that expedites procedures for the release of goods. When deciding on the information technology to be used for this purpose, each Party shall: make electronic systems accessible to customs users; Article 5.3 literal C - provide for electronic submission and processing of information and data before arrival of the shipment to allow for the release of goods on arrival; Article 5.3 literal D -- Each Party shall endeavor to use information technology that expedites procedures for the release of goods. When deciding on the information technology to be used for this purpose, each Party shall: employ electronic or automated systems for risk analysis and targeting; Article 5.3 literal F -- work towards developing a set of common data elements and processes in accordance with World Customs Organization (WCO) Customs Data Model and related WCO recommendations and guidelines; Article 5.4 -- Each Party shall endeavor to adopt or maintain risk management systems that enable its customs authority to focus its inspection activities on high-risk goods and that simplify the clearance and movement of low-risk goods, while respecting the confidential nature of the information it obtains through such activities.
134
request of the GOC, it noted that the project would focus on two items: operationalize the single window system (VUCE) and rationalize the inspection regime.135 (See below for more detail.)
78. The AS-PDS Approval notes that the project represents the third “pilot” (first in a middle-income country) of the Trade Logistics Advisory Product approved by the IC Business Line Committee in July 2007.136 After “extensive consultation with CIC management and with LAC regional management” it was agreed that the pilot in Colombia would be undertaken “even though IFC priorities were not for middle income countries.”137 According to CIC/FIAS, it was felt that “more advanced technical/advisory work” would be possible in
Colombia, which could provide useful insights for work in other countries in the LAC region and elsewhere.138 79. The approval document goes on to say that the project is the “first joint pilot between FIAS and IFC’s LAC
Office for Advisory Service,” adding that one factor that boded well for the success of the project was the “partnership with LAC IFC facility ensuring continual presence on the ground” and the “clear coordination and partnership with PREM LAC and IBRD Colombia Country Manager.”139 With respect to the latter, the AS-PDS Approval states that the project will “complement” a WB PREM project being undertaken with the National Tax and Customs Administration (DIAN) to “support the redesign of customs procedures and HR reform.” 140
Project design and Implementation
Chronology
80. Table 17 provides a chronology of key events leading up and during the project.
135 Ibid. 136
The other pilots were in Rwanda and Liberia. Early Review no. 558505. 137
Written comments, 28 June 2011. 138
Ibid. 139
AS-PDS Approval, Version 1, 30 September 2008. 140
Table 17. Chronology
Date Event/Milestone
10 Dec. 2004 Decree 4149 of 2004 – Calls for establishment of VUCE, etc.
2005-06 GOC hires SERTISOFT and Microsoft—led consortium (later CENET). VUCE is developed and launched Dec. 2007 Doing Business in Colombia: Reform Memo prepared by DBRA
2-3 Apr. 2008 Trade Logistics scoping mission
9 May 2008 Decree 1520 of 2008 – Calls for simultaneous physical inspection by four agencies; MCIT is instructed to develop procedures manual within six months of the date of decree.
July 2008 Initial process mapping of control agencies undertaken by IFC team 11 Aug. 2008 Letter from MCIT to IFC requesting assistance
20 Sept. 2008 AS – PDS Approval
October 2008 Development of preliminary action plan for integration of control agencies’ systems with VUCE 3 Dec. 2008 Decree 581 of 2008 – establishes VUCE Steering/Technical Committees, etc.
Apr. 2009 Scoping mission on risk management component conducted in Bogota and Cartagena May 2009 IFC hires ASSENDA to conduct VUCE diagnosis and develop action plan
June 2009 Risk management workshop
24 July 2009 VUCE Project: Diagnostic and Plan of Action, Draft, ASSENDA 3 Sept. 2009 IFC and Government of Colombia sign Cooperation Agreement Dec. 2009 VUCE Project: Diagnostic and Plan of Action, Final, ASSENDA July 2010 Risk management workshop
3 Sept 2010 IFC and Government of Colombia sign amended Cooperation Agreement (1st Amendment) Nov. 2010 Risk management workshop
1 Nov. 2010 IFC hires TMS Corp. SA (Sertisoft) to make modifications to import module of VUCE Dec. 2010 Doing Business in Colombia: Reform Memo
31 Dec. 2010 IFC and Government of Colombia sign amended Cooperation Agreement (2st Amendment) 28 Feb. 2011 IFC hires CENET to make modifications to export module of VUCE
Source: Nexus Associates based on review of project documents
Project design
The project aims to reduce the time and cost of moving goods into and out of Colombia as measured by Doing Business.
81. The original PDS Approval document states that the project was expected to result in “streamlined and automated procedures” that will “increase transparency” and yield “cost savings to companies.” It was expected that this would result, inter alia, in the following: “increase in the volume of trade / increase share of exports in international markets; increase in investment in key tradable sectors; and increase in the number of firms engaged in key tradable sectors *…+ and/or growth in the size of business [sic] already established, resulting in more jobs.”141 No baseline data were provided in the PDS Approval document other than Doing Business 2008 (June 2007) indicators that were included in an Annex.
82. AS-PDS Approval (V2) uses the same language to describe the objectives of the project; however, it presents a new set of performance indicators agreed with the CIC/FIAS M&E team. Most of the indicators center on the number of recommendations adopted by GOC. However, the document also includes four indicators that are based explicitly on Doing Business as shown in Table 18. The approval document also anticipates a two percent reduction in the “cost of trading” as a result of the project. Baseline data presented in the approval document are roughly consistent with results reported in Doing Business 2009 (June 2008).142
141
AS-PDS Approval, Version 1, 30 September 2008. 142
The figures in the PDS Approval document differ slightly from the DB2009. Specifically, the Doing Business report shows the number of days required to import to be 15 rather than 14 as cited in the PDS Approval.
Table 18. Baseline and Targets Presented in PDS Approval Version 2.0
Indicator Baseline Target
Number of required documents related to trade logistics – exports 6 1 Average number of days to comply with business regulation – exports 14 12
Average official cost of trading - export (a) 1,690 1,656
Number of required documents related to trade logistics – imports 8 2 Average number of days to comply with business regulation – imports 14 12
Average official cost of trading - imports (a) 1,640 1,607
Notes: (a) The PDS approval document does not contain baseline or absolute targets for costs. The figures cited in the above table come from Doing Business 2009
Source: Nexus Associates based on PDS Approval Version 2.0
83. The objectives of the project were modified in June 2010143, roughly two years after its inception. The new language maintains the focus on reducing the time and cost of importing and exporting goods by
“streamlining procedures, documents and systems.” It notes that the project will concentrate on the main port of Cartagena with a secondary focus on three other seaports – Barranquilla, Buena Ventura, and Santa Marta. However, the baseline and targets for key indicators were changed. Specifically, the baseline was changed from Doing Business 2009 (data as of June 2008) to a year earlier – Doing Business 2008 (data as of June 2007). No explanation was provided for changing the baseline or targets. The figures cited in the PDS Approval are included in Table 19.
Table 19. Baseline and Targets Presented in PDS Approval Version 3.0
Indicator Baseline Target
Number of required documents to export 6 5
Average number of days to export 20 16
Cost to export $1,440 $1,425
Number of required documents to import 6 5
Average number of days to import 24 20
Cost to import $1,440 $1,425
Source: PDS Approval Version 3.0
The project is designed to be carried out in two phases.
84. While the objectives have been modified over time, the description of planned activities has remained unchanged as summarized in Table 20. Phase I was expected to be completed by 30 June 2009 and Phase II by 30 June 2010.
Table 20. Planned Activities
Phase Activities
Phase I –
Streamlining Import and Export
Processes
Map import and export processes
Identify “quick win” reforms that can be carried out by the GOC within 8-12 months “Validate” the proposed reforms through stakeholder workshops and develop an action plan Establish an M&E framework, including baseline indicators
Phase II – Integrating Streamlined Processes into VUCE
Support the GOC to help implement recommendations, including “aligning” back-office procedures Conduct an assessment of VUCE and assist with systems development
Assess the “risk-based approach used to allocate channels for inspection,” and provide assistance “on coordinating the agencies in the simultaneous and non-intrusive inspection.”
Source: Nexus Associates based on PDS Approval Version 1.0
143
The total budget for the project was originally set at US$837,500 and later increased to US$1.2 million.
85. As shown in Table 21, the original IFC-managed budget was set at US$630,000, including US$300,000 from Spanish Trust Fund, US$80,000 from FIAS Core Support, US$75,000 from FMTAAS, and US$175,000 from IFC LAC Office for Advisory Services. Another US$200,000 was to be provided by the GOC in “parallel” support and US$7,500 in in-kind support was expected from Analdex – an association representing businesses engaged in foreign trade. In January 2010, the budget was increased to US$1.2 million and allocations among funding sources were shifted. Significantly, as described in more detail below, the GOC agreed to contribute a total of US$350,000 to the project – US$250,000 in cash (COP 500 million) and US$100,000 in parallel support.
Table 21. Approved Budgets
AS-PDS Approval V1 (30 Sept. 2008)
AS-PDS Approval (28 Jan. 2010)
Funds managed by IFC
FIAS Core 80,000
IFC LAC 175,000 140,166
BEE Business Line 7,5000 72,472
Spanish TF (Govt of Spain) 300,000 500,000
Norway NTF-PSI 129,886
Government of Colombia – cash 250,000
Subtotal 630,000 1,092,524
Additional Contributions
Government of Colombia – parallel 200,000 100,000
Analdex – in-kind 7,500 7,500
Subtotal 207,500 107,500
Total Budget 837,500 1,200,024
Source: AS-PDS Approval
Project Implementation
VUCE
CIC/FIAS undertook a preliminary process mapping exercise to identify issues that required GOC action. 86. While the project was approved in September 2008, work began three months earlier in July. Between 16
and 24 July, the CIC/FIAS team144 visited the 18 control agencies and prepared a series of preliminary process maps for the agencies listed in Table 22. According to the team, “The mapping exercise revealed that there [were] different levels of automation among the agencies [...] Some agencies were very advanced in their automation (ICA, INVIMA), and some others still did all their trade transactions on paper (National Drugs Fund, Military Industry, XIII Brigade).”145 The process mapping was an internal exercise meant to inform the
144
This process mapping was done by Soren Lennartson, expert consultant for the Trade Logistics team of the World Bank Group and Andrea Feldman, who at that time was employed by ANALDEX. Written Comments, op.cit. Ms. Feldman later joined the CIC/FIAS team.
145 Ibid.
team and provide a basis for subsequent activities; while results were discussed with the GOC, no written report was delivered to the client.146
87. Based, in part, on the process mapping exercise, the team147 prepared a preliminary action plan ostensibly geared toward “quick wins” that could be implemented by the GOC within eight to 12 months as envisioned in the original project approval document.148 The action plan called for the official establishment of a Steering Committee and Technical Committee to oversee and coordinate the development of VUCE as well as the adoption of standard texts, safe server signatures, block signatures, and automatic responses. The action plan also outlined specific steps for six key control agencies – ICA, INVIMA, DNE, SIC, MinAmbiente, and Ingeominas – as summarized in Table 23. The decision was made in consultation with the government to focus on these six agencies because they are responsible for the highest volumes of licensing activity or handle sensitive goods.149
146 Ibid. 147
The action plan was drafted by CIC/FIAS team -- Soren Lennartson (expert) together with Natalia Cubillos and Andrea Feldman; with supervision/oversight by Uma Subramanian. Ibid.
148
VUCE Plan of Action, v2, 22 October 2008. 149
Table 22. Initial Assessment / Action Plan
Entity Status as of
Oct. 2008 Agreed Actions
Status as of Dec. 2011 Date Completed Legislation, If Required
ICA General The latest version of SYSAP began to work with the Government Online System
Monitor integration activity and resolve problems with the
performance of the network (RAVEC) Jun. 2009 Export The Web service between VUCE-SYSPAP is
functional (for export operations)
Assign an officer to fill the vacant position to provide digital
signatures for export procedures Jun. 2009 Import Operates manually with VUCE Introduce a web service to enable SYSPAP import module to
communicate with VUCE Mar. 2011 Circ. 05 2011
INVIMA Export Operates manually with VUC INVIMA prints their own certificates
Assign an officer to fill the vacant position to provide digital
signatures for export procedures Jun. 2009 Introduce a web service to enable Health Registry to
communicate with VUCE
Auto-generate information in VUCE about printed certificates
Import Operates manually with VUCE Introduce a web service to enable Health Registry tocommunicate with VUCE Apr. 2011
Circ. 05 2011 Eliminate the "mini-VUCE" once the web service is operational Mar. 2009
General Request extracts of payments periodically Develop new message from VUCE to inform of payment
statements. n/a
MINAMBIENTE
Export Operates manually with VUCE, although the two systems are compatible
Introduce a web service to enable SILA to communicate with