Aide Memoire – [March 4, 2016]
LAO PEOPLE’S DEMOCRATIC REPUBLIC
AIDE MEMOIRE Implementation Support Mission for the Customs and Trade Facilitation Project (P101750 IDA Grant H4030-LA/H8430-LA) February 8-12, 2016 in Vientiane Public Disclosure Authorized
KEY PROJECT INFORMATION Project Number P101750 Board approval date June 17, 2008 Project closing date June 30, 2017 Disbursement as of February US$ 8.6 million 2016 Total Grant Amount US$12.5 million Grant number H4030-LA/H8430-LA
I. INTRODUCTION
1. A World Bank Group team carried out a project implementation support mission for the Customs and Trade Facilitation Project (CTFP) in Vientiane Capital during the period February 8- 12, 2016.
Public Disclosure Authorized 2. The key mission objectives were to: review implementation performance and quality of activity outputs of the project, including pace of disbursements and the likelihood of achieving development objectives and results before the scheduled closing date June 30, 2017; assess the implications of the funding gap (due to SDR losses) that may have an adverse impact on overall project implementation; review progress and the quality of implementation of Customs Automation Support (Component A) and Organizational Development (Component B) for Lao Customs Department (LCD); obtain project progress data and update the result framework indicators; and take stock of Lao Customs Department’s initiative to improve law enforcement and anti-smuggling on illegal trade of wildlife and timber.
3. The team would like to express its sincere thanks to Dr. Athsaphangthong Siphandone Public Disclosure Authorized (Director General, LCD) and Mr. Bounpaseuth Sikounlabout (Deputy Director General, LCD) for their guidance and cooperation during the mission. The mission would also like to express its thanks to Lao Customs staff at Thanaleng Customs Checkpoint, Lao-Thai Friendship Bridge 1 Customs Checkpoint and the Project Implementation Unit for their support.
4. This Aide Memoire details the mission findings and agreed next steps related to implementation of all activities in CTFP. According to the World Bank's Access to Information Policy, Aide Memoires are to be publicly disclosed unless otherwise indicated by counterparts. The disclosure of the Aide Memoire was discussed and agreed to during the mission with LCD representatives.
II. OVERALL IMPLEMENTATION STATUS AND MANAGEMENT PRIORITIES
Public Disclosure Authorized 5. Implementation Status. The overall progress of project implementation is on track and remains “Satisfactory” to meet the Project Development Objective (PDO). As of February 11, 2016, the overall project disbursement stands at 69% for the total grant US$12.5 million; of which the additional financing grant US$6.5 million has reached a disbursement level of 43%. LCD completed all agreed actions identified during the last mission in August 2015, and made good progress of
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delivering key project outputs. The ASYCUDA 1 World is now in operation at 21 customs checkpoints nationwide, and is reported to be functioning in a reliable and stable manner in facilitating almost 99 percent of formal trade in Lao PDR. The key functions including automated selectivity system, revenue reconciliation and trade statistics are in live operation. Customs operational procedures have been standardized at all major border checkpoints. As part of the disaster recovery efforts and business continuity plans, LCD completed the establishment of the Disaster Recovery Center (DRC) at Thanaleng Customs Checkpoint with a fast fiber-optic link to Customs HQ. The first set of back-up ASYCUDA World server equipment has already been relocated in the DRC. LCD completed the installation of the first lot of back-up generators in six locations that have high volumes of trade but are vulnerable to power outages. The back-up generators are in place to ensure that the ASYCUDA World kiosk, customs clearance facilities can be operated without disruption to service the trading community. Some areas in rural and mountainous regions are more vulnerable to electrical outage due to the poor transmission grid and seasonal climate condition. Prior to the generator upgrade the duration of a typical electrical outage was reported at around 2-3 hours with a frequency of about 2-3 times a month2.
6. Additional good progress has been made in capacity building and customs modernization since the previous mission in August 2015. LCD completed all procurement actions agreed during the previous mission by the end of November 2015. All large technical assistance packages including customs capacity enhancement program and the customs training center development have already commenced. Initial work has centered on establishing the required counterpart team to work with the various component experts and on discussing specific activities, deliverables, and timeframes for each component of the assignment. The inception phase of these assignments has now been completed and the overall work program has been discussed and agreed with LCD management. Inception reports on customs training center development program (CS-8) and customs capacity enhancement program (CS-12) were delivered on time and are of good quality, acceptable to the Lao Customs Department. The inception phase for customs legal support and Time Release Study (TRS) has now commenced.
7. Management Attention. Important project challenges include performance of key contractors and contract management issues. The mission highlighted serious concerns over limited progress of ASYCUDA World support and maintenance. The considerable delay with poor and unpredictable performance of the UN Agency—United Nations Conference on Trade and Development (UNCTAD) - pose serious threats to the reliability and sustainability of the ASYCUDA World implemented by Lao Customs. Such delays in required support represent a significant continuing operational and technical risk to the reliability of the ASYCUDA World. Operationally, this is an untenable situation for LCD and potentially threatens the movement of goods (imports and exports) across Lao PDR’s borders. Technically, the ASYCUDA World has several dependencies on the system upgrade to resolve a number of bugs and improve overall stability. Noting that this project will be closed by June 30, 2017, the mission recommends that LCD ensures an effective and efficient management of contractors with attention to output quality and delivery. The high quality and timely delivery of outputs are crucial for the project to achieve its PDO. In respect to addressing the above challenges and concerns, the mission agreed with LCD on a series of follow-up actions listed in ANNEX 3.
1ASYCUDA refers to Automated SYstem for CUstoms DAta, developed and managed by UNCTAD. 2 World Bank Enterprise Survey in Lao PDR (2012) 2
Aide Memoire – [March 4, 2016]
III. STATUS OF PROJECT COMPONENTS
8. The Customs and Trade Facilitation Project (CTFP) is financed by the International Development Association (IDA) with a total grant of US$ 12.5 million, of which US$6 million (effective on October 20, 2008 and closed in December 31, 2013) and an additional financing of US$6.5 million (effective on May 28, 2013 and will close on June 30, 2017). CTFP is implemented by Lao PDR Customs Department of the Ministry of Finance. The PDO is to facilitate trade by improving the efficiency and effectiveness of customs administration and simplifying customs procedures to eliminate duplication and redundancy, reduce transactions costs and time to clear goods, and increase transparency and accountability. CTFP has two components: (a) Automation support (including implementation of ASYCUDA World); and, (b) Organizational development (including customs modernization support).
Component A: Automation Support (including Implementation of ASYCUDA World)
9. ASYCUDA World Implementation, Support and Maintenance. The support and maintenance contract with UNCTAD was signed in March 2015 and an inception mission was carried out by UNCTAD in early June 2015. LCD has identified 25 specific support and maintenance activities that need to be undertaken by UNCTAD as part of the agreement. After considerable delays and ongoing negotiations between LCD and UNCTAD, a work plan to resolve these issues and upgrade the ASYCUDA World system to the most current release was agreed in August 2015. The upgrade was scheduled to be completed by Q3 2015 (September). While UNCTAD began to work on the test environment, the work was neither completed satisfactorily nor was it moved over to a production footing. After repeated requests from LCD, UNCTAD further committed to sending their technical resource person to Vientiane Capital from February 9 – 23, 2016 to resolve outstanding issues as well as to upgrade the production environment to the latest release of the ASYCUDA World. This site visit by UNCTAD’s Technical expert was unexpectedly cancelled by UNCTAD on February 5, 2016. LCD informed the mission that they were concerned that UNCTAD was not meeting the terms of the ASYCUDA World support and maintenance agreement, and that this represents a significant continuing risk to the operation and reliability of the system. With the exception of the single inception mission, all other activities and milestones that were agreed and documented in the agreement have not been carried out or met. This is an untenable situation for LCD and potentially threatens the movement of goods (import and export) across Lao’s borders. The mission strongly urges LCD to document its concerns carefully and seek rapid resolution with the highest levels of management in UNCTAD.
10. ASYCUDA World Upgrade. LCD informed the mission of the urgent and critical need to upgrade the AW system to the latest release. This upgrade is expected to resolve a number of bugs and improve overall stability. Additionally, the upgrade will provide more functional versions of certain modules (e.g. Valuation) that LCD is anxious to implement. The upgrade is also on the critical path for a number of other LCD activities. These dependencies are detailed as appropriate in the following paragraphs. Of greater concern, however is the finding by the LCD IT team that the ASYCUDA World system (both the current production system and the version to be upgraded to) is built on Java version 6. This version has a number of documented major security vulnerabilities and is no longer supported by Oracle. This potential security flaw is preventing LCD from offering access to ASYCUDA World through the internet. According to LCD, UNCTAD has not confirmed a timeframe for ASYCUDA World to upgrade to a more secure Java version 7 or 8. The mission
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concurs with LCD’s concerns and recommends that LCD delay offering internet access to ASYCUDA World until these security flaws are addressed.
11. Strategic ICT capability development. The focus of the capability development to date has been to implement the core systems and processes that underpin the deployment of any ICT business system in Government. This includes a properly configured and managed network, data backup and recovery and disaster recovery measures, data security systems, virus detection and prevention. The majority of this work has been completed and the ICT infrastructure for LCD has been stabilized and has been operating in robust and reliable manner.
12. Disaster Recovery Center and Business Continuity. The refurbishment of the DRC in Thanaleng Customs Checkpoint has been completed. All necessary equipment has been procured, delivered and installed. LCD has obtained a fast fiber-optic link between Customs HQ and the DRC site in Thanaleng Customs Checkpoint. This link has also been extended to the Customs Training Center located approximately three kilometers away. The DRC is currently in the commissioning phase with the final pieces of equipment being relocated from the HQ data center. The DRC is expected to be fully operational by February 29, 2016.
13. Back-up Generators. The first lot of back-up generators were procured, delivered and installed at 6 locations (Lao-Thai Friendship Bridge 1 Customs Checkpoint, Boten Customs Checkpoint, Boten Warehouse, Dansavanah Customs Checkpoint, Vangtao Customs Checkpoint and Namheuang Customs Checkpoint). A second lot of back-up generators for 9 additional sites will be procured shortly. The supply and implementation of the second lot is expected to complete in June 2016.
Component B: Organizational Development (including Customs Modernization Support)
14. Customs Capacity Enhancement. The LCD Customs Capacity Enhancement Program is designed to support the implementation and further development of a range of modern approaches to customs administration consistent with WTO 3 and WCO 4 standards. It includes six core components: risk management and intelligence; compliance improvement and authorized economic operators (AEO); communication and change management; performance monitoring and client service standards; administrative appeals; and integrity and anti-corruption.
15. The consultant (QI/BIVAC) commenced work in Vientiane Capital on January 11, 2016 and the work program is expected to be undertaken over an 18 month period. Initial work has centered on establishing the required counterpart team to work with the various component experts and on discussing specific activities, deliverables, and timeframes for each component of the assignment. The inception phase of the assignment has now been completed, and the overall work program has been discussed and agreed with LCD management. Work on the specific component inputs will commence in late February and are expected to be completed by June 30, 2017. The LCD expressed concerns that the expert on administrative appeals and the expert on performance monitoring and client services standards may not be available. This may present some risks of delays in these respective work clusters. The mission suggests that LCD clarify the availability of the two experts so that there will not be any delay in commencement of the respective task clusters. In any
3 WTO refers to World Trade Organization in Geneva, Switzerland. 4 WCO refers to World Customs Organization in Brussel, Belgium. 4
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circumstance, the consultant should address the concern urgently within the contract terms and conditions, and ensure that there will be no delay in delivering the outputs of these two task clusters.
16. The mission discussed the overall scope of the program and progress to date with the LCD team and highlighted the need for component activities to be well coordinated with the consultancy team contracted to deliver the Customs Training Center Development program. The LCD acknowledged the complementarily between the two assignments and confirmed that they had emphasized the need for effective collaboration in meetings with both consultancy teams. The mission was informed by the Training Center Development team that contacts have already been established and both teams have agreed to meet regularly to ensure consistency in approach and coherence in content.
17. Training Center Development. The Training center Development Program is designed to strengthen the LCD’s human resource development capabilities. This includes activities associated with the development of a HRD strategy; the preparation of a comprehensive training curriculum; preparation of relevant modularized training materials; training of trainers; the selection of training aids; and implementation and translation of selected modules of the WCO’s e-learning program.
18. The consultant (Nathan Associates) commenced work in October 2015. Initial meetings were held with the LCD to agree on the overall work program and to establish the necessary counterpart team. Field visits were also undertaken to the Customs Training Center and Thanaleng Customs Checkpoint. Work on the competency framework necessary to underpin the training needs assessment has commenced with the conduct of an eight day design and validation workshop with participation from all key customs technical areas. The competency framework is based broadly on the European Union (EU) customs competency framework but has been modified to better align with LCD needs, priorities and organizational framework.
19. Work has now commenced on identifying any gaps between the agreed competency framework and existing competency levels. This work will, in turn, inform the work on curriculum design and training material preparation. It will also assist in identifying the most appropriate delivery approaches. Once prepared, the curriculum and course materials will be reviewed by the LCD and approved prior to commencing the training of trainers.
20. In discussion with the consultant the mission was informed that the assignment experienced some initial delays as a result of the time taken for the LCD to formally identify members of the counterpart team and to agree on the specific work program. The consultant also highlighted the impact of recent organizational changes associated with implementation of the Ministerial Decision No. 1765/MOF, dated on June 3, 2015. The latter has led to some degree of uncertainty on specific organizational roles and individual position requirements. Both issues are expected to result in some slippage in the expected delivery timeline of individual assignment components. In particular, the delivery of the training needs analysis will be delayed by one month to February 20, 2016 and the delivery of the human resource development strategy to late March. These delays on intermediate deliverables are not, however, expected to impact on the delivery timetable for the training curriculum, training materials and training of trainers.
21. The LCD acknowledged that there were some early delays during the inception phase of the assignment but that these issues had largely been resolved and that day to day contact between the consultants and LCD staff has now improved. They also noted that the workshop had been very well received by participants and that progress on the competency framework was now on track. They
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also recognized that the Ministerial Decision No. 1765/MOF had created a degree of uncertainty amongst staff but stressed that it was unlikely to result in major differences in the overall knowledge and skill requirements of LCD staff. The mission stressed that it was important for LCD staff to work closely with the consultants to ensure requests for information were addressed promptly and that the consultant’s time was used effectively. The mission therefore recommends that the LCD consider assigning a suitably senior official on a full time basis to take day to day responsibility for all LCD training related activities including managing the work program of the consultants.
22. Customs legal advisor. The inception mission for the consultant legal advisor was held from 25 January – 8 February during which time the consultant met with key LCD personnel and obtained copies of all relevant legal texts. The focus of the consultant’s work will be on assessing the gap between the current legal framework and the requirements of the WCO Revised Kyoto Convention (RKC) on the Harmonization and Simplification of Customs Procedures, the WTO Trade Facilitation Agreement, and relevant ASEAN customs commitments. Early analysis undertaken by the LCD suggests that a significant amount of revision will be required to the legal framework. The assignment covers a ten month time period with monthly progress reports and a final report due at the end of October 2016. The consultant’s inception report is due in April 2016.
23. Time Release Study. The consultant (EMC) has now been engaged to undertake Time Release Studies (TRS) in 2016 and 2017. The mission met with the consultancy team to discuss the proposed methodology and study timetable. Based on the current schedule, the 2016 TRS will be launched by the Deputy Director General of the LDC on February 18, 2016 with data collection activities expected to be undertaken between March 20, 2016 and May 30, 2016. A draft report will be prepared by mid-July 2016 and a final accepted report to be delivered to the LCD by mid-August 2016. In meetings with LCD personnel the mission stressed the importance of moving quickly to launch the 2016 TRS in order to ensure sufficient time between the 2016 and 2017 surveys. The surveys provide data necessary for monitoring project performance in meeting PDOs and will contribute to the overall evaluation of project results. LCD officials acknowledged the importance of the surveys and indicated their full commitment to supporting the consultancy team during their data collection activities.
24. Customs Valuation Support Database. As reported in the last Implementation Support Mission Aide Memoire, the LCD has postponed a decision on the valuation support database until such time as they assess the enhanced functionality available through the latest version of the ASYCUDA World system. This cannot be tested until such time as the new version is installed. This was initially scheduled to be implemented by UNCTAD in October 2015 but the LCD was advised that due to unforeseen circumstance the visit has had to be delayed until February 9 – 23, 2016. UNCTAD have since advised that they cannot meet this revised timetable and are yet to confirm the timing of the implementation visit.
25. Lao PDR National Single Window implementation. During the visit the mission and LCD staff visited the office of the Lao National Single Window (LNSW) concessionaire, Bureau Veritas (BV) to view a demonstration of the system currently under development. BV advised that Ministry of Industry and Commerce (MOIC) had selected the licensing process associated with imported motor vehicles as a pilot. Following successful testing the pilot is currently underway and feedback to date from public and private sector users has been positive. While the pilot is focused on only one specific license, the basic functionality demonstrated will apply, with slight modifications, to all licenses and permits ultimately offered by the system. The approach taken by BV is broadly in line with the proposed functionality described in the WB-financed LNSW Blueprint developed in 2013. 6
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The BV team advised the mission that a joint venture company was established in September 2015 with shares of 30% to the Lao PDR Government and 70% to BV. The company will operate the LNSW system with fees and any dividends shared in line with the ownership ratios. The company board will include the Vice Minister of Finance, the Director General of the LCD (MOF), and the Director General of the Department of Imports and Exports—DIMEX (MOIC).
26. While development of the LNSW is progressing broadly according to the agreed timetable, full and effective deployment will depend heavily on achieving full interoperability with the ASYCUDA World. The mission understands the new version of the ASYCUDA World, once installed (see above) should facilitate connection to the LNSW. Securing the necessary interoperability will require close coordination between BV and UNCTAD. The BV team agreed to keep the Bank team briefed on developments and will share relevant information and materials as they are developed. Once fully operational the LNSW system will provide traders with a single gateway to submit process and clear all regulatory requirements associated with import, export and transit activities.
27. Progress on LCD’ initiative to improve law enforcement and anti-smuggling operation. During the visit the mission met with the Deputy Executive Director of the Environmental Protection Fund (EPF) to discuss progress on approval of the LCD sub-project proposal for assistance under the second Lao PDR Environmental and Social Project (LENS-II) to strengthen the LCD’s anti- smuggling capacity of illegal wildlife trade. The mission was informed that while the important role played by Customs in combating wildlife and timber smuggling was acknowledged by all, members of the Technical Committee had raised concerns about the size of the grant requested under the proposal and specifically the procurement of an ICT system that they believe may fall outside of the scope of the grant facility. The Deputy Executive Director recommended that the LCD review the proposal with a view to restructuring the proposed activities into two separate but closely interrelated phases. Under such an approach, Phase I would support the critically important technical assistance and advisory elements of the project and Phase II could potentially support procurement of the ICT system. It was felt such an approach would be more likely to receive support from the entire technical Committee and would allow time for a thorough examination of specific ICT support requirements. The mission agreed to convey these recommendations on to the relevant LCD officials and offered to contribute to redrafting the sub-proposal if the EPF recommendations are accepted. The next meeting of the EPF Technical committee is scheduled for March 2016 which suggests the necessary revision should be undertaken promptly.
IV. MONITORING AND EVALUATION
Project implementation remains on track in delivering key outputs and results. The PDO is focused on improving customs efficiency and the effectiveness of customs administration by simplifying the customs procedures and reducing the time and cost associated with customs clearance. The automated selectivity in the Lao AW is in live operation. However, the mission was informed that no changes were made by LCD to adjust risk profiles and risk parameters. Customs declarations that are subject to full customs inspection remains at about 51 percent for August –December 2015, compared to 50.4 percent for October 2014-July 2015, indicating no improvement in the level of inspection activity since October 2014. Much of risk management based selectivity work still needs to be further developed through the on-going work on strengthening risk management and intelligence under the customs capacity enhancement program. Further analysis of customs performance in terms of efficiency and effectiveness will be captured by the ongoing Time Release Study (TRS) that was commenced in February 2016, and is expected to be completed by July 2016. 7
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Additional measurement of customs performance and efficiency relies on the upcoming World Bank Enterprise Survey for Lao PDR that will be completed by mid-2016.
V. FIDUCIARY ISSUES
Procurement
28. The overall procurement performance for the CTFP project is “Moderately Satisfactory”. The detailed status of each procurement package attached in ANNEX 5. Due to the currency depreciations, the remaining budget is not adequate to finance a number of procurement packages. Therefore, three shopping packages and two technical assistances packages are suspended and deleted from the procurement plan. The remaining two goods packages are still delayed from the expected dates. The procurement post review was conducted and the findings will be provided by February 29, 2016.
29. Procurement staffing. The project’s procurements have been carried out by a full time national procurement consultant with the intermittent inputs from the International Procurement Specialist. There is no government officer assigned to work for the project’s procurement after the full time national procurement consultant was on board since December 2014. The LCD agreed that a refresher training on procurement guidelines and procedures will be conducted for senior customs management officers by the end of March 2016. The training aims to enhance understanding of senior customs management officers of the LCD in procurement.
Financial Management
30. The overall financial management performance is “Moderately Satisfactory”. While most project resources are now committed, disbursement is still low and needs to be accelerated given the remaining time to the project closure. Upgrade of accounting software is also not yet completed. Remaining funds need to be closely monitored.
31. Disbursement. Disbursement as of February 11, 2016 is 69%, for the total grant US$12.5 million; of which the additional financing grant US$6.5 million is disbursed at 43%. However, disbursement is still considered low since the project only has about 17 months before project closure. Based on Client Connection records, the mission also noted the depreciation of SDR against USD. As of February 11, 2016, the USD equivalent of the grant amount signed is no longer US$6.5 million but only US$6.1 million. Therefore, we strongly recommend that the project team review every quarterly the remaining funds against funds needed (expected expenditure) to implement remaining activities to the closure of the project. Refer to sample format in ANNEX 4.
32. External audit. The mission was informed that the field work for the audit of FY14-15 is almost completed. The auditor is still waiting for certain supporting documents for contributions made by the government to the project. To ensure that the audit report can be submitted on time, we request that the project team assists the auditors in following up of the supporting documents required. The audit report and management letter are due for submission to the World Bank no later than March 31, 2016.
33. Financial reporting. Interim unaudited financial report for the quarter ended September 30 has been submitted timely without errors. However, variance analysis needs to be improved. The latest IFR due on February 15, 2016 was submitted on time.
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VI. CONCLUSION
34. The overall progress of project implementation has been on track with an increasing disbursement over the past several months. Significant improvements has been made since August 2015 mission by commencing all large technical assistances in customs training center development; customs capacity enhancement program, customs legal support and time release study (TRS). The ASYCUDA World that is running live operation in 21 customs checkpoints continues to show reliability and experiences no disruption in customs clearances. However, the considerable delays of the UNCTAD support and maintenance, including system upgrade, continue to post serious risks of potential disruption and vulnerability to system security failure. The mission suggests that LCD shall document its concerns carefully and seek rapid resolution with the highest levels of management in UNCTAD to resolve the pending issues promptly. Other challenges are related to LCD’s capacity to effectively and efficiently manage all signed contracts with attention to high quality and delivery of large technical assistance outputs so that it will be able to maximize the benefits of customs capacity enhancement and modernization. The proposed next project implementation support mission will take place in October 2016.
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ANNEX 1. List of government officials and stakeholders met during the mission
Name Position Organization 1 Dr. Athsaphangthong Siphandone Director General, Lao Customs MOF Department/Project Director 2 Mr. Bounpaseuth Sikounlabout Deputy Director General, Lao MOF Customs Department/Project Leader 3 Mr. Anousak Sisa-ad Deputy Director of ICT and Planning MOF Division, Lao Customs Department 4 Mr. Vongvanhpheng Deputy Director of Customs MOF Phoumsavanh Exemption Division, Lao Customs Department 5 Mr. Phoukhong Ouanlamany Project Analyst, CTFP, Lao Customs MOF Department 6 Mr. KetmanySivongsa Financial Management Officer, MOF CTFP, Lao Customs Department 7 Ms. Lattanaphone Financial Management Assistant, MOF CTFP, Lao Customs Department 8 Mr. Sengphet Thanongsakd National Procurement Consultant, MOF CTFP, Lao Customs Department 9 Mr. Thanomsit Khaophibane Deputy Director of Legislation MOF Division, Customs Department 10 Mr. Singsavanh Deputy Chief of Thanaleng Customs MOF Checkpoint 11 Mr. Bouasone Sayasouk Deputy Chief of Lao-Thai Friendship MOF Bridge 1 Customs Checkpoint, Vientiane Capital 12 Mr. Khamphong Sivilay Deputy Director of Administration MOF Division 13 Mr. KhamphanhSoulit Deputy Director of PCA division MOF 14 Mr. Sompasong Amphaengphai Deputy Director of Customs MOF Procedures and Formalities Division, Lao Customs Department 15 Mr. Khamphanh Soulit Deputy Director of PCA division MOF 16 Mr. Sythui Philavong Deputy Director of PCA division 17 Mme. BanesatyThephavong Director General, Import and MOIC Export Department 18 Mr. Frédéric Lamy BIVAC Manager QI-BIVAC 19 Mr. Michael Squirrell International ICT Advisor, ICT and MOF Planning Division, Lao Customs Department 20 Mr. Michael Watts Team Leader, Customs Training Nathan Center Development Program Associates Inc.
21 Mr. Sean Power Senior Consultant, Emerging Markets EMC Consulting
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22 Mr. Bernardo Contri Project Management, Emerging EMC Markets Consulting 23 Mr. Phoutavanh Sithammavanh Field Team Leader, Emerging EMC Markets Consulting 24 Ms. Manida Unkulvasapaul Consultant EPF 25 Ms. Bounphama Phothisane Deputy Executive Director EPF 26 Mr. Jean-Michel Pavy Senior Environment Specialist WB
ANNEX 2. List of Mission Team Members 1. Konesawang Nghardsaysone, Trade Economist and Task Team Leader (GTCDR) 2. Gerard McLinden, Lead Customs and Trade Facilitation Specialist (GTCDR) 3. Ramesh Siva, Lead Information Specialist (GTIDR) 4. Mombert Hoppe, Senior Trade Economist (GTCDR) 5. Siriphone Vanitsaveth, Financial Management Specialist (GGODR) 6. Souksavanh Sombounkhanh, Program Assistant (EACLF) 7. Sirirat Sirijaratwong, Procurement Specialist (GGODR), also provided remote support from Bangkok. 8. Alina Phonvisay, Program Assistant (EACLF)
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ANNEX3. Table of Agreed Actions
TABLE OF AGREED ACTIONS Proposed Action Responsible entity Comments timeline Component A 1. Document LCD’s concerns carefully and LCD/MOF 1. By February Ensure no impact on seek rapid resolution with the highest levels 20, 2016 the live operation and of management in UNCTAD on AW reliability of the Lao support and maintenance activities. AW 2. Delay offering internet access to Lao 2.AW LCD/IT Team Immediately3. Reduce exposures to until the system upgrade and the security internet security flaws are addressed. threats.
3. Complete the relocation of all backup LCD/IT February 29, Ensure a full and live servers in the established DRC 2016 replication of DRC 4. NCB for the second lot of back-up LCD/Procurement June 2016 Reduce vulnerability generators Unit and risk of disruption by power outage. Proposed Action Responsible entity Comments timeline Component B 5. Training Need Assessment Report LCD/Nathan End February Associates 2016 6. HRD Strategy and Implementation Plan LCD/Nathan End March Associates 2016 7. Assign a suitably senior official on a full LCD End of April Ensure knowledge time basis to take day to day responsibility 2016 transfers and for all LCD training related activities sustainability including managing the work program of the consultants 8. Gap Assessment Report of Risk LCD/QI-BIVAC End of Management and Intelligence February 2016 9. Seek clarification on availability of the LCD/QI-BIVAC End of March Ensure no delays in expert for performance and client services 2016 commencing of the standards (CS-12—Customs Capacity assignment. Enhancement Program) 10. Seek clarification on availability of the LCD/QI-BIVAC End of April Ensure no delays in expert for administrative appeals (CS-12— 2016 commencing of the Customs Capacity Enhancement Program) assignment. 11. Conduct refresher procurement training for LCD/Procurement End of March Raise understanding of LCD’ selection committee and Advisor 2016 procurement rules and management staff guidelines 12. Submit the revised Procurement Plan for LCD/Procurement End of NOL Unit February
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ANNEX4. Sample of remaining project fund monitoring
Category Undisbursed per Commitment Unliquidated Undocumented Total Cash and Total Description Client (B) advance (C) expenditure expected bank remaining Connection (including UN expenditure balances funds (USD) as of xx advance) (D) E=B+C+D (F) G=A-E+F (A) Goods, CS, Non-CS, IOC & Training
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ANNEX 5. Revised Procurement Plan
Lao PDR: Customs and Trade Facilitation Project-Additional Financing
I. GENERAL
1. Project information: Country : Lao PDR Borrower/Recipient : Ministry of Finance Project Name : Customs and Trade Facilitation Project - Additional Financing Project ID No : P144992 Project Implementing Agency : Lao Customs Department, Ministry of Finance Bank’s approval date of the Procurement Plan: ( O ) : 04 April 2013 (R1) : 10 December 2013 (R2) : 19 May 2014 (R3) : 29 December 2014 (R4) : 01 April 2015 (R5) : 16 October 2015 (R6) : 16 December 2015 (R7): 11 February 2016
2. Date of General Procurement Notice: 3 May 2013
3. Period covered by this procurement plan: 18 months
II. PROCUREMENT OF GOODS and WORKS
1. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Guidelines for Procurement:
Procurement Prior No. Procurement Method Method Review Comments Threshold Threshold 1. ICB (Goods) >= US$600,000 All 2. NCB (Goods) < US$600,000 First contract 3. Shopping (Goods) <= US$100,000 Direct Contracting Where justified and subject to IDA’s prior 4. - All (Goods) agreement
2. Procurement of all contracts for Goods financed wholly or partially by IDA will be carried out through the applicable procurement methods in accordance with the thresholds in the above table and as defined against each contract package in the procurement plan. Procurement using NCB or shopping procedures will use procedures, set forth in the Recipient’s Decree of the Prime Minister on Government Procurement of Goods, Construction, Maintenance and Services, 03/PM dated January 9, 2004, and the Implementing Rules and Regulations on Government Procurement of Goods, Works, Maintenance and Services, 0861/MOF dated May 5, 2009, including national standard bidding document with IDA’s prior concurrence, will be followed subject to the improvements listed in the NCB-Annex to the Legal Agreement.
3. Procurement Packages with Methods and Time Schedule
1 2 3 4 5 6 7 8 9 Review Start Estimated Prequali- Domestic by Bidding Ref. Contract Procurement Cost fication Preference Bank / Comments No. (Description) Method (US$) (yes/no) (yes/no) (Prior Selection / Post) Process 14
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Component A – Automation Support G-05 Software for 20,000 Shopping No No Post (O) Dec. Deleted. the helpdesk 2013 Local ICT (A4.3.1) (R1) Apr. team will 2014 provide an (R2) Jul. alternative. 2014 (R3) Mar. 2015 (R4) May 2015 (R5) Nov. 2015 G-16 CCTV 100,000 Shopping No No Post (O) Jul. Deleted due equipment 2013 to shortfall (A1.4.5) (R1) Apr. in funding— 2014 depreciated (R2) SDR May 2014 (R3) Jun. 2015 G-18 Generators for 250,000 NCB No No Post Dec. remaining 2015 international (R1) Jun. check points** 2014 (A5.2.2) (R2) Oct. 2015 (R3) Jan. 2016 Component B – Organizational Development G-12 Video 30,000 Shopping No No Post (O) Feb. Deleted due conference 2014 to shortfall facility for 5 (R1) Jun. in funding— regional offices 2014 depreciated (B2.2.3) (R2) Jul. SDR. 2014 (R3) Jul. 2015 (R4) Mar. 2016 G-14 WCO e- 75,000 Direct No No Post (O) Apr. Consult learning Contracting 2014 Mike Watts material access (*) (R1) Jun. on (B2.3) 2014 prioritization (R2) Oct. of e-learning 2014 modules to (R3) Jun. be selected. 2015 (R4) Nov. 2015
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(R5) Apr. 2016
Note: (*) Direct contracting will be considered subject to request with justifications to be submitted for the World Bank’s no objection. (**) Government will finance civil works and minor infrastructure development costs including office renovation/site preparation for system rollout and disaster recovery center, and training center (O) Original (R) Revised NCB National Competitive Bid
III. SELECTION OF CONSULTANTS
1. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants:
Procurement Prior Review No. Selection Method Comments Method Threshold Threshold 1. QCBS, QBS (Firms) > US$100,000 >=US$100,000 2. CQS (Firms) <= US$100,000 First Contract 3. Single Source (Firms) - All Where justified and subject to IDA’s prior agreement 4. Least Cost Selection - >= US$ 100,000 For Auditor 5. Individual Consultants - Only the fiduciary, Comparison of qualifications of at legal and some least three candidates. SSS may be long term positions used where justified and subject to IDA’s prior agreement
2. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than $100,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines
3. Consultancy Assignments with Selection Methods and Time Schedule
1 2 3 4 5 6 7 Review Estimated by Start Bidding Ref. Contract Selection Cost Bank / Selection Comments No. (Description) Method (US$) (Prior Process / Post) Component B – Organizational Development CS- Customs valuation support 150,000 QBS Prior (O) May 2013 Deleted due to shortfall 06 database development (R1) Jan. in funding— (B1.2.2) 2015 depreciated SDR. LCD (R4) Jun. will customize and use 2015 the valuation module in ASYCUDA World upon system upgrade through support and maintenance to be provided by UNCTAD. CS- Risk management 150,000 QBS Prior (O) Jun. 2013 Deleted due to shortfall 07 software support (B1.2.3) (R1) Sep. in funding— 2014 depreciated SDR. LCD continues to use and
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1 2 3 4 5 6 7 Review Estimated by Start Bidding Ref. Contract Selection Cost Bank / Selection Comments No. (Description) Method (US$) (Prior Process / Post) (R2) Nov. enhances selectivity in 2014 ASYCUDA World. (R3) Sep. 2015 (R4) Jan. 2016 Note: SSS Single-Source Selection will be considered subject to request with justification to be submitted for the World Bank’s no objection. IC Selection of Individual Consultants QCBS Quality and Cost-Based Selection CQS Consultants’ Qualifications Selection QBS Quality-Based Selection LCS Least-Cost Selection
IV. LIST OF AWARDED AND ON-GOING CONTRACTS
The following tables list the awarded and on-going contracts, and completed contracts.
Goods and Works
Packag Review Date of General e Estimate Contract Proc. by Bank Contra Descriptio Supplier Status Numbe d Value Value Method (Prior/Pos ct n r t) Signed Disaster recovery servers, related Khampaseu hardware goods 115,319 30-Jan- th G-01 and UPS 120,000 NCB Post delivere USD 15 Computer ($100,000) d Co., Ltd and Racks ($20,000) (A5.3 & A5.1.4) ICT hardware equipment for ASYCUD 2.267.909.6 Alice goods A geo 00 Kip 26-Sep- G-02 221,000 NCB Prior Computer delivere rollout and (282,324 14 Co., Ltd d helpdesk USD) PCs (A1.4.1, A1.4.4 & A1.4.6) Network NAMI goods 840,966,000 12-Sep- G-03 equipment 184,000 NCB Post Computer deliverin Kip 14 (LAN & Co., Ltd g 17
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WAN); (104,689 network USD) gear (A1.4.2 & A1.4.3) Additional licenses for Strategy ASYCUD Direct 17-Oct- Object G-04 A rollout 50,000 113.148 Contracti Prior 12 OOD of for 500 ng Bulgaria users (A1.4.6) Additional licenses for Strategy ASYCUD Direct 15-Jan- Object G-04 A rollout 50,000 34,711 Contracti Prior 16 OOD of for 500 ng Bulgaria users (A1.4.6) Additional licenses for Strategy Direct ASYCUD 17-Oct- Object G-05 NA 113,148 Contracti Prior A rollout 12 OOD of ng for 500 Bulgaria users Partition and furniture for disaster recovery setup and LCD training Installin center set 706,000,000 1-Dec- SB Lab 856 g G-06 95,000 Shopping Post up Kip 14 Co., Ltd. complete including d white board, shelves (A5.1.1, A5.1.2, B2.2.1 & B2.2.2) Air Conditioner 440,495,000 Installin Cooler s for DRC Kip 30-Apr- g G-07 40,000 Shopping Post Master Sole and TRC (54,720 2015 complete Co., Ltd. (A5.1.3 & USD) d B2.2.3) Generators for 5 Internation Installin NNC al check 239,130 13-Jul- g G-10 350,000 NCB Post Pharma points and USD 15 complete Co., Ltd 1 d warehouse* * (A5.2.1)
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Infrastructu re monitoring TK Support tools 16-Dec- G-11 50,000 43,230 USD Shopping Post Sole Co.; (software, 15 Ltd. training and installation) (A5.4) IT and ICT equipment for LCD training 553,410,000 Khampaseu goods center, Kip 16-Oct- th G-13 30,000 Shopping Post delivere Operational (68,892 14 Computer d Training USD) Co., Ltd (Roll out) and CTFP Office Project Chevrolet- goods 18-Jun- G-15 Vehicles 50,000 59,059 USD Shopping Post Lao Co., delivere 14 (B6.10) Ltd. d ICT Hardware Khampaseu for 13-Jul- th G-19 100,000 98,915 USD Shopping Post Ongoing ASYCUD 15 Computer A Support Co., Ltd (A1.3.3) Audio System and Khampaseu IT 16-Dec- th G-020 33,000 34,711 USD Shopping Post Equipment 15 Computer for TRC Co., Ltd (B2.2.6) ACCPAC (software, Motive crease Direct Solutions G-22 accounting 20,000 16,830 USD Contracti Prior (Lao) Co., code and ng Ltd training) (B6.7.1) 1,343,00 TOTAL: 1,353,380 0
Consulting Services
Packa Recrui Review Date of Contra ge General Estimat t. by Bank Contra ct Consultant Status Numb Description ed Value Metho (Prior/Pos ct Value er d t) Signed ASYCUDA Support and 6-Mar- CS-001 266,000 266,054 SSS Prior UNCTAD Maintenance 15 (A1.3.1) International 8-Aug- Michael David CS-002 400,000 371,091 IC Prior IT Specialist 14 Squirrell International 4-Jan- Michael David CS-002 533,499 IC Prior IT Specialist 16 Squirrell
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Local ICT Support (including 27 May CS-003 230,000 191,119 QCBS Prior NCG Sole Co., Ltd help desk 15 establishmen t) (A4.2) Survey & Design of Back-up 30-Apr- CS-004 Generators 50,000 20,285 IC Post SomsanithSadettan 14 for 11 checkpoints & LCD Time Release 15-Jan- CS-05 100,000 133,441 CQS Prior EMC Studies 16 (B1.2.1) Technical Assistance for Customs Training 18-Sep- Nathan Associates CS-008 400,000 449,770 QCBS Prior Center 15 Inc., Developmen t Program (B2.1) Customs Regulation 17- CS-010 106,000 44,400 IC Prior Thongdy Soulichack Specialist Nov.-14 (B3.2) Technical Assistance for Customs 1,000,00 1,095,4 30-Oct- CS-012 Capacity QCBS Prior QI-BIVAC 0 15 15 Enhancemen t Program (B5.1) CS- Administrati 18-Oct- Bangonn 32,400 8,640 IC Post 013-1 ve Assistant 12 Phommachanh Assistant to CS- Customs 17- Phonethipha 49,600 15,180 IC Post 013-2 Advisory Nov-14 Sensoulintha Team CS- Finance 30-Sep- Thipkesone resigne 38,000 9,600 IC Post 013-3 Assistant 14 Sanasackda d Financial 08- CS- and Admin LattanaphoneVannas replace 38,000 8,400 IC Post May- 013-3 Assistant ouk d 2015 (B6.2) Project 17-Dec- Phoukhong CS-014 Analyst 75,000 28,800 IC Post 14 Ouanlamany (B6.5) National 01-Dec- Sengphet CS-015 Procurement 90,000 42,000 ICS Prior 14 Thanongsakd Specialist National 23-Dec- CS-016 Finance 75,000 61,875 ICS Prior Ketmany Sivongsa 14 Specialist
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Project 25-Mar- Ernst & Young Lao CS-017 Auditor 20,000 22,836 LCS Prior 2015 Co., Ltd. (B6.8) International Procurement 3-Apr- CS-018 120,000 104,636 IC Prior Mr. Marian Nenita Advisor 2015 (B6.6.2) International Legal 30-Oct- CS-20 150,000 153,847 IC Prior Mr. Thomas Walsh Advisor 15 (B3.1) Technical Supervision of the Installation 20-Sep- CS-021 8,000 6,370 SSS Prior Somsanith Sadettan of 15 Generators Consultant (A5.2.2) 3,248,00 3,196,1 TOTAL: 0 67
VI. LIST OF CONTRACTS TO BE EXTENDED (CONSULTING SERVICES)
Price of Period of Price of Extensio Extension Service Packag Descriptio Spent n Comment Budget in the Consultant e No. n to Date (+ 2% s Previou Signe approx.) End s Period d
Customs 17- 16- Regulation 106,00 Thongdy Annual CS-010 44,400 44,400 44,880 Nov- Nov- Specialist 0 Soulichack Extension 15 16 (B3.2) Financial 11- 10- Lattanaphon CS- and Admin. Annual 38,000 18,000 8,400 8,568 May- May e 013-3 Assistant Extension 16 -17 Vannasouk (B6.2) Project 29- 28- Phoukhong Annual CS-014 Analyst 75,000 57,600 28,800 29,376 Nov- Nov- Ouanlamany Extension (B6.5) 15 16 National 01- 30- Sengphet Procuremen Annual CS-015 90,000 42,000 42,000 42,840 Dec- Nov- Thanongsak t Specialist Extension 15 16 d (B6.6.1) Technical Supervision of the For 1- 15- Installation Somsanith second CS-021 8,000 6,370 6,370 6,497 Dec- Feb- of Sadettan batch of 15 16 Generators generators Consultant (A5.2.2) 317,00 168,37 TOTAL: 132,161 0 0
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ANNEX 6. List of International Customs Checkpoints with live operation of the ASYCUDA World System
Table 1. Additional Financing –Geographical Rollout of 10 checkpoints
Checkpoints Date of rollout completion Network Connection Mode Phoukeu (Attapeu) 9-Feb-15 Fibre Naphao (Khammouan) 11-Feb-15 Fibre Paksan (Bolikhamsay) 18-Feb-15 Fibre Namkan (XiengKhouang) 1-Mar-15 Fibre Namngern (Xayabouly) 2-Mar-15 Fibre Nongnokkhien (Champasack) 1-Apr-15 Internet 3G Phoudou (Xayabouly) 2-Apr-15 Internet 3G Pahang (Houaphanh) 6-May-15 Internet 3G Banmom (Bokeo) 7-May-15 Internet 3G Panghok (Phongsaly) 18-May-15 Internet 3G Note: Pakse and LuangPrabang Airports are not deployed with the system because of limited volume of trade.
Table 2. Original Financing – Main rollout in 11 checkpoints and the Rollout of SmartTax System in 2015
Network SmartTax Date of rollout Checkpoints Connection Rollout in completion Mode 2015 Boten (LuangNamtha) 2012 Fibre Yes Namphao (Bolikhamxay) 2012 Fibre Friendship Bridge 1 (Vientiane Yes 2011 Fibre Capital) Friendship Bridge 2 (Savannakhet) 2012 Fibre Yes Friendship Bridge 3 (Khammuan) 2012 Fibre Yes Friendship Bridge 4 (Bokeo) 2012 Fibre Yes Vangtao (Champasack) 2012 Fibre Yes Dansavanh (Savannakhet) 2012 Fibre Yes Namheuang (Xayabouly 2012 Fibre Namsouay (Houaphanh) 2012 Fibre Wattay International Airport 2012 Yes Fibre (Vientiane Capital)
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ANNEX7. Attached an update to the Result Framework
Revised Project Results Framework – Customs and Trade Facilitation Project
Project Development Objective (PDO): To facilitate trade by improving the efficiency and effectiveness of customs administration and simplifying customs procedures to eliminate duplication and redundancy, reduce transactions costs and time to clear goods, and increase transparency and accountability.
Baseline Cumulative Target Values Data Responsibi Original Progress PDO Level Results Frequen Source/ lity for UOM5 Project To Date Comments
Indicators Core cy Methodolog Data Start (2012) 2013 2014 2015 2016 y Collection (2009) 1. Reduction in mean import, export and 11.2 10.1 9.1 8.2 7.4 Time Reduction in mean transit clearance Every 1- Release time to clear imports Hours 17.9 LCD times for commercial 2 years Survey of 34% during 2009- shipments by 10 (TRS) 12 6 percent per year. Actual 11.2 11.2 11.2
2. Reduction in the Reduction in number 5 / 4 5 / 4 4 / 3 4 / 3 4 / 3 number of steps to 9 / 7 of steps to import Number Every 1- LCD clear commercial (import / LCD from 9 to 5 and to of steps 2 years regulations shipments by 25 export) export from 7 to 4 percent. during 2009-12 Actual 5 / 4 5 / 4 5 / 4
3. Increase in the ratio of Indicator of increased detections/inspections 1.2 1.5 1.9 2.3 2.9 use and effectiveness by 10 percent per ASYCUDA of customs risk year [based on % N/A Annual management LCD management and available ASYCUDA reports ASYCUDA data and reports for selectivity the purposes of Actual No data 0.887 0.918 0.91 customs control].
5 UOM = Unit of Measurement. 6 Tracking the indicator by using the TRS2012 since no new TRS data is available. The 2016 TRS is now under way and data will be available in July 2016. 7 The ratio was calculated based on the selectivity data (October 2013-March 2014) from the Lao Customs Department 8 The ratio was calculated based on the selectivity data (Nov 2014 – July 2015) from the Lao Customs Department.
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4. Increase in client Sustained perceptions of improvements in customs performance 2.38 2.5 2.6 2.7 2.8 Logistics Every 2- performance as and integrity as Index 2.08 Performance WB 3 years measured by the LPI. measured by World Index (LPI) Next LPI to be issued Bank survey results Actual 2.38 2.45 2.45 in 2016 by 25 percent.
Intermediate Results and Indicators Baseline Target Values Data Responsibi Original Progress Intermediate Results Frequen Source/ lity for UOM Project To Date Comments
Indicators Core cy Methodolog Data Start (2012) 2013 2014 2015 2016 y Collection (2009)
Intermediate Result 1:Improved customs processes and procedures.
Not Partially Comple
1. Full acceptance of initiated completed ted Pilot would electronic data be completed submission for Progress by next Text LCD customs declaration reports mission (Jan procedures by the end 2016) of 2013 Partially Partiall completed y : Pilot to complet be ed conducted
Intermediate Result 2: Improved ICT infrastructure which supports the implementation of the new customs processes and procedures and is sustainable and reliable.
2. Prototype developed and Not Progress Task completed at Text Completed LCD accepted by initiated reports AF approval government 3. Accepted Not Progress Task completed at prototype validated at Text Completed LCD initiated reports AF approval pilot site
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Original No. of 4. Prototype Planned 11 checkpoint to replicated at Not Progress Text check point LCD replicate was 11. AF remaining checkpoint initiated reports Completed finances additional sites 12 checkpoints. AF covers additional 12 sites to roll out the 5. Integrated ICT Complete prototype. system is in place by d: Roll out However, the 2011, pilot completed Original 11 at 10 out remaining and reviewed by Not checked Progress Text of 12 LCD two 2012, and fully initiated point reports check checkpoint operational in all completed points would be implementation sites completed dropped from by 2014. the plan due to its little volume traded. 6. Appropriate front Roll out at line staff and affected Original 11 AF covers additional 10 out of traders trained in Not checked Progress 12 sites to roll out the Text 12 check LCD advance of pilot initiated point reports prototype by end of points testing and pre completed the project completed nationwide rollout.
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