Overview of transport operational connectivity and challenges for integrated transport Challenges to seamless border crossing and national strategies for transport facilitation

By Sakhone PHILANGAM Vice President - LIFFA Phnom Penh 25th September 2017 AGENDA

1. Current status of cross-border & transit transport facilitation including implementing of international transport agreements

2. National strategies(plans) for transport development

3. Current modal share of each mode of transport and plans for modal shift to encourage sustainable transport

4. Current status of connectivity from ports to hinterland & vice versa

5. Challenges to transport facilitation and possible solutions

6. Proposed LIFFA’s Solutions 1. Current Status of Cross Border & Transit Transport facilitation

FUNDAMENTAL ISSUES Current Status Legal basis Remarks Transport permits & Traffic rights , Vietnam unlimited Bilateral China 20,000 permits Bilateral Cambodia 40 quotas Blateral N/A N/A Visa requirement Thailand No ASEAN Vietnam No ASEAN China Yes Cambodia No ASEAN Myanmar No ASEAN Temporary Importation of road vehicles All borders Use of D53 Customs Law Trucks can go anywhere

Insurance of vehicle Local provider Law on insurance Cross Border and Transit Mandatory Land Transport Law Vehicle weight and Dimension Axle load 11 tons seasonal factor Maximum weight 40 tons seasonal factor Alteration Allowed Special Transport Permit Overweight/oversize Vehicle registration and Inspection certificate CLVT Mutual ASEAN/Bilateral Pay deemed profit tax and VAT China Mutual Bilateral MM pending agreement 1. Current Status of Cross Border & Transit Transport facilitation

Supporting Modalities Current Status Scope/framework Remarks Legal regime Transit Transport Operational CBTA, AFAFGIT R3 & R9 Cross border Transport Operational Bilateral Agreement Most popular Container Regime N/A Declared as goods Need proper segregation

Guarantor scheme (container & vehicle) Open but not implemented Customs Law & MOU Pay bond in cash. Must be LIFFA member Designated route Corridors only Customs Law No tool, not ratified Technologies ASYCUDA Declaration Module only TF Needs Manifest Module LAO TRADE PORTAL Operational TF MOIC OTRTS Development stage LIFFA Tool under guarantor scheme I Spot Solution Pilot LIFFA Tool under guarantor scheme Others Subject to needs Private Private use Professional Training

AFFA Courses 5 certified Trainers One course conducted for 30 participants MI Training Not attractive* MI Cooperation "Master" degree AFFA institute Under "construction" AFFA TIFFA is leading the role Facilitation coordination mechanism NTFC Active MOIC Funding from World Bank NTC Being reorganized MPWT Joint control at border crossing Danesavanh/Lao Bao Operational CBTA, AFAFGIT /Moukdahanh Under negotiation CBTA, AFAFGIT Domestic Law adjustment SEZ, Dry Port and Logistics centre Logistics Park Nippon Express Y/N? Agreement on Dry Port SAVAN SENO Operational Agreement on Dry Port No Business Others Under FS Agreement on Dry Port Boten, Facilitation tools Secure Cross Border Customs seal is used Bilateral Agreement Mainly on SOC Efficient Cross Border Transport Under trial Ad Hoc request Trans-loading Operational Bilateral Agreement Most popular

* No participants or few from lately 2. National Strategies for Transport Development

National Logistics Strategy from 2016 – 2020:

1. International Logistics Parks Development and construction of Dry Port 2. Feasibility study, design and construction of regional logistics Parks at Nateuy and Savannakhet 3. Improvement of international routes linking to Dry Port 4. Development of multimodal transport between road and rail 5. Leading logistics company cultivation program 6. Guarantee Association Development Program 7. Capacity building program 8. Development of law and regulation for the management and promotion of logistics 9. Capacity building program for Lao International Freight Forwarders Association 10. CBTA Implementation and Monitoring Program 11. Common Control Area Development Project 12. Cross Border Checkpoints Standardization Program 13. Cross Border Points Development Project 14. Customs Facilitation Program 15. Use of IT Systems for the management of transport logistics 3. Current Modal Share and Trend

➢ Road transport is the dominant mode Laos PDR as main sectors are within D1 (500-750 km) and because of its land locked status

➢ Demand on cross border and transit transport by road is increasing drastically following the shift to road transport for consuming/ perishable goods and high value goods and the recent measures taken by Lao PDR

➢ Modal shift is expected after completion of Lao China railway link and transport nodes are in place. Preparedness for Modal Shift: ➢ Multimodal Transport Law was promulgated in 2012 ➢ Dry Port/ICD are being developed as transport nodes to service trans-shipment operation ➢ Some operators already use FIATA Bill of Lading (Multimodal) as transport document ➢ Liability Insurance Working Group led by MY under AFFA 4. Connectivity from ports to hinterland – Current Situation

1. Absence of Transportation Node that can support multimodal transport 2. Long process at Border Post (causing congestion)due conveyance clearance since it enters customs territory after the border post 3. Heavy reliance on neighboring countries’ policy: ➢ Problematic for special transports (OOG, DG) ➢ Lao truck cannot enter seaports for various reason 4. Trans - loading operation as there is NO space for container depot 5. Return of empty container is almost immediate 6. Integrated NEEDS transport Node (Terminal/Dry Port).

Mode: Road Truck Node: Seaports Direct delivery Laem Chabang, Vung Ang, Danang to customers

Link: Asian Highway AH12, R12, R9 Delivery to LLSE Bonded warehouse PostBorderLao

Problem occurs here! 4. Connectivity from ports to hinterland – The Problem!

Current Process A 1. Clearing agent (CA) wait for Clearing agent trip truck arrival at point 1 or go to point 2 to get all B documents from driver via trip A 2 2. CA travel trip B to get document stamped 1 “arrival” on Thai Truck Carrier Report/Outward Manifest at 1 3 3. CA get passports (driver and truck) stamped, get D53 (TAD) from customs, pay the bills at 3 and hand carry all documents back to 2 via trip B 4. Truck proceed to 4 to get customs inspections signed on D53 and conveyance released to bonded 4 warehouse 5. Total time used is from 30 mins to 2 hours per TRUCK!!! 4. Connectivity from ports to hinterland – The ideal!

Proposed Process

1. Dedicated Truck lane and single checkpoint at 1 2. Use Advance Document Information (ADI) to prepare/print all necessary documents before truck arrival 3. Border operator update ”arrival” checkpoint in ADI. Customs collect fees against Trip Receipt and sign off TAD Document. 4. Conveyance Released and Border operator update “conveyance released” checkpoint

1 5. Time used: 5 minutes 5. Challenges to Transport Facilitation and Solution

Challenges:

1. To find an optimal balance between transport facilitation and controlling/regulatory measures! 2. To narrow new SMART scope: We had been trying hard to get consent on standard practice but there seems to be no global norms set by an international intergovernmental body that is recognized by countries globally. Question: Do we NEED global recognition? Or travel across more than 3 countries in our region by truck ? Can we just work out something that cater to our needs? 3. To Set the Operational Standard that Works: Since there is no ideal model for Laos (for its different set up and stage of development), it should take the lead to set the standard of the Lao Model based on its experience and success story on the ground as the most linked country by land (bilateral agreement and trans-loading seems to work well?). 4. To allow flexibility in the process (e.g. dual plates) and make compromise on fees to accommodate sustainability? 5. To get support to accelerate the process and fund the Transport Facilitation the same way it funds the Trade Facilitation? (We have 3 years left to realize the strategy) 5. Challenges to Transport Facilitation and Solution

Possible Solution: Extract from ADB’s Key lessons for the new CPS for Laos:

➢Infrastructure needs to be developed in a well planned, coordinated, and prioritized way, with attention to the associated transport and non-transport services; ➢Attention is needed on continued development of human resources and their skills; ➢Private sector development should be promoted; and ➢Resource mobilization needs improving, particularly domestic revenues. 5. Challenges to Transport Facilitation and Solution

Possible Solution: Extract from Paragraph 63 (Note by the ESCAP Secretariat – Moscow 5-9 December 2016):

➢Standardized and advance information exchange ➢Effective guarantee management systems ➢Streamline border crossing processes and/or inspections, no inspections at border crossings or ports for transit cargo; ➢Introduction of the concept of trusted transport operators ➢Standardize trans-shipment procedures at gateway ports and dry ports ➢Modern customs procedures 5. Challenges to Transport Facilitation and Solution

Possible Solution:

Extract from the Statement of the 5th JCM CBTA, on16 December 2016 in Chiang Mai

The ‘early harvest’ will be based on the text of the Memorandum of Understanding on the ‘Early Harvest’ Implementation of the CBTA provided in ANNEX 1 of this Joint Committee Statement, noting that it includes simplified procedures, such as simplified, standardized, Temporary Admission Documents for vehicles, the waiver of guarantees for vehicles and containers, and waiver of TADs for containers, on a pilot basis, subject to annual review.

The NTFC will ensure that the required preparations are undertaken for the timely implementation of the ‘early harvest’, review the implementation of the GMS Road Transport Permit scheme, and recommend any required further improvements to facilitate TTF in the GMS. 6. Proposed Solution – Lao NTFC/LIFFA to play leading role

Background:

➢ LIFFA is member of Lao NTFC and its members are directly benefiting from transport facilitation ➢ The role of LIFFA is incorporate in the Law on Multimodal Transport of Lao PDR ➢ LIFFA is the guaranteeing organization vis a vis Lao Customs for temporary admission ➢ It is the only single private organization that deal with cross border and international transport in Laos ➢ It has initiated an ambitious project: the (all electronic systems) “Sustainable Cross Border Management” Project (SCBTM) in 2014 and recently initiated ADI Systems, a hybrid version (paper and electronic) that would serve as an effective tools for LIFFA to fulfill its role as “Guaranteeing Organization” and subsequently act as the “Cross Border and Transit Transport Facilitation Agency” for countries in the region ➢ The project includes All aspect of paragraph 63 recently adopted in Moscow and the “Early Harvest” of CBTA adopted in Chiang Mai ➢ Project is pending funding and buy in by stakeholders LIFFA “SCBTM” LIFFA “SCBTM” LIFFA “ADI” - Tool LIFFA “ADI” - Tool

CROSSING THE BRIDGE THROUGH GREEN LANE CONTROLLED BY E-SEAL to CONTAINER YARD

e-Seal Installation at Journey is Customs Inspection Thailand controlled by at CY e-Seal

Cross Bridge GREEN LANE

Directly go to CY Nongkhai Thanaleng LIFFA “ADI” - Process Customs warehouse Customs warehouse Friendship bridge Customs Friendship bridge Customs Cross border flow Border (CY or LLSE)

customs office Border post Border post Customs office Carrier/Agent Consignee of departure of departure of arrival of arrival

Documents flow • TAD hard copy • Truck Waybill copy • Invoice/P/L • Entry outward • Carrier report • TAD hard copy • Truck Waybill • Declaration • Entry outward • Carrier report • Conveyance • Container weight • Declaration form/IM form/IM copy • Carrier report • Conveyance information declaration(CWD) • Invoice, P/L • Invoice, P/L copy • Conveyance information • Crew list • Trip ticket • DO information • Crew list • Crew list

Process flow

• Submit customs • Export release • Conduct physical • Scan trip ticket & • Validate IM and order • Pay all charges due paperwork to • Endorse carrier check and collect payment duty payment • Sign delivery sheet customs office of report & keep one carrier report for • Endorse inward • On duty payment • File original departure copy reconciliation manifest Issue Delivery Order documents for • Submit advanced • Endorse conveyance • Collect conveyance • Endorse container to bonded warehouse audit Document information and information declaration for cargo release Information to keep one copy • Collect crew list

Cross Border Process for Inward Conveyance Inward for Process Border Cross LIFFA system • Get ref. code and print out hardcopies (Cargo Manifest) LIFFA “Early Harvest” - Cargo Manifest ເອກະສານຂົ ນສົ ງ ຕາມສັ ນຍາ CBTA (Master Bill) LIFFA “Early Harvest” – Bill of Truck TAD Combined Form - recto LIFFA “Early Harvest” – Motor Vehicle TAD TAD Combined Form- Verso LIFFA “Early Harvest” – Motor Vehicle TAD

LIFFA “Early Harvest” – Container TAD CONTAINER TAD TAD CONTAINER

We hereby certify that the details of the statement provided are true and correct SIGNED: NAME: DATE: Conclusion

1. Lao National Logistics Strategy 2016 – 2020 is formulated in such a way to fully support the operational connectivity and transport facilitation

2. LIFFA can be the implementing agency of the above under Lao NTFC by conceptualizing the ideal process, the simplified documents for border crossing and the tool for managing cross border transport: 1. Process: Advanced Documents Information for conveyance (vehicle, container & cargo) 2. Documents: Cargo Manifest and TAD generated/printed from ADI 3. Tool: OTRTS, E-Seal

3. Stakeholders are requested to consider how to materialize the proposed concept through the buy-in from respective authorities and project funding from donors Thank You!