45260-001: South Asia Subregional Economic Cooperation Trade Facilitation Program

Project Data Sheet (PDS): Details

Description

The South Asian Sub-regional Economic Cooperation (SASEC) Sub-Regional Trade Facilitation Program supports ADB s regional cooperation strategy for South Asia (2011-2015) and builds on the commitments expressed by the SASEC Trade and Transport Working Group. Its intended impact is to increase intra-regional trade among the SASEC member countries of Bangladesh, Bhutan, and Nepal. India is not included in the program because it is self-financing its trade facilitation reforms and has already taken significant strides ahead of the other countries. It is, notably, the only SASEC member country that has acceded to the Revised Kyoto Convention for the Simplification and Harmonization of Customs Procedures (RKC). This program s expected outcome is efficient, effective, transparent, secure and service-oriented processing of cross-border trade in the sub-region. To achieve this outcome, the Program and its associated TA will support activities under three thematic areas: (i) modern and effective customs administration, (ii) streamlined and transparent regulations and procedures, and (iii) improved information and responsiveness to the private sector. The importance of this program is underscored by the realities in South Asia as described below.

Project Rationale and Linkage to Country/Regional Strategy

South Asia is among the least integrated regions in the world. Despite South Asia s impressive growth performance in recent years, the region remains one of the least integrated in the world. The passage of the South Asia Free Trade Agreement (SAFTA) in 2006 and related bilateral free trade agreements have yet to show a significant impact in enhancing sub-regional trade. South Asia accounts for only 2% of world trade, and 1.7% of world foreign direct investment. Intra-regional trade is only less than 6% of the region s total trade. In comparison, intra-regional trade as share of total trade for Latin America, Middle East and North Africa, and East Asia are 17%, 8%, and 55% respectively. South Asia s intra-regional trade is lower than that of other regions even after factors such as geographic proximity, income levels, and population are taken into account. At the same time, there are estimates of relatively high levels of informal trade, perhaps as much as 72% of formal trade. In this context, there is enormous potential for intra-regional trade to grow and for the sub-region to benefit from economies of scale, greater competition, and technology spillovers from increased trade. Sub-regional growth and integration will in turn lead to a bigger market and foster greater integration with other regions and with the world economy.

Impact

Increased intra-regional trade in the SASEC region.

Project Outcome

Description of Outcome

Faster and cheaper processing of cross-border trade in the SASEC region.

Progress Towards Outcome

Ongoing

Implementation Progress

Description of Project Outputs

Modernized and more effective customs administration Streamlined and transparent regulations and procedures Improved information and responsiveness to the private sector

Status of Operation/Construction or Implementation Progress

Second and final tranche released. For Bangladesh, the following have been achieved: 1. Proposed amendment to the Customs Act, 1969 to make it fully compliant with the General Annex of the Revised Kyoto Convention approved by the cabinet. 2. Completed a regulatory impact assessment of proposed amendments to the Customs Act and legislation to make them fully compliant with the General Annex. 3. Issued a directive to establish an authorized economic operators program 4. NBR issued updated standard operating procedures on risk management, post-clearance audit, assessment, physical inspection, and non-intrusive inspection that are compliant with the SAFE Framework. 5. Completed a WCO time release study covering Chittagong Port and Benapole Land Port operations to serve as benchmarks for a performance monitoring system. 6. NBR launched its operations of the Automated System for Customs Data World with a pilot national single window program. For Bhutan the following have been achieved 1. Submitted to the WCO, Bhutan s instrument of accession to the Revised Kyoto Convention. 2. Finalized a regulatory impact assessment report on the proposed amendments to the Bhutan laws, rules, and regulations, which are required to ensure Bhutan s compliance with the General Annex of the Revised Kyoto Convention 3. Department of Revenue and Customs will have piloted the Customs Management System Component of Revenue Administration Management Information System in accordance with its approved Action Plan. 4. Department of Revenue and Customs, in coordination with the Trade Facilitation Committee, will have piloted the RAMIS-based automation of the application and approval process of trade-related transactions at Bhutan border agencies. For Nepal, the following have been achieved: 1. Ministry of Finance forwarded to Cabinet a proposal to submit a resolution to the legislature Parliament for Nepal's accession to the Revised Kyoto Convention 2. Completed a Regulatory Impact Assessment of proposed amendments to the Customs Act 2007, and related regulations to make fully compliant with the General Annex of the Revised Kyoto Convention 3. The Cabinet will have issued a directive to establish a National Single Window program that will (i) specify the lead agency and other participating agencies, (ii) outline the roles and responsibilities of participating agencies, and (iii) provide an implementation plan, which includes gender and social inclusion objectives. 4. Established a client service center at the customs border posts at Birgunj, Biratnagar, and Bhairahawa

Safeguard Categories

Environment: C
Involuntary Resettlement: C
Indigenous Peoples: C

Status of Covenants

Category Rating
Loan 2955
Sector
Social
Financial
Economic
Others Satisfactory
Safeguards
Project Financial Statements
Grant 0321
Sector
Social
Financial
Economic
Others Satisfactory
Safeguards
Project Financial Statements
Loan 2954
Sector
Social
Financial
Economic
Others Satisfactory
Safeguards
Project Financial Statements
Grant 0322
Sector
Social
Financial
Economic
Others Satisfactory
Safeguards
Project Financial Statements

 

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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