The Philippines has canceled an $88.28 million loan from the World Bank that was allocated for the Philippine Customs Modernization Project (PCMP).
The Department of Finance requested the cancellation in a letter dated November 7, citing delays and legal challenges that hindered the project’s progress.
The World Bank labeled the project “no longer viable” due to “multi-faceted delays” and unsatisfactory implementation. Of the total loan amount, only $4.48 million, or 5.07 percent, had been disbursed before the project was terminated.
The PCMP aimed to automate and modernize Bureau of Customs operations to improve efficiency and combat smuggling.
However, legal issues, including a lawsuit filed by Omniprime Marketing Inc., a losing bidder, delayed the procurement of key systems such as the Customs Processing System. These delays pushed the expected project completion to 2024.
Despite the setbacks, the Bureau of Customs has achieved a 97 percent digitalization rate through new systems introduced in 2024, including the Overstaying Cargo Tracking System, the Enhanced e-Travel System, and the ATA Carnet Monitoring.
The World Bank had approved the loan in October 2020, with the Philippine government set to provide an additional $16.1 million for the $104.38 million project. However, prolonged procurement processes spanning two years contributed to the cancellation.
Before digitalization efforts, customs clearance in the Philippines was significantly slower compared to neighboring countries. World Bank data showed it took 120 hours to clear a container in the Philippines, compared to 56 hours in Vietnam, 50 hours in Thailand, and 36 hours in Malaysia.
Following the cancellation, the unspent funds will be returned to the World Bank within four months. The Philippine government continues to prioritize customs modernization and is pursuing alternative funding and strategies to overcome legal and logistical barriers.
Efforts to improve the Bureau of Customs aim to enhance trade facilitation, reduce costs, and support economic growth. Despite the project’s cancellation, modernization initiatives remain a focus for the government and its stakeholders.
