Upload
amice-gordon
View
216
Download
1
Tags:
Embed Size (px)
Citation preview
Trade Logistics in the Caribbean
Ankur HuriaInvestment Climate Advisory Services
World Bank GroupPort-au-Prince, Haiti
OCTOBER 22 2009
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency2
Why improve trade logistics services in the Caribbean?
Governments need to be energized to improve trade logistics services
Overarching rationaleGlobalization and the desire to be part of global networks
Attracting private investment is a key objective for the Caribbean countries
Improved export potential and in some cases, to become trading hubs
Faster, leaner & responsive supply chains are essential for improving export/trade performance
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency3
What does it mean for Businesses?
Poor trade logistics creates tremendous costs for businesses including inventory, transportation….
Direct cost of transportation
Lost days due to lack of daily vessel runs
Cost of financing investment in inventory (interest paid or opportunity cost of capital)
Taxes
Insurance
Financial Risk Storage and Handling
Market share
Spoilage
Shrinkage
Obsolescence
Warehousing and storage especially when large inventories require additional space
Handling and transportation in general and to overflow facilities
Cost Categories
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency4
Impact on client countries will vary by typology: Poor countries not integrated with world financial systems and
commodity markets (many sub-Saharan countries); Mineral rich countries (Angola, Nigeria) Emerging economies integrated with world markets (China) Middle income countries (South Africa, Brazil, Mexico) Island nations (Caribbean)
Variation between primary importers (most Caribbean islands) versus primary exporters (China).
Higher protectionism in major markets, at least in the short term. Will have direct implications for regional/ preferential trade agreements and the pressures to shape up.
Lower bilateral donor funding .
How does the current financial crisis affect demand for trade logistics services?
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency5
Pressure to become much more competitive; it becomes even more important for countries to reduce costs to trade.
Reducing supply chain costs to improve performance will be seen as a key element of firm level strategy (i.e. cost cutting on inventories) in a credit scarce market.
Rebuilding confidence in global markets would necessitate a larger role for improved trade logistics services.
Can be seen as time for emerging economies to prepare groundwork.
How does the current environment affect demand for trade related services?
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency
Doing Business: Trading Across Borders 2010
Indicator Grenada St Kitts St Lucia DominicaLatin
America & OECD 2010 2010 2010 2010 Caribbean Average
Documents to export (number) 6 6 5 7 7 4
Time to export (days) 14 12 14 13 19 11
Cost to export (US$ per container) 1226 850 1600 1297 1244 1090
Documents to import (number) 5 6 8 8 7 5
Time to import (days) 19 13 18 15 21 11
Cost to import (US$ per container) 2479 2138 2645 1310 1481 1146
Source: Doing Business 2010
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency7
Import time: 50% - 60 % due to software…
Nature of Trade Procedures
Dominica (No. of days) %
Grenada (No. of days) %
St Kitts (No. of days) %
St Lucia (No. of days) %
Inland transport 1 7 2 11 1 8 2 11Terminal Handling 4 53 6 32 5 38 6 33Customs
Clearance 3 20 4 21 2 15 1 6Document Assembly 7 47 7 37 5 38 9 50
Total days to
import 15 19 13 18
Source: Doing Business 2010
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency8
Geography – Small island nations tend to import significant amounts of foodstuff and other basic goods which are not produced locally, with high transaction costs.
Technology - Modern technology offers a number of benefits that could promote trade facilitation. While one of the key reasons for poor technology usage is lack of adequate financing, it is also clear that many customs administrations/ports do not have a strategy for effectively deploying technology.
Key Challenges for the Caribbean
Legislation - Trade related legislation is often outdated, for instance electronic commerce legislation is still not in place in most countries.
Conflicting Interests – Customs revenues are a key component of government revenue. As a result the facilitation function has played a secondary role to the revenue collection function for Customs administrations in the region.
Specific challenges that governments need to consider while making trade logistics improvements
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency9
Selected Policy Issues
Lack of coordination between border control agencies i.e. Customs and Port authorities in some islands. Also many countries don’t seem to have a forum i.e. a national body to discuss trade facilitation issues in a joint-coordinated manner.
Risk management implementation is at a nascent stage in most islands.
Low levels of automation and electronic processing. Reasons include lack of financing, electronic commerce laws, and lack of implementation capacity among others.
Policy and Infrastructure issues
Selected Infrastructural Issues
Poor warehousing facilities causing delivery inefficiencies, increasing inventory costs
Lack of a regular feeder cargo service that serves the ports of the Caribbean
Inefficiencies in port/terminal services that cause inordinate delays or costs
Governments in the Caribbean islands face a range of policy and infrastructural issues that need to be overcome to improve trade logistics!
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency10
Three Focus Areas of the Trade Logistics Program
Simplification and harmonization of procedures including documentation;
Technical support to introduce risk-based management systems for inspections
Automation of trade clearance procedures/ Single Window System
Focus on reform implementation
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency11
Trade Logistics Advisory Program: Delivery Models
Systemic Reform
Regional Solutions
Rapid Response
IFC World Bank
Group
Donors: CIDA DFID NTF NIPP
Development Agencies: WCO IMF OECS
Private Sector
THE WORLD BANKWorld Bank Group Multilateral Investment Guarantee Agency12
Questions and Comments