Mongolia: Customs Modernization Project

Sovereign Project | 35376-033

Summary

The Customs Modernization Project aims to finance (i) the migration and upgrading of the customs automated data processing system (GAMAS); (ii) the improvement of infrastructure at major customs houses and customs border posts; and (iii) institutional strengthening, including business process reengineering, capacity building in relation to the above two components, interagency coordination, regional cooperation, and public-private partnerships.

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Project Name Customs Modernization Project
Project Number 35376-033
Country Mongolia
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2307-MON: Customs Modernization Project
Asian Development Fund US$ 5.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change
Sector / Subsector Industry and trade - Trade and services
Gender Equity and Mainstreaming
Description The Customs Modernization Project aims to finance (i) the migration and upgrading of the customs automated data processing system (GAMAS); (ii) the improvement of infrastructure at major customs houses and customs border posts; and (iii) institutional strengthening, including business process reengineering, capacity building in relation to the above two components, interagency coordination, regional cooperation, and public-private partnerships.
Project Rationale and Linkage to Country/Regional Strategy

The Project reflects the Government's efforts to promote trade and improve the investment climate through customs reforms and modernization. It is a response to (i) the recent accession of Mongolia to the International Convention on the Simplification and Harmonization of Customs Procedures (Revised Kyoto Convention) and the forthcoming enactment of a new Customs Law, (ii) the Government's recent move toward a national single electronic window (SEW) service and e-government, and (iii) Mongolia's attempt to gear up the fight against corruption.

The GAMAS needs upgrading to enable it to meet the increasing demands of customs administration. The GAMAS is still manually operated and labor-intensive and has a decentralized architecture. The existing capacity of the GAMAS server and network system is low and the system can no longer cope with the growing number of customs eclarations or maintain proper trade statistics. Modern customs business processes such as risk management and post-clearance audits cannot be effectively or widely introduced because of the lack of an internet-enabled system and a centralized database.

Customs inspection equipment and anti-smuggling detection facilities are inadequate in most customs border posts. The only customs laboratory is in the headquarters of the Mongolian Customs General Administration (MCGA) in Ulaanbaatar, to which samples of goods have to be transported for examination. These constraints constitute bottlenecks to trade.

In concert with the new anti-corruption legislation, the issue of governance needs to be addressed by improving business processes and providing MCGA with modern techniques and tools. Training and capacity building, partnerships with the private sector, and cooperation with other border agencies and with neighboring customs administrations are needed.

Impact Increased volume and smooth flow of trade
Project Outcome
Description of Outcome Improved efficiency, transparency, and sustainability of customs services and administration
Progress Toward Outcome

Mongolia has amended its Customs Law.

The Customs Automated Information System has been formally set up and officially accepted.

Regional customs cooperation, particularly with PRC has made good progress. The MON-PRC joint customs control (JCC) has been piloted at Zamyn-Uud and Erenhot since 15 Dec 2009, and the harmonized cargo manifest for road transportation has been used, contributing to reduction of clearance time at the border. In June 2011, the two customs further agreed to expand JCC pilot to another pair of border crossing points.

The project is near completion, and will be financially closed by August 2011.

Implementation Progress
Description of Project Outputs

1. Migration and upgrading of the GAMAS system to an internetenable enviroment and cenrtral database which was upgraded to Customs Automated Information System (CAIS).

2. Improvement of infrastructure at selected major customs houses and customs border posts, including provision of inspection and laboratory apparatus.

3. Institutional strengthening, comprising business process reengineering, capacity building, interagency coordination, regional cooperation, and public-private partnership.

Status of Implementation Progress (Outputs, Activities, and Issues)

ADB approved on 16 June 2008, EA's request for the reallocation of loan proceeds and minor changes in implementation arrangements as follows:

(i) Name of Component 1 of the Project from "Migration and Upgrading of the GAMAS" to "Customs Automated Information System";

(ii) Procurement method from National Competitive Bidding to International Competitive Bidding; and

(iii) Reallocation of ADB loan proceeds among items under Components 1 and 2.

Component 1 is completed. The CAIS was officially accepted on 5 July 2010 after a pilot operation for about one year. The performance of CAIS has generally been stable, and most of the customs declarations are being made on line. IA is planning to install a back-up server for better protection of customs data, to be financed by the loan savings and contigencies.

Procurement under Component 2 is near completion. Contracts for Subcomponent 1 (regional customs labs) have been delivered, and contracts for Subcomponent 2 (X-ray inspection equipment) were awarded on 6 December 2010.

Under Component 3 (institutional strengthening), a series of domestic and international traning activities have been organized on various subjects, benefitting about 1500 participants, including MCGA officials, customs officers at the key customs houses, traders, customs brokers, carriers and forwarders, commercial bank officers, and other business users. IA is also developing a plan to reorganize the MCGA IT Center and to build capacities further.

ADB has fileded loan review missions regularly. As of December 2010, six review missions have been conducted. The overall implementation is on track, and most of the loan covenents have been met. Next loan review mission is planned for the thrid quarter of 2011 to discuss, among other things, the prepartion of the project completion report. The project is expected to close in August 2011.

Geographical Location Mongolia
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design All key government agencies have been active in adopting reform measures. The Government has reiterated that the measure is a priority in its policy reform agenda.
During Project Implementation Seminars/training/workshops
Business Opportunities
Consulting Services

The grant will fund a total of 4.5 person-months of international and 44.5 person-months of national consultants. These relate to business process and ICT implementation (4.5 person-months international and 5 person-months national), interagency coordination (3.5 person-months national), as well as project performance monitoring (36 person-months national).

The consultants will be engaged either as individuals following the Individual Consultant's Selection (ICS) method or as consulting firm(s) to be selected following the Consultants' Qualification Selection (CQS) method. Services in relation to surveys and publications will be engaged through the least cost selection (LCS) method in accordance with ADB's Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers.

Procurement Goods, works and related services to be financed out of the proposed ADB loan will be procured according to ADB's Procurement Guidelines. Contracts valued at $500,000 or more will be procured through International Competitive Bidding (ICB) procedures. Contracts valued at less than $500,000 will be procured using National Competitive Bidding (NCB) procedures. Minor items of equipment and materials estimated to cost at $100,000 or less will be procured through Shopping procedures.
Responsible ADB Officer Yuebin Zhang
Responsible ADB Department East Asia Department
Responsible ADB Division Public Mgt, Financial Sector and Regional Coop Division, EARD
Executing Agencies
Ministry of FinanceMr. B. KhurenbaatarFax No. (976-11) 262272Government Building-2
Negdsen Undestnii gudamj-5/1
Ulaanbaatar-210646, Mongolia
Timetable
Concept Clearance 15 Aug 2003
Fact Finding 29 May 2006 to 09 Jun 2006
MRM 04 Aug 2006
Approval 20 Dec 2006
Last Review Mission -
PDS Creation Date 11 May 2006
Last PDS Update 14 Dec 2011

Grant 0070-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
20 Dec 2006 06 Feb 2007 21 May 2007 31 Aug 2010 31 Aug 2011 11 Jan 2012
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 0.09 Cumulative Contract Awards
ADB 0.00 20 Dec 2006 0.00 0.48 96%
Counterpart 0.09 Cumulative Disbursements
Cofinancing 0.00 20 Dec 2006 0.00 0.48 96%

Loan 2307-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
20 Dec 2006 06 Feb 2007 21 May 2007 31 Aug 2010 31 Aug 2011 13 Dec 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 5.00 Cumulative Contract Awards
ADB 5.00 20 Dec 2006 5.20 0.00 100%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 20 Dec 2006 5.20 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory - - Satisfactory

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation
Title Document Type Document Date
Mongolia: Customs Modernization Project Validations of Project Completion Reports Feb 2015

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