Philippines Needs to Spur Implementation of Paperless Trade

The Philippines is making good progress in simplifying and modernizing export and import processes, including implementing paperless trade, despite the COVID-19 pandemic. A United Nations survey shows the country’s implementation rate of key trade facilitation measures stood at 86.02% in 2021, higher than Asia–Pacific’s average at 64.9% and Southeast Asia’s 74.3%.

However, by accelerating the digitalization of processes further, the Philippines could reduce trade costs and improve its competitiveness significantly.

The Readiness Assessment for Cross-Border Paperless Trade: Philippines, published by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Philippine Bureau of Customs, says “the Philippines has demonstrated strong political will and made significant progress in implementing trade facilitation and paperless trade. However, more remains to be done to further enhance trade efficiency in the Philippines, particularly by adopting digitalization of trade procedures across all agencies.”

The implementation rate for measures relating to transparency, trade formalities, institutional arrangement and cooperation, paperless trade, and cross-border paperless trade are higher than Asia-Pacific regional average as well as the Southeast Asian average, the report notes. Still, despite posting higher than regional and subregional averages, cross-border paperless trade measures have low implementation rates.

Successful implementation of cross-border paperless trade has the potential to reduce trade costs by 13% on average across Asia and the Pacific region, the report says, citing a co-published report with the Asian Development Bank. Shifting to paperless trade will also improve regulatory compliance, reduce illicit financial flows, and facilitate engagement in the increasingly digital global economy.

The report is based on technical and legal assessments of the readiness of the Philippines for cross-border paperless trade.

Uneven implementation

The report notes uneven implementation of paperless trade and cross-border paperless trade among agencies and stakeholders.

The customs bureau has implemented paperless trade systems, being the focal agency for cross-border trade, but other agencies have also set up their own systems to facilitate information processing in completing trade transactions, and not all the systems are connected.

One of the systems the customs bureau has put in place is the National Single Window (NSW), a computerized internet-based system that allows parties involved in trade to lodge information and documents with a single entry point to fulfill all import, export, and transit-related regulatory requirements. The facility was developed to interconnect government agencies involved in the processing of import and export shipments.

In 2017, the Department of Finance launched the TradeNet platform to operate as the new NSW. The Department of Information and Communications Technology runs and maintains the system.

Apart from this, the Philippines has also partially implemented electronic port systems for seaports and airports, but they are not interconnected. The government agencies in the port system maintain their respective electronic systems, with some still in the midst of phasing out manual systems.

The Philippine Ports Authority, which runs public ports, has several electronic systems already in place, such as the Electronic Accreditation System, Electronic Permit Management System, and Internet-based Port Operations and Receipting for Terminals System.

The Maritime Industry Authority (MARINA) has deployed the first phase of an online system for domestic shipping called the Integrated Domestic Shipping Information System. The system has undergone pilot testing and is set to go live this year.

The Civil Aviation Authority of the Philippines also maintains its own electronic systems, but they are limited to air navigation and air traffic systems and equipment.

Recommendations

While the Philippines is “trending in the right direction” when it comes to paperless trade, the report recommends more measures:

• Strengthen the institutional mechanism for coordination with stakeholders of cross-border paperless trade;
• Continue with the implementation of trade-related electronic systems and other trade IT projects, including the customs bureau’s cargo processing system, the port community system to be spearheaded by the Philippine Ports Authority, and the national single window system;
• Update the single window platform to handle all types of documents in cross-border trade;
• Implement the national program to accelerate the deployment of fiber optic cables and wireless technologies to improve internet speed, as well as various ICT-related programs to improve public service delivery;
• Adhere to the National ICT Ecosystem Framework roadmap, which will guide the development of the Philippine digital ecosystem;
• Implement the e-Government Master Plan 2022, which aims to achieve a One-Digitized Government;
• Conduct an annual vulnerability assessment and penetration test to protect the integrity and security of government IT systems against cyber-attacks;
• Align the development and implementation of cross-border paperless trade with the National ICT Ecosystem Framework;
• Implement the Anti-Red Tape Authority Law, which was enacted to improve the competitiveness of and ease of doing business in the Philippines;
• Harmonize data according to international standards;
• Focus on capacity-building and budgetary support; and
• Implement the globally recognized Authorized Economic Operator program that gives exporters, importers, and other trading operators preferential treatment from customs authorities.

The Philippines has regulations in place that facilitates the shift to paperless trade, including the Electronic Commerce Act of 2000, which is “fundamental” to the recognition of paperless transactions under local law, the report says. Yet, gaps remain, such as the lack of rules involving electronic notarization systems and electronic or digital signatures.

The report recommends

• amending the electronic commerce law to ease the requirements for the recognition of electronic and digital signatures, facilitate electronic notarization, and expressly recognize contracts formed by automated message systems as recognized under the United Nations Convention on the Use of Electronic communications in International Contracts;
• accession to the Electronic Communications Convention to govern the legal recognition of cross-border electronic transactions, while domestic law will continue to govern domestic transactions; and
• enactment of a law related to the management of the national single window.