Earlier, the State Bank of Vietnam, the Ministry of Finance and the World Bank completed negotiations to determine the credit arrangements for the project.

In the context of the international economic integration and trade globalisation process, Vietnam's customs sector has faced challenges facilitating trade, while at the same time tightening import-export control and increasing budget collection. The sector has initiated numerous activities to implement the modernisation process. Vietnam's Customs Law has been amended in line with the revised Kyoto Convention. Electronic clearance procedures have piloted well by customs officials in Ho Chi Minh City and Hai Phong port city. The General Department of Vietnam Customs and the World Bank have completed a technical assistance project to prepare for the Customs Modernisation Project, which is expected to begin early this year. The five-year project is being funded by a loan of nearly US$66 million from the World Bank and more than US$11.8 million from Vietnam. The project is to have three major components - customs system and procedures, organisational restructuring and resource management, and information and communication technology.

The first component will put in place improved systems and procedures to reduce clearance time, enhance transparency and predictability, significantly reduce red tape and lower transaction costs. It will also support the development and implementation of a modern, transparent and accessible legal framework.

Deputy Finance Minister Truong Chi Trung said the project got started with a pre-feasibility study. “For instance, amended and renewed articles in the Customs Law were introduced in May 2005 to coincide with customs modernisation,” he said. “Risk management principles, definitions of customs obligations and powers, post clearance audit standards, e-customs and intellectual property regulations have been legalised to ensure harmonious customs procedures of transparency and simplicity.”

The second component will develop a modern organisational structure and strengthen human, financial and physical resource capacity. The third component is designed to provide the customs sector with a modern information and communication technology environment and create infrastructure that can facilitate the adoption of modern approaches by customs administrative personnel.

Quantitative indicators have also been set out to measure the project’s impact. Deputy director general of Vietnam Customs Dang Hanh Thu, who is also the project’s director, said: “We aim to re-engineer our organisational structure from the central to the grassroots level by 2010 to meet requirements of modernisation.”

“The project has to be undertaken with care,” Ms Thu said. “Detailed surveys and evaluations will be done before any further recommendations are made. Human resources have to be developed. We also have four groups of quantitative indicators for duty collection, customs clearance duration, percentage of shipments under physical control and client satisfaction.”

Mr Thu said that after the project is up and running, the customs sector hopes to bring budget collection to more than US$3.5 billion. The time required for customs clearance will be reduced to 1.5 days for imports and just two hours for exports. The proportion of shipments going through physical checks will be reduced to less than 30 percent.