Public Private Partnerships (Ppp) Models For National Single Window


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Public-Private Partnerships (PPP) Models for National Single Window

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Public Private Partnerships (Ppp) Models For National Single Window

  1. 1. High-level Symposium On Building Regional Capacity For Paperless Trade 24 Mar 2009 Jonathan Koh Director, Solutions & Consulting Copyright 2008 Private & Confidential
  2. 2. Public-Private Partnerships (PPP) Models for National Single Window Case studies from Singapore, Mauritius, Ghana" Copyright 2008 Private & Confidential
  3. 3. Our Experience Country Project Implemented Business Model Singapore TradeNet / TradeXchange 1989 PPP Mauritius Mauritius TradeNet 1994 PPP Ghana Ghana Community Network 2000 PPP Panama Automated Data Collection 2004 Self Funded System (Panama Canal Authority) Panama Customs 2008 World Bank / IADB Saudi Arabia SaudiEDI 2005 Build-Operate- Transfer India Port Community System (India 2007 Port Association Madagascar Madagascar (GASYNET) 2007 PPP Ivory Coast Ivory Coast TradeNet 2008 PPP Mozambique Mozambique TradeNet On-going PPP Qatar Qatar Customs Clearance Single On-going Self Funded Window Copyright 2008 Private & Confidential 3
  4. 4. Recommendation 33 – 3 concepts of SEW Copyright 2008 Private & Confidential 4
  5. 5. The Singapore TradeNet Copyright 2008 Private & Confidential
  6. 6. TradeNet® - 1989 to 2007 • World’s first nationwide trade documentation system • Single point for trade-related transactions with the Government • Integrates ALL 35 controlling units’ requirements • 100% of the total Trade Permit applications are processed by the TradeNet® system. • Handles approximately 30,000 permit applications per day, amounting to some 9 million transactions a year. • Used by approximately 2,500 companies with 8,000 users. • TradeNet® Version 4.0 implemented in October 2007. Before After Copyright 2008 Private & Confidential 6
  7. 7. Singapore Trade Facilitation Journey • In 1985 – Severe recession hits Singapore • Establishment of a high-powered Economic Committee - chart new strategies to improve its economic competitiveness. • Recommends - expedite the use of IT to improve trade competitiveness. • In 1986, Hong Kong revealed that it was creating a trade oriented EDI system called HotLine (now TradeLink), which further strengthened Singapore’s resolve to implement our own TradeNet. • The Trade Development Board was given the task of mobilizing the trade community and became the coordinating point among various agencies such as Customs and Excise, Port of Singapore Authority, and Civil Aviation Authority of Singapore. Copyright 2008 Private & Confidential 7
  8. 8. TradeNet – Beginnings • A TradeNet Steering Committee was created to oversee the process in 1986. • Dec 1986, then Minister of Trade & Industry – Mr Lee Hsien Loong publicly announced the TradeNet project, to be completed in two years. • Jun 1987 – RFP Issued. • 18 Mar 1988 - Singapore Network Services (now CrimsonLogic) was created to own and operate the TradeNet system • Jan 1989 – TradeNet was launched • TradeNet Initial Investments / Development was funded by the Government – in excess of US$10M Copyright 2008 Private & Confidential 8
  9. 9. Operating and Sustaining TradeNet • SNS as a “Special Purpose Vehicle” • Ownership – – 55% - Trade Development Board – 45% - Statutory Boards related to info-comms – Port of Singapore Authority – Civil Aviation Authority – Singapore Telecoms • Operate as a “Valued Added Network” (VAN) operator • Allowed to charge a transaction fee to cover operating costs under a concession from Government • SNS went to develop further nationwide community EDI networks – MediNet, LawNet, BizNet, etc Copyright 2008 Private & Confidential 9
  10. 10. SNS CrimsonLogic Today • We survived 21 years !! • Global Operations with > 600 Staff Copyright 2008 Private & Confidential 10
  11. 11. The Next Generation TradeNet - TradeXchange • First IT Public-Private Partnership (PPP) in Singapore • CrimsonLogic was appointed by the Singapore Government as an independent contractor to develop, operate and maintain as well as drive the adoption of this project. • Other than TradeNet®, the Singapore Government is not involved in the provision of the TradeXchange® services • Launched Nov 2007 • Prospective no. of users: 90,000 Copyright 2008 Private & Confidential 11
  12. 12. The Mauritius TradeNet Copyright 2008 Private & Confidential
  13. 13. Mauritius TradeNet – Beginnings • After the success of the Economic Processing Zones (EPZs) mainly in the textile industry, plans to strengthen the economy through the further diversification of economic activities • Decision to increase investment and services in IT • Recommendations to that end by the World Bank in 1993, followed by several studies • One of the feasibility studies: establishment of an network to facilitate the processing of trade documents by electronic means Source: Jean-Claude Montocchio, INCOM Consultant Copyright 2008 Private & Confidential 13
  14. 14. Mauritius TradeNet – Beginnings • An extensive analysis was carried out by the public authorities in Mauritius • Adopted the Singapore TradeNet as a model • Following detailed system studies and intensive industry discussions, it was evident that a Value-Added Network (VAN) operator is needed to operate the TradeNet and other IT Communications services. • The VAN would be a tripartite joint venture company involving public and private sector representatives and a foreign technical partner. It would also operate autonomously and has to be self sustainable in the long run. • The Mauritius Network Services Ltd. was incorporated on 15th April 1994 as a private company. Copyright 2008 Private & Confidential 14
  15. 15. Structure of Mauritius Network Services • The Mauritius system – also called TradeNet – is a joint venture between : - Mauritian public and private sector interests (representing the main actors of the economy), and - a foreign partner providing know-how and experience • Original Shareholders of Mauritius Network Services Ltd. were: - Maurinet Investments Ltd. (60% of equity) - 53% held by 4 Mauritian public bodies, and - 47% held by the Chamber of Commerce & Industry - Singapore Network Services Pte. Ltd.) (40% of equity) • Joint-venture functioning 100% as a private concern • Equity (± USD 1 million) provided by shareholders • Currently, as at 2009, the shareholdings held by CrimsonLogic has been reduced. Copyright 2008 Private & Confidential 15
  16. 16. Success of Mauritius Network Services • Self-sustainability perspective right from the start • Activities financed from 2 sources: - a software single-user license of $ 1300 at the outset - a service fee of USD 5.- per declaration sent thru’ MNS • Highly successful and profitable activity: - share value multiplied by eight since 1994 - yearly dividends = ± 90% of funds invested Copyright 2008 Private & Confidential
  17. 17. The Ghana Community Network (GCNET) Copyright 2008 Private & Confidential
  18. 18. Ghana Community Network – Beginnings • In the 90’s, a national reform drive Government’s vision for a Ghana that is open to the rest of the world to attract FDIs and promote business competitiveness. • The Government of Ghana launched the Ghana Gateway project for which it solicited support from the World Bank. • Official delegations visited New Zealand, Singapore, Mauritius, and Malaysia. • The Singapore and Mauritius visits particularly fascinated the delegation that saw in the TradeNet there - an approach that provides the dual benefit of: – speeding up trade transaction without jeopardizing Government revenues, while – streamlining the processes of trade transaction by bringing the various members of the trading community into an integrated network. Source: Luc De Wulf, TradeNet in Ghana Copyright 2008 Private & Confidential 18
  19. 19. Ghana Community Network – Beginnings • An Inter- Ministerial Gateway Oversight Committee was set up to oversee the this ambitious initiative. • After review of proposals from various software and systems integrators, Crimsonlogic was invited to provide the EDI system, having earlier successfully transferred this technology to Mauritius • It was, however, not prepared to commit investment funds directly for the development of the EDI. Development funds was assumed by Societe General de Surveillance S.A. (SGS), which played the role of the strategic investor and lead technical partner. • Ghana also adopted the Customs Management System that was designed for Mauritius and that was smoothly interfacing with the initial TradeNet from Singapore. • As part of the arrangements, a new company was created and charged with the implementation of both the TradeNet and the Ghana Customs Management System (GCMS). This company was given a de facto Build Own and Operate (BOO) contract. Copyright 2008 Private & Confidential 19
  20. 20. GCNet • Ghana Community Network (GCNet) was created as a JV company : – SGS (60%) – Customs Excise and Preventive Service CEPS (20%) – Ghana Shippers Council (10%) – 2 local banks (5% each) • Incorporated in Nov 2000 • Mandated by Ministry of Trade and Industry to implement and manage the GCNet system • 70 employees (including Network, Systems, IT Security, Ops Support, Call Centre, Training Depts) Copyright 2008 Private & Confidential 20
  21. 21. Success of GCNET • Immediate substantial decrease in clearance time – factor of 5 • Immediate substantial increase in Govt revenue – 35% Total Revenue - Tema 500,000 450,000 2002 2003 400,000 2004 350,000 300,000 Mio GHC 250,000 200,000 150,000 100,000 50,000 0 FEB MAY SEP MAR APR DEC AUG OCT NOV JAN JUL JUN Copyright 2008 Private & Confidential 21
  22. 22. Public-Private-Partnership (PPP) Copyright 2008 Private & Confidential
  23. 23. What is PPP? Definition and History of PPPs • Basic Principles – Contracts for performance of services – Payment of fees based on the standards of performance of services – Payments commence only when services commence – Pricing risk transferred to private sector, with in built contractual mechanisms for variations Management Contracts Outsourcing Joint Venture DBOO DBFO Part Privatisation Copyright 2008 Private & Confidential 23
  24. 24. Rationale For PPP PPP is not a • Source of “free” money • Way of financing unaffordable projects • Means of implementing bad projects PPP can • Leverage private sector innovation • Produce optimum risk allocation • Achieve design/build/operate synergies • Yield whole life cost savings • Capture alternative, or residual, values • Allow ministries to focus on their core mission • Frees up agency manpower for operational roles Copyright 2008 Private & Confidential 24
  25. 25. Traditional Procurement vs PPP Cash Flow Streams Traditional Scheme Development costs Operating costs Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Year 30 Contract End PPP Scheme Annual payment for facility service provision (inc repayment of capital) Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Year 30 Contract End Copyright 2008 Private & Confidential 25
  26. 26. Costs in Single Window? Design & Dev’ment Costs Operating Costs > US$15M to 20M >> US$ 2M per annum Cost increases if … • Operate, Support & • SW (to Customs) Maintenance of SW assets • SW (Customs & 20+ OGAs) • SW + Customs Mgt Backend • Drive Adoption & Training Time to implementation • Min. 40 to 50 staff • 2 years ? • Continual support for Network, Systems, Security, Training • Servicing to Trading Community; Customs, OGAs Copyright 2008 Private & Confidential 26
  27. 27. What’s the Cost Country Price Scope Remarks Singapore TradeNet US$12M Trade Facilitation Customs backend (1989) (Single Window) system not included excludes Customs System New Zealand NZ$22 Customs system CusMod System million[1] only (1996) Korea’s Automated ~ US$24 Customs System Does not cover Nation- Customs System million[2] only wide Single Electronic (1992 - 1997 Window Royal Thai Customs Baht 1.0 Customs system Does not cover Nation- System (1997-2000) billion2 only wide Single Electronic (~US$32M) Window Russian Customs US$133M2 Customs System Does not cover Nation- Development Project only wide Single Electronic Window [1] Article “Customs paves way for one-stop border” - [2] “THE ROLE OF AUTOMATION IN TRADE FACILITATION” - OECD Trade Policy Working Paper No. 22, 2005 Copyright 2008 Private & Confidential 27
  28. 28. Structuring a PPP Contract Structuring a PPP Contract – Typical Special Purpose Vehicle (SPV) Structure Government Equity Investors SPV Consultants PPP Contract Equity Shareholder SPV – PPP Credit Lenders Agreement Contractor Agreement Debt or Bond Sub-Contracts Sub-Contracts Design & Multi-Year Market Development Operations Adoption Copyright 2008 Private & Confidential 28
  29. 29. PPP – Managing & Transferring Risk Copyright 2008 Private & Confidential
  30. 30. The hard facts of today's world 1. SW are risky IT projects 2. Govt’s budget are overburdened 3. There’s no silver bullet Reference : Project Risks in Singapore’s TradeNet project is well documented in “Managing Risk in IT Projects – Case Study of TradeNet” – Neo & Leong, Journal of Information Technology Management, 1994 Copyright 2008 Private & Confidential 30
  31. 31. Risk Allocation Risk Allocation – Traditional Procurement Model Risk Government Risk INPUTS Design Asset Development Operation Renewal Copyright 2008 Private & Confidential 31
  32. 32. Risk Allocation via PPP Risk Allocation – Typical PPP Model Government Risk Government Shared OUTPUTS Risk Transferred SPV Transferred Risk Risk Design Asset Construction Operation Renewal Copyright 2008 Private & Confidential 32
  33. 33. Transferring Risk • Contract and Payment Mechanism determine risk transfer • Payment to PPP Contractor dependent on performance – Unitary Payment: Output Specification (allows risk transfer and innovation) Availability Criteria Performance Standards Payment Mechanism Incentives for performance and tool to effect Risk Transfer Copyright 2008 Private & Confidential 33
  34. 34. Risk Transfer • Objective: RISK TAKEN BY PARTY BEST PLACED TO MANAGE IT • Optimal risk transfer will enhance Vfm • Excessive risk transfer – cost increase, and unbankable in extremes Copyright 2008 Private & Confidential 34
  35. 35. Copyright 2008 Private & Confidential 35
  36. 36. The PPP Process for Single Window Implementation PPP Project Phases 3 to 12 months 12 to 18 months 18 to 30 months Feasibility Phase Procurement Phase Contract and change management Phase •Identify possible PPP •Advertise the opportunity •Implement contract opportunity •Hold industry briefing day •Manage Contract •Establish Project Management •Issue PQQ •Conduct PPE Team •Gain approvals •Examine viability of PPP - Define objectives •Issue ITN - Produce outline output based •Evaluate proposals definition of the required service •Negotiate Contract - Prepare outline public sector •Best and Final Offer comparator - Test market and bankability •Select Preferred Bidder •Produce business case •Gain approvals •Place Contract Copyright 2008 Private & Confidential 36
  37. 37. The CSFs Successful delivery of PPPs for Single WIndow • Critical Success Factors include: – Coordinated, realistic, efficient approach to procurement – Commitment from politicians, civil servants and the private sector – Public sector realism for what the private sector can deliver – Private sector empathy for what the public sector is seeking – Legal framework consistent with procurement and project needs NEW SKILLS NEEDED BY PUBLIC AND PRIVATE SECTORS Copyright 2008 Private & Confidential 37
  38. 38. Thank you for your time email: Copyright 2008 Private & Confidential 38