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Due to prohibitive transaction fees ...Government re-tendering for port community system

Published:Wednesday | July 30, 2014 | 12:00 AM
A section of the port of Kingston. - File

McPherse Thompson, Assistant Business Editor

The nearly 15-year advocacy for the establishment of a port community system to improve Jamaica's trading system and enhance the country's rating in the Doing Business Report, has received another setback although bidders have been found.

In the June 2014 International Monetary Fund (IMF) country report on Jamaica, the Government said that as part of the growth-enhancing reforms, its plans to establish a port community system (PCS) to electronically integrate and streamline export and import procedures are under way.

Bids were received from pre-qualified bidders and have been evaluated; a process that was completed in April 2014 and both bidders were found to be "technically and financially responsive."

Public-private sector partnership

The Ministry of Finance and Planning explained that the port community system project for Jamaica is being undertaken by way of public-private sector partnership.

The investors are required to provide the funding and technical resources to implement and maintain the system, the ministry said in emailed responses to Wednesday Business queries.

"Evidence must be shown that they are financially capable of undertaking and financing the project, technically able to provide the ICT (information and communication technology) and project management skills required to implement the project," it said.

"Both bidders have met the criteria with respect to the capital financing requirements and technical ICT capabilities," it added

In the IMF report, the Government said that notwithstanding the criteria being met by both bidders, the associated transaction fees were prohibitive and would make Jamaica globally uncompetitive.

As such, approval has been received from the National Contracts Commission for a limited re-tender, utilizing a refined request for proposal with the two pre-qualified bidders, to facilitate more effective alignment of the system capabilities and the competitive needs of the country at this point in time.

The Government also said that with the Jamaica Customs acquisition of ASYCUDA World Customs Management System, an independent assessment of both the port community system and ASYCUDA World systems "is currently being undertaken and will inform the next critical steps."

The ministry further explained that the transaction fees proposed by the investors were substantially higher than the Port Authority of Jamaica's and consultants' average estimates.

However, it declined to disclose the extent of the transaction fees. "Based on the fact that the GOJ (Government of Jamaica) will be re-tendering this process, we would not be able to disclose the transaction fees," the Ministry said.

However, explaining how the transaction fees arose, it said the private-public partnership being pursued is a design, finance, build, operate and transfer (DFBOT) model. This will entail the investor providing both the capital and all other resources needed to implement the port community system.

"The investor will recover his investments through transaction fees that will be paid by different users/entities within the port community (importers, exporters, custom brokers, shipping agents, etc.) for varying trade transactions," the Ministry said.

Explaining how the transaction fees proposed would have made the country globally uncompetitive, the Ministry noted that "Jamaica operates in a global environment and, as such, the total trade costs (tariff and non-tariff) for completing transactions (imports, exports or trans-shipments) are always being assessed globally by business operators."

Increased import costs

In addition, it said "higher transaction costs will serve to increase the cost of goods imported for our productive sector and for consumers, and will increase the cost of our exports, which in turn generally makes them less competitive."

The bidders/investors will operate the port community system via a special-purpose vehicle to be created specifically for its implementation and management for the duration of the concession agreement, the Ministry said.

Historically, the Ministry said, "Jamaica has a poor ranking with the World Bank's Doing Business and Logistical Performance Index reports; therefore the Government of Jamaica , has mandated the Port Authority of Jamaica and Jamaica Customs to implement a PCS for Jamaica."

It explained that a port community system is a neutral and open electronic platform enabling intelligent and secure exchange of information between public and private stakeholders in order to improve the competitive position of the sea and air ports' communities.

It optimizes, manages and automates port and logistics-efficient processes through a single submission of data and connecting transport and logistics chains.

It will be a single window for the ports of Jamaica as it is shared, set up, organized and used by firms in the same sector - in this case, a port community. A PCS optimizes, manages and automates smooth port and logistics processes through a single submission of data and by connecting transport and logistics chains.