Structure solution to smuggling
A key solution to the smuggling problems today is to have a structure that has already proven successful in the past. This is the Task Force on Anti-smuggling created through EO 385 on Nov. 16, 2004.
Its head was then Interior and Local Government Secretary Angelo Reyes. He got help from other government agencies and the private sector. From the government, active participants were the Department of Finance, which supervised the Bureau of Customs; the Department of Justice, which enforced the laws; and the Departments of Agriculture and Trade and Industry, which were tasked to promote the welfare of their constituents, the victims of smuggling. From the private sector, the Alyansa Agrikultura represented agriculture while the Federation of Philippine Industries represented industry.
One and a half years later, on March 15, 2006, EO 509 repealed EO 385. The task force was reconstituted with the commissioner of Customs as head. From then on, neither other government agencies nor the private sector were able to play any role in the anti-smuggling drive. This means 2005 was the only full year that the anti-smuggling force, created under EO 385, was able to act with its government-private sector composition. It was also the year when smuggling decreased and the rise of smuggling stopped.
Measuring smuggling
One method of measuring smuggling is to identify the total exports reported by other countries to the Philippines and compare them to total imports reported by the BOC. Much of this difference can be attributed to smuggling. Smuggling can be in three forms: outright smuggling, undervaluation and misclassification.
The Alyansa Agrikultura is a farmer-fisherfolk coalition composed of 42 federations and organizations covering all agricultural sectors. It noted a dramatic rise in smuggling since 2003. At the start of President Aquino’s administration, it recommended the creation of an Oversight and Task Force with government-private participation headed by a Cabinet secretary to fight smuggling. The Alyansa was told to give the new Bureau of Customs administration a chance to operate without such a group. Should the BOC fail to stop smuggling, the proposal would be considered.
Rationale
Today, recommendations for action and reform are often ignored by the BOC.
One example is the recommendation that the BOC’s Inward Foreign Manifest (IFM) be made accessible to the Department of Agriculture and the Department of Trade and Industry. This has not been done. Unlike in the past, the DTI does not have this access now. The DA has very limited access because of an organized bureaucracy that makes such access difficult.
The IFM is a document that the BOC receives two days before an imported shipment’s arrival. It contains the name of the importer, the imported goods, the ship’s name and the date of arrival. For agriculture, all shipments that do not have the required DA import permits can automatically be apprehended. But since the DA does not have the IFMs, the shipments go through without a check and balance system. For industry, the list of importers can be compared to a list of importers on a watch list and their goods examined more thoroughly. But since the DTI does not have the IFMs, this is likewise not done.
Conclusion
There is an urgent need for a check-and-balance mechanism to aid the BOC commissioner in his anti-smuggling work. Today, only the BOC hears complaints and recommendations. There is no structure to enable other government agencies and the private sector to participate meaningfully and regularly in fighting smuggling.
It is not possible to stop all the smuggling that takes place. But as shown in the above table, the increase in smuggling was stopped and even declined when a government-private sector task force was established with a Cabinet secretary as its head. When the task force was led by the BOC, smuggling flourished. This is a concrete proof that anti-smuggling work cannot be left to the BOC alone. A government-private sector oversight and task force structure is an effective way of fighting smuggling. This is imperative so that more than the loss of P100 billion in government revenue and, more importantly, of jobs in our severely threatened agriculture and industry sectors, will be finally stopped.
Graphic head Philippine imports
Below is a record (in billion dollars) for the top 25 countries that contributed 86-91 percent of Philippine imports as recorded by the BOC:
Year Exports Reported Imports Reported Difference % Under-reported
By Countries by BOC, Philippines
2004 $45.56 B $41.87 B $3.69 8%
2005 46.56 43.87 2.69 6%
2006 51.86 46.38 5.48 11%
2007 58.58 49.32 9.26 16%
2008 66.23 50.65 15.58 24%
2009 54.53 40.37 14.16 26%
2010 70.86 51.08 19.78 28%
2011 78.45 54.94 23.51 30%
Source: UN Commodity Trade Statistics
*Part of this is not smuggling. For example, some of the exports to the Philippines are then re-exported and are not in the BOC import record.
(The author is chairman of Agriwatch, former secretary for Presidential Flagship Programs and Projects, and former undersecretary for Agriculture, and Trade and Industry. For inquiries, e-mail [email protected] or telefax (02) 8522112.)
