The cost is clear

THE BUREAU of Customs, the celebrated BOC under the Department of Finance that already merited a “special” mention in the Sona of our leader Benigno Simeon, a.k.a. BS, riled up the business sector again with its latest “anti-smuggling” measure.

Word went around business that the BOC wanted to revive—one more time with feelings—the discredited abandoned scheme called “preshipment inspection.”

It seemed that, in a meeting among top honchos of the BOC and big business organizations, the BOC showed the new “customs memorandum circular,” or CMC, spelling out the new rules on the preshipment inspection.

The BOC even told the business groups that the coast was clear for the CMC, as it already went through the approval process “upstairs,” perhaps meaning the top guys at the DOF—but probably not Malacañang.

Now, in the 1980s and 1990s, the government had adopted the pre-shipment inspection scheme that became popular among developing countries.

At that time, only one company cornered the multi-million dollar income from the scheme, which was the SGS, or Swiss company Societe Generale de Surveillance.

The government nevertheless abandoned the scheme about 15 years ago.

In the recent meeting with business groups, however, the BOC presented a list of seven companies to be accredited inspectors, including SGS, together with other well-known foreign groups, including Intertek, Cotecna, and Nippon Kaiji Kentai.

The main uproar in the business sector against the new CMC was that it would, in effect, translate to additional costs to business in a country heavily reliant on importation for almost everything.

Moreover, the BOC’s new version of the pre-shipment inspection scheme covered only the “quantity” of importation, apparently as a way to verify the declaration of importers on the volume of their shipments.

Thus, the biggest issue between the BOC and importers, the “valuation” of import shipments, which would determine the duties and taxes, should remain the exclusive territory of the BOC.

We all know that the “magic” in the BOC has always taken place in the valuation.

As  early as April last year, Customs Commissioner John Philip Sevilla revealed his plan to implement reforms in the bureau, among them the return of the preshipment inspection scheme.

He said then that the “reforms” would fight corruption in BOC and, as a result, would also curb smuggling.

There—so the problem was corruption in the BOC, and the main solution of the BOC, backed up by the DOF honchos, would be to punish business with more costs. Superb!

In other countries, importers often resorted to pre-shipment inspection, despite the huge costs it entailed, as a surefire way to check the “quality” of what they bought from suppliers abroad.

Here, our beloved government officials wanted the method to fight corruption— you know, just to do the job that they were supposed to do.

Anyway, the BOC took several months after Sevilla’s announcement of his “reforms” to do the approval process for the comeback of the preshipment inspection scheme.

All this time, the business sector has been complaining about the additional costs that importers must bear due to the debilitating port congestion, such as higher demurrage, storage fees and shipping charges.

The logistics industry, for instance, which included forwarders and trucking companies, revealed that it was losing some P120 million a day due to the port congestion.

The tedious process in the BOC for the release of shipments even added to the damaging port congestion. Upon arrival of the shipment, the BOC would relay to the customs brokers the amount of duties and taxes. The mere “relay” would normally take a few days.

That would be the only time the brokers could start the “negotiation” with the BOC assessment office, which would give the shipment either red, yellow or green signals.

Important: No shipment ever got a “green” signal!

Anyway, another assessment followed the “stop light” assessment, conducted by the IAS, or the Import Assessment Service, needing at least four signatures.

This would take only 10 days, if the importer would be lucky enough to have hired the brokerage firm of one of the BOC deputy commissioners. Otherwise, it would be a much longer process of arriving at the taxes and duties.

Payment of the taxes and duties would take four to 10 days, which was coursed through one single bank, by the way, none other than government-owned Land Bank which, in turn, often complained that it still did not have the “updated” data from the BOC computers.

When all was said and done, the cargo would go through another queue for the “x-ray” machine, creating another delay, prior to the trip outside the piers to slug it out with the MMDA traffic enforcers, the LTO, the LTRFB and the Makati City anti smoke belching special unit.

All those stops, of course, entailed costs to the importer. And taken as a whole, they would amount to truckloads of money.

We imported almost all the raw materials in manufacturing, because we never bothered to establish basic industries such as steel and chemicals.

Not only did we become addicted to imported textile, we even imported RTWs, and the chains of RTW stores that sprouted in all the malls. Even “Filipino” brands with store chains imported their merchandise.

Also, in this so-called agricultural country, where more than 70 percent of the population relied on agriculture for livelihood, we import the raw materials for food processing industries.

We were supposed to be the world’s biggest producer of coconut, and yet we imported palm oil for raw material.

Local brands of snack items actually use imported wheat, and even imported flour, not to mention starch, sugar and even food coloring. Look, we even imported chicken and pork. And let us not forget garlic!

And so to help solve the problem at the piers, our beloved government also imposed what became known in business as the “balance of trade” fee—which should be more of an “imbalance” of trade fee.

Because we imported more than we could export, mountains of import containers got stuck at the piers. There was no need for all of them for export shipments. Shipping lines would charge extra to take the empty containers out of the country.

On top of it all, the bright solution was to impose on the importers the “balance of trade” fee, amounting to only P22,000 per container.

Now, it is clear that business must shoulder the additional cost of the new improved pre-shipment inspection scheme.