Smuggling as harmful as drugs

Smuggling and drugs are equally harmful to our nation and our people.

This is why President Rodrigo Duterte,  in a 4 a.m. meeting with the five-coalition Agri Fisheries Alliance (AFA), said  that he would fight not only drugs, but also smuggling.

The table below shows why.

In 2014,  the smuggling rate was 36 percent, with lost government revenue of P242.6 nillion.

There is much publicity on the alleged Napoles scam that deprived us of P10 billion over 10 years, or P1 billion a year.  This is extremely small,  compared to the P202.5 billion a year lost to smuggling.

The numbers in the table are gathered from the UN Trade Statistics. The data cover  more than 85 percent of all exports to the Philippines.

Our government loss computations are not exaggerated:  our 2012 estimate is only 2 percent higher than that given by President Noynoy Aquino in his Sona; our 2011 estimate is only  4 percent  lower than that  computed by the Global Financial Integrity,  a Washington,  DC-based think tank.

However,  the main harm is not the revenue loss.  It is the damage done to our legitimate industrialists,    small businesses,  and especially small farmers and fisherfolk.  We are now flooded with cheap and even unsafe imports that deprive us of our jobs,  which further increase  our poverty.  In addition,  new investors who can provide  us with  more jobs hesitate because they may lose money from rampant smuggling.

Good news.  Thankfully,  smuggling declined in 2015.  That year,  it declined from 36 percent  in 2014 to 30 percent. The government lost revenue of P242.6B similarly decreased to P202.5B.

What happened during the last 20 years?   From 2004 to 2005,  smuggling decreased from 8 percent of imports to 6 percent.  This was when the Cabinet  Oversight Committee Against Smuggling (COCAS) was established.  It was chaired by a secretary, and had undersecretaries from the four relevant Departments of Finance,  Agriculture, Trade and Industry,  and Justice.  There were also two private sector representatives: one from agriculture (Alyansa Agrikultura) and one from industry (Federation of Philippine Industries). They met with the BOC twice a month,  monitoring and recommending BOC antismuggling action. BOC had no choice but to respond.

But ever since COCAS was abolished in 2006, with little BOC oversight,  smuggling consistently increased until 2014.

It decreased in 2015 for two reasons.  First,   there was a low level National Competitive Council Anti-Smuggling Committee with the same composition  as the abolished COCAS.  But because of its low level representation, it did not accomplish what a high level COCAS could have done.  Secondly, this committee’s meetings started to be held at the BOC Commissioner’s Conference room. Consequently, BOC was much more involved.

Last Nov. 17,  BOC Deputy Commissioner Arturo Lachica was shot dead.  His key function was to file cases against smugglers.  If  smugglers are Lachica’s murderers,  then they only have to contend with other BOC officials to continue their smuggling.  But if COCAS is reestablished,   the smugglers must now  deal with four other government  departments.

If smuggling is indeed as harmful as drugs,  President Duterte must now consider reestablishing the COCAS, with two private sector agriculture and  industry representatives. They can then closely monitor and recommend BOC anti-smuggling action.  The fight against harmful  smuggling  can then be won even sooner than the war against dangerous drugs.