DOF warns BOC of sugar smuggling scheme in PH

A possible sugar smuggling scheme has been operating under the nose of the Sugar Regulatory Administration (SRA), following reports that a number of traders have been exporting sugar and replacing them with imports at a volume beyond what is allowed by the government.

Carlos Dominguez III, secretary of the Department of Finance (DOF), sounded the alarm on Monday and instructed the Bureau of Customs (BOC) to be on the lookout for smuggled sugar, adding that the higher than world market prices of sugar in the Philippines have provided smugglers with an incentive.

Traders may have been taking advantage of the SRA’s export replenishment program, wherein exporters who are allowed to export sugar to the United States may apply for permits to import sugar at the same volume.

This replenishment scheme helps ensure that the local sugar supply is stable. But Dominguez said it was possible that traders were using this program to bring in more imported sugar that they can sell here at a higher price.

Reports

In a statement, Dominguez said he had received reports from officials of the Bureau of Internal Revenue in Cebu about a company authorized to export sugar that has been replacing its overseas shipments with sugar volumes that are way higher than what it had exported.

Under Sugar Order No. 2, the SRA allowed the exportation of sugar to the United States after being given an import quota of 142,160 metric tons. Traders who are interested to take part in the exportation program must apply with the SRA.

“This is the first time I have heard of such an allegation. All the traders that exported to the United States are accredited with SRA,” Hermenegildo Serafica, administrator of the SRA, said in a text message exchange with the Inquirer.

“There are requirements … that need to be compiled before they can be given import clearance. Plus, Customs will always look for SRA import clearance, and all import clearances that traders present to Customs are verified with SRA … If there is no permit to import, these sugar are confiscated,” he added.

Import clearance

Serafica stressed that the SRA has not issued any import clearance to any trader who has exceeded their volume of export.

As of June 30, retail sugar prices have been stable at between P45 to P47 a kilogram for raw, P50 a kilo for washed, and between P52 and P54 a kilo for refined.

Wholesale prices, however, have been rising since the milling season began in September last year. The average price of a 50-kilo bag of raw sugar as of end-June rose by 5 percent to P1,831 from P1,741 in September last year, while the price of washed sugar increased to P2,016 per LKg from P1,862 per LKg.