PPP when government fails

According to Jesus Aranza, chair of the Federation of Philippine Industries, it was only in 2004 when the anti-smuggling drive scored significant success. This was because public-private partnership (PPP) was truly in action, though it was not called PPP then.

The drive was so successful, with well-connected unscrupulous politicians and close relatives of powerful Cabinet officials identified, that this PPP structure was abruptly abolished. Smuggling again flourished. It still flourishes today. By itself, government has failed to stop it.

PPP absence

PPP’s absence in the anti-smuggling campaigns has had disastrous effects. Today, government is deprived of more than P100 billion in forgone revenues because of rampant smuggling.

This number is derived by taking the difference between the reported exports from other countries to the Philippines by the International Monetary Fund (IMF), the United Nation Comtrade, and the National Statistics Office.

The three organizations’ estimates are very close to each other. However, they differ significantly from the reported imports from the Bureau of Customs (BOC).

The Alyansa Agrikultura has stated that the 30 percent missing data (or P630 billion a year) from the BOC report can be accounted for by either outright smuggling or technical smuggling (i.e., undervaluation, misclassification and misdeclaration).

The BOC has never answered this question posed by the Alyansa Agrikultura in forums like official meetings with the BOC, a Senate hearing, and various media briefings. It is bad enough that we lose so much forgone government revenue because of smuggling. Worse, rampant smuggling kills agriculture and industry, thus depriving us of much needed jobs.

Hog industry

Hog farmers, including Edwin Chen, president of the Pork Producers’ Association of the Philippines and concurrent Alyansa Agrikultura vice president, got so desperate they published two full-page ads to ask for anti-smuggling action. They pointed out that they lost P8.7 billion for eight months alone largely due to smuggling. They also pointed out that 70 percent of hog producers are small backyard raisers.

What the full-page ads did not state is that these backyard raisers produce more than 50 percent of hogs. More importantly, 20 percent of them have already lost their livelihood!

Information from the Department of Agriculture (DA) Bureau of Agriculture Statistics (BAS) shows that backyard farmers produced 9.8 million heads in 2009 and 8.0 million in 2011. For March, 2012, estimates are now at 7.8 million, or 20 percent less than 2009. So far, the full-page ads have resulted in very little action.

Solution

We believe this is because there is no PPP in anti-smuggling. PPP is not working because it needs a structure to support it. Structure follows strategy.  It’s simple: if there is a PPP strategy but no PPP structure, there will be no PPP.

The solution is to create what already worked in the past. It is a PPP structure such as the very successful Cabinet Oversight Committee on Anti-smuggling (Cocas). Cocas was abolished in 2004 after several months precisely because it was successful. It had five Cabinet Secretaries from the Departments of Finance, Agriculture, Trade and Industry, Justice, and Interior and Local Government.

There were two private sector representatives: one from the Alyansa Agrikultura for agriculture and the other from the Federation of Philippine Industries for industry.  Cocas met every two weeks to recommend and, more importantly, monitor anti-smuggling action. Customs Commissioner Rufino Biazon is doing his best, but needs an oversight body like PPP Against Smuggling (PPPAS) to support him.

At the PPPAS, we expect better public sector coordination. The DA officials said they have made recommendations to BOC, but frequently get a deaf ear.  They complain that farmers should not blame DA, but only BOC, for smuggling.

We respectfully, but strongly, disagree. We elected one government. Its agencies should work together. DA should implement its mandate by cooperating with the good forces in BOC to protect the farmers. We believe that the PPPAS, with private sector involvement, will help attain this because of the transparency and accountability that will be achieved during the PPPAS regular meetings.

So why not create a PPPAS structure to follow the strategy of anti-smuggling? It worked very well in the past. We do not have to reinvent the wheel. What are we waiting for? Is there truth to the rumor that some unscrupulous politicians need smuggling revenues at the expense of poor farmers’ livelihoods to fund their 2013 electoral bids? On this important smuggling issue, the government’s political will will be tested in the next few weeks. We hope that our government will not be found wanting.

(The author is chair of Agriwatch, former secretary for presidential flagship programs and projects, and former undersecretary for agriculture and Trade and Industry. For inquiries and suggestions, email [email protected] or telefax (02) 8522112)