P900B worth of goods smuggled into PH from 2011 to 2015, says UA&P study

Around P900 billion worth of goods in eight critical industries were smuggled into the country from 2011 to 2015, weaving a “vicious network of negative economic repercussions,” according to a study conducted by the University of Asia and the Pacific (UA&P).

The study, commissioned by the Fight Illicit Trade (Fight IT) Movement under the Federation of Philippine Industries, Inc. (FPI), covered eight industries, namely: Petroleum, steel, resins, wood, cigarettes, sugar, palm oil and automotive batteries.

The value of smuggled goods was computed by getting the export value of the products from the host countries and comparing that with the imported value here in the Philippines as reported by the Philippine Statistics Authority, said Rolando Dy, project study head.

Petroleum was the most smuggled item, with the value of smuggled petroleum products during the period pegged at P680 billion, followed by steel at P106.1 billion, the study showed.

The remaining value of smuggled goods per industry are as follows: Resin (P42.9 billion), palm oil (P30.9 billion), wood (P24.8 billion), cigarette (P9.8 billion), sugar (P9.3 billion), and automotive batteries (P750 million).

“The bad thing about that is it actually cripples the legitimate taxpayers like our members in the industry because what happens there is that these illicit traders are able to sell their products at a cheaper price at the disadvantage of the government,” said FPI President George Chua in a briefing on Friday.

The study used an “input-output analysis” of the national economy to determine the economic impact as well as the multiplier effect on gross domestic product, household income, and employment—all three of which fell during the five-year period due to smuggling in the selected industries, the study said.

The findings, including the value of smuggled goods which totaled P904.6 billion, were derived from the analysis of all industries from 2011 to 2015, except for cigarettes since the analysis only began in 2013, the study noted.

“Smuggling weaves a vicious network of negative economic repercussions. Its devastating effects on government revenues and industries spawn vicious circles of economic problems,” the document read.

Since illicit trade displaces domestic production, the value of smuggled goods is treated as a decrease in domestic production or the gross output, with the drop valued at P1.1 trillion. Moreover, during that five-year period, the Philippine economy lost P495.5 billion in gross domestic product (GDP). In terms of household income, there was an estimated P77.2 billion decrease.

However, employment suffered more than the GDP or the household income did, the study said, as it reported 291,070 workers displaced due to smuggling, a finding which “suggests that smuggling most severely affects the ability of the economy to create more productive jobs.”

According to FPI Chair Jesus Lim Arranza, it was the federation that selected the industries, but expressed interest in eventually expanding the study to include other industries with suspected smuggling such as rice, furniture and meat.