MANILA, Philippines - It's high time to rationalize the regulatory and revenue functions of the Bureau of Customs (BOC) to make them responsive to the realities and exigencies of the times.
The policies, procedures and practices in the country’s importation system are so antiquated that smugglers of agricultural commodities have found them easy to circumvent, making smuggling a $10-billion illegal trade each year.
Now being smuggled into the country are milled rice, refined sugar, beef, onion, pork, chicken, ginger, carrots and turnips.
In the mid-1980s, the value of smuggled agricultural products was estimated at $6 billion a year.
Smuggling increased at a much faster rate in the succeeding years, noted a study titled “An Assessment of Smuggling Agricultural Commodities in the Philippines” funded by the Department of Agriculture-Bureau of Agricultural Research (DA-BAR) and implemented by the Philippine government-hosted Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA).
Conducted with the help of University of the Philippines Los Baños (UPLB) experts, the research project examined the dynamics of smuggling of agricultural products in the country and recommended policy changes to mitigate the problems spawned by this lucrative illegal practice.
The policy reforms will cover those that require legislative action, those that simply need administrative action by the Cabinet secretaries and bureau directors, and procedural changes at the field level, the study said.
Topping the list of recommended reforms for legislative action is the rationalization of the BOC’s regulatory and revenue functions.
Under the Tariff and Customs Code of the Philippines, BOC supervises and controls all import and export cargo brought to and stored in piers, airports and terminal facilities, including container yards and freight stations.
This implies that BOC has the executive power in trade facilitation, safety and quarantine restriction, and revenue generation.
“This function is already archaic because the issue on revenue collection pales in comparison to the consequences of lapses in quarantine functions,” the study stressed.
For instance, the entire poultry industry would be wiped out if avian flu and other devastating viruses find their way into the country because of lapses. The study claimed that the Tariff and Customs Code provision that “customs employees should cooperate with quarantine authorities in the enforcement of port quarantine regulations” is no longer adequate because the executive decision is still lodged with the BOC, which may not have the necessary appreciation of the gravity of quarantine issues. BOC personnel, it pointed out, are mostly lawyers who may have less appreciation of the dangers of contaminated cargo allowed entry into the country, unlike regulatory authorities such as veterinarians and agriculturists who are technically better equipped for the job.
The regulatory, trade facilitation and revenue collection functions should be rationalized and separated, as is now the practice in countries such as Singapore and Indonesia with successful anti-smuggling programs.
With a streamlined function, the study continued, the BOC can focus on the proper imposition of tariff duties and monitor reference prices.
“Separating these functions in consonance with the inherent capability of the institutions will also enhance the oversight process in checking unscrupulous practices: traders accreditation to the Department of Trade and Industry (DTI); safety and quarantine services to the Departments of Agriculture (DA) and Health (DOH); and revenue collection to the Bureau of Customs, the study stated.
Other reforms recommended for legislative action are the imposition of stiffer penalties for the crime of smuggling; harmonization of tariff rates; and creation of a Food Safety, Revenue and Trade Coordinating Council.
The study said that penalties against smugglers should be increased and made commensurate to the value of goods apprehended. At present, the penalty is only up to 2.5 times the value of smuggled commodities.
In Indonesia, the penalty imposed is 1,000 percent of the value of the contraband apprehended. In Singapore, aside from being given stiff monetary penalty, smugglers are “socially sanctioned” by being exposed in the media.
The study also noted that variability of tariff rates provides enough incentives for importers to misdeclare imports. The rates can be amended to establish uniformity.
The Food Safety, Revenue and Trade Coordinating Council is addressing the lack of coordination, resources and infrastructure as well as the breakdown of communication between the regulatory authorities (DA, BOC, DTI, Department of Finance, and other government agencies involved in activities of the country’s ports of entry such as the Philippine Ports Authority and Coast Guard).
Among the main recommendations for operational reforms are the revival of the certification by an accredited agency from the country of origin, more stringent procedure for accreditation of importers, facilitation of real-time access to cargo manifest by other regulatory agencies, and full implementation of the Single Window System (SWS).
“The procedure to have the imported cargo certified by an accredited agency from the country of origin should be revived,” the study said.
At the time this was still practiced, smuggling was perceivably reduced. The practice was stopped for financial reasons during President Joseph Estrada’s term.
The study, however, pointed out that the additional costs of sustaining the practice can be recovered once revenue collection increases as a result of reduced smuggling.