DTI rejects PCCI proposal to take over SGS function

The Department of Trade and Industry (DTI) rejected the proposal of the Philippine Chamber of Commerce and Industry (PCCI) to take over pre-shipment processing of imports when the contract of Societe Generale de Surveillance (SGS) expires this week.

DTI secretary Manuel Roxas Jr. told reporters over the weekend that the government's primary concern was to simplify the import process and eliminate unnecessary layers in the system.

When the Bureau of Customs (BOC) shifts its valuation procedure from home consumption value to transaction value, Roxas said pre-shipment inspection will no longer be necessary since the Bureau already has a database of transaction values for all the tariff lines.

All the BOC has to do, Roxas explained, will be to compare the declared value given by the importers with the information in its database in order to determine the taxable duty on imports.

The apprehensions expressed by both local and foreign companies, however, stemmed from lack of confidence on the ability of the BOC to handle imports without SGS which had been instrumental in cutting down the processing time from two weeks to only four days.

According to Roxas, however, the BOC needed to be given a chance to prove its system before the government considers employing a service contractor to intervene at critical points in the process.

"If there is a need to hire a contractor for pre-shipment processing, then why not let the BOC do it instead of the private sector?" Roxas pointed out. "The problem here is at what point do we put accountability should there be mistakes in the process?"

Since the PCCI is a private entity, Roxas said it did not have the degree of public accountability that the BOC has. "This proposal really needs to be studied very carefully," he said.

According to the PCCI, it was prepared to help the BOC during the transition period while the Bureau was fine tuning its new procedures, expressing skepticism over the BOC database which would be used for customs valuation. PCCI vice president for industry Donald Dee said the chamber was prepared to hire a third party service contractor and it was already in negotiation with SGS as well as other European companies who might be interested in the pre-shipment processing service contract.

Meanwhile starting Thursday this week, government will begin to carry out on its own the verification and valuation of imports coming into the country, with the BOC stating confidently that it is ready to carry out the task.

For the last 13 years, the Philippines has relied on pre-shipment inspection by SGS as its primary means for verifying and valuing imports. The service has proven to be quite expensive, however, resulting in unpaid fees to SGS of approximately $100 million (P4 billion). The Philippines has reportedly been paying SGS an average of P2 billion a year for the service.

However, with government not having any money to foot the bill, Finance Secretary Jose Pardo declared that as of March 31, SGS will no longer conduct pre-shipment inspection and that government will implement its own procedure to check imported products and their prices.

Pardo gave details of a "super green lane" for the trusworthiest importers based on their track record with the Bureau, who will be able to quickly move their goods out of Customs subject only to audit procedures. "Yellow lane" and "red lane" importers will be subject to verification and checking.

With a system based upon the verification of imports as they arrive locally, the capabilities of local Customs officials will be improved as the budget dedicated to the payment of PSIs can now be used to upgrade the Bureau's own efforts. -