Customs must reform processes

The Bureau of Customs has always been thought of as hopelessly corrupt. Commissioners come and go but the corruption stays. It is easy to think that corruption is embedded not just in the people working there but also in the system.

Corruption at Customs is a way of life. A coffee table book written by PhilStar reporter Iris Gonzalez two years ago describes how this corruption is passed on as some kind of dubious legacy to the next generation. It is prevalent not just among higher level officials whose discretionary decisions matter, but even down to the lowliest guards.

The book of Iris was written in a way that merely reports life at the Customs bureau as it is lived day in and day out without making any moral judgments. There was even a sense of helplessness conveyed by some individual stories. Through pictures, you get to look at the faces of the people whose corrupt ways have always been Exhibit A when conversations veer towards the need to clean up government.

Just before I took my holiday break, I had a conversation with Customs Commissioner Ruffy Biazon. I made some comments about the failure of Mr. Biazon to curb, among others, the rampant smuggling of oil products into the country. I wrote that while I thought Mr. Biazon himself seems clean so far, he didn’t seem street smart enough to deal with a bureaucracy experienced in the ways of fleecing the public as they shortchange the National Treasury.

Ruffy sought out Rosan Cruz, a common friend, to ask for a chance to talk to me directly and explain his predicament. Unlike past commissioners who move around with a platoon of aides and bodyguards, Mr. Biazon was low key. He came alone and patiently waited for me at Bread Talk in Rockwell.

He let me open the conversation with a reiteration of my disappointment with the lack of progress in the clean up drive at Customs. He allowed me to make the usual litany of failures from oil smuggling to the missing container vans which happened before his watch. Then he started to explain why his job is more difficult than merely chopping corrupt heads off.

The problem, he said, is the system. We need a complete overhaul of the way we do things in Customs, he explained, if meaningful change is to happen.  â€œMy diagnosis of our customs problem is that our customs clearance system is basically founded on antiquated policies and procedures, mostly laid down by a law, the Tariff and Customs Code which was first passed in 1957,” Biazon explained.

“It has remained largely unchanged since then. It has become outdated, what with the new practices and policies being implemented by customs administrations worldwide and those adopted by the World Customs Organization… Not to mention agreements and treaties the Philippines has signed over the years.”

It is not enough to fire corrupt Customs officials, he said. So long as the same system prevails, new officials will be as corrupt as their predecessors. What must be done, he said, is to reform the processes so as to limit if not eradicate the opportunities for corruption. We have to plug policy loopholes which make smuggling possible.

Biazon continued: “The ‘kalakaran’, or the way of life in Customs flourished under this policy regime, that’s why in one interview, I said that the BOC stagnated in terms of progressing into modern customs administration. Unfortunately, this sad state of affairs continues because policy makers and political leaders have a very limited knowledge and understanding of customs administration.”

This is why, he explained, “over the decades, we have seen numerous turnovers of leadership… and we dismissed personnel due to issues of continued smuggling and revenue leakage. But while dismissal may punish those who are seen as culprits, it will not be a deterrent to the next person who will occupy the posts vacated. The ‘kalakaran’ will continue to happen unless the operating and the legal environment are changed.”

Change or an overhaul of the system “is the direction where I want to take the BOC,” Biazon asserts. But, he said, it is not easy. “Understandably, there is resistance. Those opposing it are not only well entrenched in BOC, they are also well connected in the circles of government, business and media. Reformists in the BOC face a tough challenge from those with vested interests.”

Mr. Biazon’s vision for Customs “is a technology-driven BOC, fully automated and modernized with reduced human intervention in the processes. It cannot be done in a short span of time due to implementation constraints (budget, procurement process, etc). And it needs to be done gradually to avoid system shock.”

In more specific terms, Mr. Biazon wants to expand pre-shipment inspection to also include containerized cargo. Right now, only the bulk and break-bulk cargo are inspected prior to shipment. That only covers 65 percent of dutiable volume of Customs. He wants to include the remaining 35 percent of containerized goods.

We have done pre-inspection in the past and it helped curb smuggling, mis-declaration and other such anomalies. Right now Customs has to rely on the honesty of the declaration by the importer and broker, a very stupid assumption to make.

Current inspection of bulk and break bulk cargo at country of origin is being done by accredited cargo surveying companies like SGS, Bureau Veritas, Intertek, among others at no cost to the government. After inspection of cargo, the surveyor transmits to BOC a survey report to include information useful to determine correct transaction value of the shipment.

The importer may use the survey report to avail of advance clearance procedure. Since the report is made by reputable cargo surveying companies, trade security and trade facilitation are enhanced.

The second proposal of Mr. Biazon is the adoption of the Enhanced Customs Transit System. That is basically a tracking system that will prevent a repeat of the mystery of the “2,000 missing containers”. He explained that what happened there is known as the “swing”, where cargo in transit is diverted to a destination different from where it is supposed to go.

Biazon wants to use the GPS system or Global Positioning Technology to secure and track containers in transit between Customs areas. The GPS-based tracking system will give an alert if the seal is cut at a point other than its approved destination.  The precise location of the container can be determined as indicated on a Google map.

The system can also protect containers from hijackers. There is no cost to government as system cost will be paid by the private sector on a container basis. It will replace the current system of using customs guards. There are not enough guards to accompany all transit shipments (average of 474 transit containers per day vs 32 guards at the Port of Manila).

It was supposed to have been implemented in 2010 as an important component of customs modernization. It enjoys technical assistance from the EU-RP Trade Related Technical Assistance Project.

Biazon said those 2,000 containers couldn’t have been lost while in transit if this GPS-based system was in place. The foregone revenue from these cargoes lost in transit is estimated at P200 million assuming an average of P100 thousand for duties and taxes per container.

Changing the way Customs is supposed to do its job, Biazon thinks, will minimize if not eliminate the opportunities for corruption. Universal pre-inspection will stop the entry of fake/substandard and misdeclared containerized goods.

No smuggled goods, no temptation. No opportunity for discretion and connivance. No corruption. It will also increase revenue collection… enhance consumer protection…. level the playing field by reducing unfair competition and revitalize Philippine industries… professionalize the BOC.

It seems Mr. Biazon has valid points. He said he has made a presentation to P-Noy on these reform measures he wants to implement. He is waiting for a go-signal from Malacanang. P-Noy must support Mr. Biazon or bear personal responsibility for continued corruption at Customs.

We can be sure there are enough influential people within the administration who want the current system to stay. If only because there are rumors Malacanang officials, yes, even P-Noy benefits from the current corrupt system at Customs (some people may be using his name in vain), P-Noy should dispel such talk by approving Mr. Biazon’s proposals. Credibility of P-Noy’s Daang Matuwid anti-corruption drive rests on Customs being reformed.

It cannot be business as usual at Customs. P-Noy must lead the wrecking crew that will demolish the infrastructure of corruption there. In the end, cleaning up Customs may be Mission Impossible. But P-Noy must go down trying to do just that anyway.

Marital bliss

After a quarrel, a husband said to his wife, “You know, I was a fool when I married you.”

She replied, “Yes, dear, but I was in love and didn’t notice.”      

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco