Business groups air concern over pace of reforms at Bureau of Customs

MANILA, Philippines - With progress stalled, local business groups have expressed  concern about possible signs of backtracking by the government that would undermine the country’s customs reform process and ultimately result in lower revenue collections and proliferation of smuggling.

Port stakeholders have accused the Bureau of Customs of dragging its feet on implementing necessary reforms which include the  re-introduction of  the pre-shipment inspection of cargoes destined for the Philippines at no cost to the government.

The proposed reform program on pre-shipment inspection of all containerized cargoes has been put on hold by the BOC due to port congestion.

According to several business groups, the proposal would  have eliminate delays being witnessed at the country’s main ports because cargoes would have been inspected and sealed by the approved inspectors before they are shipped into the country.

BOC commissioner Sonny Sevilla earlier released a draft Customs Administrative Order (CA) announcing the return of pre-shipment inspection of all imports beginning June 1 this year.  The program, however, was postponed by two months as the details were still being firmed up. 

The BOC later announced it would implement the program by  January 2015 due to port congestion. 

 Several port stakeholders, however, are wary that the program may never be implemented given the  reluctance of the Department of Finance to approve the CAO.

The proposal has been gathering dust for almost two years. 

Former Customs commissioner Ruffy Biazon has been pushing for the immediate inspection of all containerized cargo shipments, which comprise 35 percent of dutiable goods entering the country to curb smuggling which has cost the government P200 billion in foregone revenue.

There was a pending administrative order signed by  then Customs commissioner Biazon and endorsed to Finance Secretary Cesar Purisima for approval last July 26, 2013.

Several port stakeholders said the proposal would help curtail  illegal arms and drug imports into the country.  It would also stop the influx  of fake and substandard and misdeclared goods into Philippine ports, which if not urgently controlled, would put a dent on the country’s economy.

Based on data from the International Monetary Fund, the value of goods shipped to the Philippines from 2002 to 2007 reached $284.7 billion.  The BOC, however, reported only $195.01 billion worth of imports over the same period, suggesting an annual average of $14.95 billion worth of goods sold in the Philippines that were not taxed. 

At 12 percent VAT and a five percent average duty, total government revenue loss estimate is P127.08 billion a year.

“Are the pronouncements regarding Customs reforms and stamping our the smuggling problem nothing but lip service? Shortly after the assumption of Customs commissioner to his current position, he stated in a TV interview that “the new commissioner and the BOC will not be judged by its pronouncements but by its execution of real reform programs”.  Where is the execution of reform programs,” a local business group said.