Smuggling

That unfortunate incident involving former LTO chief Virginia Torres and a shipment of smuggled sugar is only the tip of the iceberg. The Bureau of Customs is heir to numerous vulnerabilities, a lot of which require technology and procedural reforms.

In testimony before the Senate, former PDEA chief Dionisio Santiago reports that the greater portion of illegal drugs proliferating here are smuggled through cargo containers through our ports. When they have gotten through, it becomes very difficult to track down illegal drugs passing the many distribution networks.

In his own testimony, former Customs commissioner Ruffy Biazon reported the interception of a complete shabu laboratory broken up into three components lodged in three separate containers.  Little wonder that the country has among the most severe problems with illegal drugs proliferation. Over the past few weeks, numerous gory crimes were found related to drug use.

An indicator of the proliferation of illegal drugs (and the facility with which the contraband is transported through our ports) is the dropping price for shabu. Santiago notes that where shabu prices once hovered at about P15 million per kilo, the drug is now sold in the streets for only P3.5 million a kilo.

Recall President Aquino’s rant against smuggling during last year’s SONA. In that speech, he estimated revenues lost to smuggling at P200 billion a year. That might even be an underestimation. Federation of Philippine Industries chair Jesus Arranza estimates smuggling losses at about $25 billion. That translates into nearly a trillion in revenue losses – surely more than enough to offset reductions in income tax rates for ordinary wage earners.

To a man, experts recommend the development of a program for advanced Customs clearance and control for containerized cargo.

About 4,500 inbound containers pass our ports each day. Former commissioner Sunny Sevilla admitted that, because of limited resources, Customs personnel can only inspect 8% or a mere 360 of those containers passing through. That means 4,150 containers get through without inspection. Little wonder that everything from agricultural products to weapons to illegal drugs manage to slip through our ports each day.

Strangely, the proposed Customs Modernization and Tariff Act (CMTA) reached second reading at the House of Representatives without proposing a solution to this glaring deficiency in the inspection of containerized cargo. That oversight was checked only upon close interpellation of the bill’s sponsors by Buhay part-list Rep. Lito Atienza.

Atienza proposed, by way of amendment to the bill, an entire section mandating the Bureau of Customs to implement a voluntary program for advanced Customs clearance for containerized cargo. In this program, importers may opt to have their cargoes inspected at the country of origin by accredited cargo surveying companies.  Duties may be paid in advance, facilitating movement through our ports.

The beauty of this program is that the cost of inspection and certification at the country of origin will be borne by the importers. For its part, the Bureau of Customs is expected to improve its revenues by about 25% when this program is fully implemented.

Filipino importers support the Atienza amendment, as this will help relieve port congestion and facilitate movement of goods. Needless to say, advanced will help reduce corruption.

There will be less need for Virgie Torres to make a pilgrimage to the Bureau of Customs.

Maliksi

PCSO chair Ayong Maliksi wrote me a long letter clarifying some of the items raised by insiders who disagree with the way he has led the agency.

In fairness, I summarize here highlights of the Maliksi letter.

Maliksi vehemently denies he ever dozed off during PCSO board meetings. As chair of the agency and head of its governing committee, he does have the prerogative to hire co-terminus employees. The PCSO provided shuttle services for its employees long before he assumed its chairmanship.

It appears, as head of the governing committee, Maliksi may directly issue memos to various officers of the agency. This includes replacing the board secretary. It turns out the former board secretary had a term that was co-terminus with the previous chair. Being so, he was not summarily dismissed. The board duly approved the nomination of a new board secretary.

Maliksi likewise clarifies the role played by Atty. Ryan Carlo Escalada. The latter turns out to be a Malacanang employee. His duties involve coordinating projects with the Office of the President and he performs no executive function.

The meatier portion of Maliksi’s letter concerns his decision to ask the NBI to look into reports some of the Small Town Lottery (STL) operators used their licenses to conduct “jueteng” draws. He likewise asked for investigators to look into reports STL operators were not correctly declaring actual sales to the prejudice of government revenues.

From the tone of Maliksi’s letter, it appears he is having difficulty with some long-timers in the agency when it comes to cleaning up the STL and improving the PCSO’s income. Improving PCSO’s income is an urgent task, considering the many projects it needs to support. Several laws command the PCSO to fund a number of undertakings and the agency must improve earnings to meet these imposed commitments.

The biggest source of leakage of potential PCSO revenues appears to be the STL program. Here, however, the PCSO chair could be running against deeply entrenched interests strong enough to frustrate reforms by the agency head.

Maliksi promised to reveal more details at some appropriate future date. I am sure those details will be extremely interesting, the PCSO being what it is.

We look forward, not with some amount of dread, to stories Maliksi might want to tell.