Customs: A year after SONA shaming
MANILA, Philippines – In his 2013 State of the Nation Address (SONA), President Benigno Aquino III minced no words in shaming the agency widely perceived to be the most corrupt in government.
He said then: “Here we have the Bureau of Customs (BOC), whose personnel are trying to outdo each other’s incompetence. Instead of collecting the proper taxes and preventing contraband from entering the country, they are heedlessly permitting the smuggling of goods, and even drugs, arms, and other items of a similar nature into our territory.
“Saan po kaya kumukuha ng kapal ng mukha ang mga kawani sa ahensiyang it (Where do the people in this agency get the gall)?”
When the President delivers his 5th SONA later today, July 28, will we hear a different tune?
The President’s statements against the BOC were stinging, but for good reason: they set the stage for reforms at the agency.
Over the past year, the BOC – the only agency that has continually ranked as either “very bad” or “execrable” in governance surveys due to its history of corruption cases – introduced a number of changes and most were focused on cleansing its ranks and getting the right people in place. (READ: Bureau of Customs: A few good men)
The changes resulted in significant improvement in the agency’s cash collections, though collections were still falling behind targets.
‘No take policy’
Reforms started at the top: a new Customs commissioner, former Finance undersecretary John Sevilla, was named. He replaced Rufino Biazon, who resigned after being tagged in the pork barrel scam late last year.
Other reforms included the creation of the Office of Revenue Agency Modernization, the strategy execution and change management arm of the Department of Finance (DOF); and the creation of the Customs Policy Research Office, the policy modernization and formulation arm for customs.
The main goal of the reorganized BOC is to stamp out the “tara” system, in which importers give grease money to Customs personnel on a certian day each week for the release of their misdeclared and undervalued cargoes. The bribes range from P5,000 to millions of pesos, depending on the officials’ positions and volume of contraband cargoes.
Deputy Commissioner for Intelligence Jessie Dellosa said that payoffs have subsided since the new leadership imposed tight monitoring of transactions.
“If before it was a grand fiesta, today, it is just a regular fiesta,” said Dellosa, a former chief of staff of the Armed Forces of the Philippines.
Scalawags at the BOC are also being unmasked.
Two personnel – Freddie Ruba, a customs guard, and Lilibeth Macarambon, a parcel examiner – were the latest catch in a wide dragnet set up by the Intelligence Group.
Ruba and Macarambon were arrested in separate entrapment operations for extorting money from a trader and claimant of a parcel at North Harbor, Manila and Central Mail Exchange Center in Pasay City, respectively.
Aside from the two, 82 Customs employees, mostly examiners and successors, were subjected to internal investigation for allegedly conniving with smugglers. Commissioner Sevilla said that 16 of them were slapped with administrative charges for their involvement in illegal rice shipments.
After Aquino lambasted the bureau for allowing the entry of smuggled items, the BOC started issuing an unprecedented number of alert orders.
“For every 100 alert orders, only 18 shipments post examination were found to be clear while 82% of the cargo were either outright misdeclared or undervalued,” Sevilla said.
“On average, for every alert order which has additional duties and taxes, we collect P194,000,” he added.
The DOF and Customs also recently launched the Customs ng Bayan website, a portal for data and information on importations extracted from the BOC’s Electronic-to-Mobile system.
Customs ng Bayan features regular releases of trade activity in each of the 17 main collection districts of customs, including the value and volume of goods imported and customs duties collected per port.
"By opening the books of an agency that many Filipinos believe is the most corrupt in government, we invite the public to join us, through our Tax Watch and Customs ng Bayan campaigns, in our war against smuggling that defrauds the government of billions of pesos every year," Sevilla said.
The BOC also tightened the process of accreditation of importers and brokers. All brokers and importers who want to bring in goods must be registered in the BOC’s Client Profile Registration System, which will enable them to file import entries.
The new process aims to plug the holes in importation procedures to better monitor smuggling activities.
Importers and brokers have until the end of the month to renew their accreditation or they will no longer be able to import and transact business with Customs. The agency said that around 5,000 or only 33% of the 15,000 licensed brokers and importers have applied for accreditation as of July 11.
Improved cash collections
The BOC said that the reforms have resulted in higher cash collections.
In January to October last year, dubbed as the BOC's pre-reform period, cash collections grew by a mere 4.76%. But when the reforms were rolled out in November 2013 to January 2014, cash collections jumped 19.26%.
“One of the key performance indicators for the reform's success is the improvement in its cash collections. One can draw a line before and after October, when the reform operations and personnel movements stabilized, and observe that the initial major elements of the President's Customs Reform Program have been substantive and generated significant growth in revenues for the government,” Sevilla said.
“These are encouraging initial results. The numbers tell us the reform program is starting to work,” he added.
Port congestion, revenue shortfalls
As expected, the reforms created a stir at BOC, with importers and brokers staging protest actions due to port congestion.
Alert orders have been the subject of complaints from importers due to delays these cause to the flow of goods.
Recently, 20 local and international vessels were not able to dock and unload their cargoes due to congestion at the Port of Manila and Manila International Container Port (MICP).
“Terminal operations productivity has been beyond acceptable level... In this regard, to avoid the foreseen delay, our principal decided to omit this voyage,” Dennis Hojilla of Ben Line Operations Department said in a letter to MICP.
“The lifting of the alert orders takes more than a week. It has caused cargo delays and higher cost on our part because of additional storage fees and demurrage,” said Julietta Lopez, a representative of the Customs licensed brokers.
The BOC however blamed the congestion problem in Manila, in part, on the truck ban implemented by the city government.
The drop in the number of container vans being released resulted in monthly collection shortfalls.
In the first half of the year, the BOC was able to generate P173.4 billion, 19.5% higher than the P145.13 billion collected last year, but below its target of P198.95 billion.
Nevertheless, Sevilla said they would continue the reforms with the long-term success of Customs in mind. “The devil is in the details: we are committed to closing up all these gaps in the system to make it harder for our people to do the bad thing, and easier for them to do the good thing. The public should expect to see more of these customs reform initiatives rolled out in the next few months.”
He said they aim to fully roll out a new electronic processing system by June 2015. Other measures include pre-shipment inspection for containerized shipments, central valuation reference for all commodities, and compilation of all special import requirements. – Rappler.com
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