The Market Monitor Minding the Nation's Business
Customs Commissioner Nicanor Faeldon said President Duterte’s marching order to him is to eliminate corruption in the Bureau of Customs (BOC) within six months, which he committed to meet through “tough” reform measures. Faeldon, a former captain in the Philippine Marines, said in a statement that under his wing, trade facilitation, rather than revenue collection, would be the top priority of the bureau.
He said that, instead of setting collection targets based on gross domestic product (GDP) percentage, there will be performance indicators that “should contain grading on ease of doing business and facility of trade.” Normally, the inter-agency policy-making body Development Budget Coordination Committee (DBCC) assigns monthly and annual revenue-collection targets for the BOC. But the bureau has not been reaching its targets for the past years.
Former Customs Commissioner John Sevilla earlier said the targets were unrealistic, since the prices of oil have been on a downward spiral since 2014.
Faeldon said that, in order to ensure the accuracy of product valuation, transparency is going to be another priority, to be realized by establishing a trade transparency unit similar to that in the United States.
The US Immigration and Customs Enforcement’s (Usice) Trade Transparency Unit identifies global trade-based money-laundering (TBML) trends, and conducts ongoing analysis of trade data supplied by its partner-trade transparency units in other countries.
TBML is the process of disguising criminal proceeds through trade to legitimize their illicit origins.
According to the Usice, one of the most effective ways to identify instances and patterns of TBML is through the exchange and analysis of trade data for anomalies that become apparent only when examined by both sides of a trade transaction.
Faeldon suggested the daily monitoring of shipment valuation and the upgrading of scanning systems to prevent smuggling.
The bureau currently updates the public with valuations on a weekly basis. The incoming customs commissioner is also keen on keeping the bureau’s operations running 24/7.
Faeldon said he was instructed by Finance Secretary Carlos Dominguez III to initiate broad reforms in the agency and quoted Dominguez as saying the perception of the bureau as the most corrupt agency has to stop.
“Beginnings now, tell your staff we will not tolerate this [corruption]. Complaints are coming from people who are honest. Remember, this election was about issues. That’s why our candidate won even if he spent only 40 percent of what other presidentiables spent,” Dominguez said.
Dominguez cited a personal experience in which one of his companies, Halifax Davao Hotel Inc., was offered lower taxation by a BOC official in exchange for a split in the tax savings. “We would prefer to pay the full amount to the government as the payment would not make us poor, so we did not cheat,” Dominguez said. He also lamented that “no culpable customs officer has been fired until now, with the bureau losing out on cases against erring officials.”
“Have you done enough entrapment operations?” Dominguez asked he will continue filing charges against smugglers and erring BOC officials.
Dominguez also took note of the suggestion of outgoing bureau officials during their transition meeting on how to improve the BOC.
But he said that, as leaders of an institution, “you have to send the message down, and better if you can do it now instead of waiting for June 30.”
According to the Philippine Exporters Confederation (Philexport), businessmen have lauded the new administration’s measures to tackle corruption in the government aggressively, which could lower the cost of doing business in the country.
Internal Revenue Commissioner Caesar Dulay has already ordered employees with records of irregularities to resign. An exporter/company owner, who did not want to be identified, lamented about “too much paperwork” in the country, prompting other entrepreneurs to relocate to other places like Hong Kong where “business is so much easier, taxes are lower and there is not too much government interference.” “I think each agency should have each procurement ‘walked’ by one of their employees and see how long and how many places it actually takes—and document that—to see what can be removed or deleted to hasten the delivery of service,” the source said. The source added that even after paying taxes, the BIR often keeps going after them with alleged letters of authorities (LOAs) and offers of settlement. “There’s just so much corruption in so many places and in so many forms.”
Mr. Duterte has given agency officials orders to ease the process of government transactions and to refrain from changing and bending the rules in government contracts, transactions and projects that are already approved and awaiting implementation.