Philippines, China Customs execs meet over trade data gap

The government has asked a meeting with Chinese Customs officials to check the narrowing but still significant gap between that country’s registered export volumes to the Philippines and import figures officially reported here.

Finance Secretary Carlos Dominguez III said official trade data show that the estimated discrepancy between registered Chinese exports to the Philippines and registered Philippine imports from China has been declining but still very large, with the gap reported at 60 percent in 2010; 57 percent in 2015, 48.7 percent in 2016 and 48 percent in the January-July period of this year.

“I’ve asked (Customs Commissioner Isidro) Sid Lapeña to invite his Chinese counterpart to sit down and review the data,” Dominguez had told reporters.

Lapeña earlier reported to Dominguez during one of the Department of Finance’s (DOF) regular Execom meetings last month that the wide discrepancy between China’s recorded exports and imports to the Philippines may be attributed to the gross misdeclaration or undervaluation of goods in terms of either volume or weight; and the possible use of “consignees for hire,” which leads to goods released to “hidden” traders and not to the consignees on record.

The latter practice allows the importer to evade the scrutiny of the Bureau of Internal Revenue (BIR), Lapeña said.

In both instances—misdeclaration or undervaluation and the use of consignees for hire—benchmarking and the submission of fake documents allow traders to get away with these underhanded schemes, he said.

During a recent Executive Committee (Execom) meeting of the Department of Finance (DOF), Dominguez reiterated his directive for Lapeña to meet and closely coordinate with the Chinese government’s customs chief in an effort to reconcile the nagging discrepancy in trade figures between the Philippines and China.

The finance chief relayed his order through Customs Deputy Commissioner Edward Dy-Buco, who had attended the Execom meeting on Lapeña’s behalf. “Just remind the commissioner that he should invite the Chinese bureau of customs chief here. You have to reconcile your figures on the import-export data. Anyway, the difference is not anymore 60 percent. It’s only 48 percent now, but that’s still large,” Dominguez said.

In 2010, registered Chinese exports to the Philippines was at $11.56 billion, but Philippine imports from China as reported by the Philippine Statistics Authority (PSA) was only at $4.628 billion, resulting in a trade discrepancy of 60 percent or $6.936 billion.

For the first seven months of 2017, Chinese exports to the Philippines was $17.77 billion, while the PSA reported imports from China at $9.24 billion, or a discrepancy of 48 percent or $8.53 billion.

Compared to the previous years and the same period in 2016, the January-July 2017 trade gap between China and the Philippines has been declining. From January to July last year, China’s exports to the Philippines was $17.10 billion, while PSA reported imports from China at $8.79 billion, or a discrepancy of 48.6 percent at $8.31 billion. “It is going down but it’s still large,” said Dominguez.

“These numbers, we’re not sure if they’re apples to apples. The definitive figure will come out from Lapeña’s sitting down with his counterpart and working it out,” he added.

In 2015, trade data show that Chinese exports to the Philippines was $26.69 billion, against PSA’s records of imports from China of $11.47 billion or a gap of $15.22 billion. In 2016, the gap narrowed, with Chinese exports to the country at $30.35 billion, against PSA records of imports of $15.56 billion or a discrepancy of $14.79 billion.

The Bureau of Customs is now focusing on China, one of the Philippines’ largest trading partners, to check the gap in export volumes to the Philippines and the shipment figures officially reported here by importers, as part of its ongoing efforts to institute reforms in the agency, run after smugglers, and improve revenue collections.

Last year, Dominguez said the heightened DOF efforts to improve the efficiency of the tax and customs systems have found alarming discrepancies totaling P1.8 trillion between the volume of imports reported here and actual figures recorded by countries exporting to the Philippines.

This massive value gap translates into foregone revenues estimated at around P231 billion, representing two percent of the gross domestic product (GDP), Dominguez said.

Official 2014 records alone of the UN Comtrade World Exports showed a gap of P1.8 trillion between the value of imports as reported locally and the value of shipments to the Philippines by exporting countries.

However, Dominguez had raised the possibility that the trade gap could just be the result of timing issues and the inclusion and exclusion of particular commodities in reporting.

Lapeña also raised the possible use of “consignees for hire,” which leads to goods released to “hidden” traders and not to the consignees on record for the trade data discrepancy.

Lapeña said that at the BOC national office in Manila, he has directed customs officers to ensure a five-day processing period for imports to cut the usual time of one to two months.

Official 2014 records alone of the UN Comtrade World Exports showed a gap of P1.8 trillion between the value of imports as reported locally and the value of shipments to the Philippines by exporting countries.