There’s still hope in the Bureau of Customs

Many of us are eager for the CMTA (Customs Modernization & Tariff Act) to be passed, and hopefully this will happen during the first quarter of 2015. This bill has been pending in Congress for the last sixteen years, making us all wonder who is responsible for blocking it.

The CMTA is a serious effort to overhaul the graft-ridden Bureau of Customs and re-align its goal and mandate which is to serve as a trade facilitation agent rather than a mere revenue-generating agency which it has been for several administrations already.

B&L (Business & Leisure) talked with Rep. Miro Quimbo who has been pushing for the passage of this bill. The CMTA is set to streamline the process at the Bureau of Customs so that goods can be released quicker and with less bureaucracy.  According to the Congressman, there is also a need to change our old Customs Law because the Philippines has to comply with our obligations under the Revised Kyoto Convention (RKC), an International Convention on the Simplification and Harmonization of Customs Procedures. The RKC was ratified by former President Gloria M. Arroyo on March 16, 2009 and concurred by the Senate on Feb. 1, 2010 through Resolution No. 220. Almost six years have passed, but we have not complied with our obligation under the Revised Kyoto Convention.

The Philippines is a member of the RKC, and as of last count, we are no. 70 while Kenya is no. 71 of the total of 71 contracting parties to RKC.  Currently, there are 179 members of the World Customs Organization, and of the 21-member countries of the Asian-Pacific Economic Cooperation, ten are signatories to the RKC: Australia, Canada, China, Japan, Korea, Malaysia, New Zealand, United States of America, Vietnam, and the Philippines.

The Revised Kyoto Convention, serving as the blueprint for modern and efficient customs procedures in the 21st century, was crafted to provide international commerce with a measure of predictability and utmost efficiency that is required by modern trade. As such, among its major governing principles are: standardization and simplification of the goods declaration and supporting documents; simplified procedures for authorized persons; maximum use of information technology; minimum necessary Customs control to ensure compliance with regulations; use of risk management and audit-based controls; coordinated interventions with other border agencies’ and partnership with the trade.

All importers and exporters certainly welcome the CMTA. The need to simplify the procedures to move goods across borders, the need to help exporters in the flow of goods in and out of the Philippines, and the need to encourage micro, small and medium-sized businesses to get involved in international trade – all these are reasons enough to fast track the passage of this bill.

With the maximum use of information technology as a governing principle, the new electronic system will reduce the number of signatures in processing and releasing documents.  The more signatures there are, the more opportunities and chances for “kotong” or “lagay”.  Would you believe that under our antiquated customs laws, goods were considered tax free if the goods were valued at P10.00 or less.  With the new law, this figure has been raised to P5,000.

With the current emphasis on revenue generation, government has unwittingly given Customs personnel so much discretion to evaluate whether the goods being imported are taxable or not. This has given rise to unconscionable corruption in this notorious graft-ridden agency which, despite several changes in administrations, has not been addressed.  With every new administration that steps in, only the tip of the iceberg is chipped—the well-entrenched syndicates inside and outside of the Bureau remain in power, rotated but never removed altogether.

Considering that the global trend now is to allow the entrance of goods into your borders and then tax them when these products reach the market, we have been left out of the dynamics of trade again. As a contracting party to the RKC, we were required to implement the standards of the General Annex of the RKC within thirty six (36) months and sixty (60) months to comply with transitional standards. Clearly, we have not done our part. Look at the festering port congestion. As things stand now, the unwritten trend at the Bureau is to make things hard for all importations with so much red tape and so many signatures required for the computation of levy and the eventual release of the goods, the exact opposite of how trade should be conducted among countries in the 21st century and against all the governing principles of the Revised Kyoto Convention.

Should we fully comply with our obligations as signatory of this convention, much can be gained not only by the importers and exporters; there is much to be gained in our trade and commerce which would trickle down to the Filipino consumer. According to Rep. Miro Quimbo, their studies show that a ten-minute reduction in the processing time translates to a reduction in price of the imported commodities by as much as 5%. This is what we as consumers stand to gain by making the process of importation easier and faster.

Also according to Rep. Quimbo, the Customs Modernization & Tariff Act is not only at par with other Customs laws of other countries, it is even better than the Customs laws of Indonesia, and is similar to the laws of Singapore and Malaysia. It is indeed a way of moving forward in our quest to make goods cheaper and more affordable to the common person. Once there is no longer room for Customs personnel to exercise their own judgement and discretion on the taxable value of all importations, corruption and bureaucracy will be greatly reduced if not altogether eliminated.

 Bureau of Customs Commissioner John Sevilla was quoted as saying that the Bureau’s mandate as a revenue-generating agency stands alongside its mandate of trade facilitation, which is well and good as the government certainly needs the revenues from here. Add to this the mandate for Customs to protect our borders against the entry of illegal goods as well as contraband items like firearms.

Mabuhay!!! Be proud to be a Filipino.

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