Duterte: BOC to blame for rampant smuggling

MANILA, Philippines - Davao City Mayor Rodrigo Duterte blamed yesterday the Bureau of Customs (BOC) for the rampant  smuggling of rice.

Speaking at the Senate agriculture committee inquiry on rice smuggling, Duterte said national government agencies in general “talk too much” when dealing with smuggling.

“In Customs, if they want to slow things up, they can do this,” he said in a mix of Filipino and English. “If you want it done slowly, it can be done. It’s a question of money.” 

Duterte said he tried to stay away from activities at the Port of Davao because he did not want to overstep his bounds as a local government official.

“I never went beyond the boundaries of the city because I did not want to interfere,” he said. “The LGUs do not have any power at all with the national government agencies.” 

He was referring not only to the BOC, but also to the National Bureau of Investigation (NBI) and the Department of Justice (DOJ), Duterte said.

Sen. Cynthia Villar, agriculture committee chairman, said in 2012 a total of 800,000 metric tons of rice entered the country without the necessary permits.

Sources in the rice industry had informed her that a total of one million metric tons of rice was smuggled into the country in 2013, she added.

Customs Commissioner John Philip Sevilla said the government lost an estimated P8 billion to P10 billion in tariff collections from rice smuggling in 2012 to 2013 alone.

The 800,000 tons of rice smuggled in 2012 were valued at around P16.8 billion, so the government lost an estimated P8.4 billion, he added.

They still do not have the 2013 export data figures from other countries, but that based on the one million metric tons estimate of Villar, the foregone revenues from Customs duties would amount to around P10 billion, Sevilla said.

It was revealed during the inquiry that a lot of the smuggling was being done by traders making false declarations on imports or bringing in rice shipments without the necessary import permits.

At the center of the inquiry was someone the rice industry identified as David Tan, whom the NBI and the committee believe is businessman Davidson Bangayan, who has admitted going into the rice trading business on the side.

In a previous hearing, Bangayan said he had tapped farmer cooperatives for the “consolidation” of their import permits under the minimum access volume program of the National Food Authority (NFA).

However, several cooperatives started complaining about their arrangement with Bangayan because they ended up being shortchanged.

Some of these cooperatives ended up being blacklisted by the NFA after being found to have engaged in smuggling activities through their link with Bangayan.

During yesterday’s hearing, a link between Bangayan and Starcraft International Trading Corp. was   established.  

Emmanuel Santos, one of Bangayan’s brokers, said he was involved with Starcraft, which was identified as among the companies that brought in smuggled rice in Davao City.

Around 28,000 bags of rice belonging to Starcraft were later released from the Port of Davao on orders of a regional trial court judge. 

Prosecution of smugglers

Malacañang said yesterday smugglers are now being exposed and the government is prosecuting those proven to have robbed the country of much-needed revenues. 

Speaking to reporters, Presidential Communications Operations Office Secretary Herminio Coloma Jr. said the smuggling problem was wide-ranging and entrenched, but that the  administration had filed cases against suspected smugglers and a total revamp was implemented in the BOC.

“What we want is prosecution, not just of one individual but of all individuals that are violating the law,” he said.

Coloma said prosecution of alleged smugglers would serve as deterrent, and that the public can see these cases on the Department of Finance’s website.

“The executive is doing everything it can on that aspect,” he said. 

“Hundreds of cases are already filed. The next step is for our judiciary to process and hear the cases... prosecute and come up with a decision the soonest time possible.”  

Coloma said the administration is pushing for reforms in the criminal justice system.

The BOC, from the commissioner to the district collectors, had been replaced or reshuffled as President Aquino had promised in his last State of the Nation Address, he added.

Coloma said Aquino had repeatedly explained that a big deterrent to smuggling would be “certainty of detection or certainty of arrest, certainty of penalty.”

All reforms that the administration would like to happen are expected to be enforced following changes in the BOC management, he added.

Coloma said the administration was looking at a comprehensive solution and “systemic reforms” were needed.

Computerization and automation of processes to minimize if not totally eliminate human intervention were being done to eliminate a major source of graft and corruption, he added.

Coloma said the administration was not wasting time to curb smuggling because a lot is at stake.

“The Bureau of Customs is the second largest revenue collection agency of the government,” he said. “And a big part of instituting good governance is cleansing the image and promoting integrity in the Bureau of Customs.”  

Other agencies like the NFA would be ready to take corrective actions to prevent rice smuggling, Coloma said.   

Smugglers lie low

Customs Deputy Commissioner for Assessment and Operations Coordination Agaton Uvero said the volume of losses from the reported 17 big-time smugglers is almost equal to those from small-time businessmen engaged in undervaluation of goods. 

Some smugglers have reportedly been lying low or have stopped operations due to reforms being taken by the BOC, he added.

Speaking before Customs officials and employees in yesterday’s flag raising ceremony, Commissioner Sevilla said while the past year can be described as “turbulent” and “exciting,” he is hoping that next year the reforms they have initiated would have already taken place.

“We have to show to those who have given up hope, all those who said that the BOC would not change and that all the BOC personnel are worthless, that these (insinuations) are not true,” he said. “Next year, they would see the BOC has done its job, it has met its collection (targets) and it has stopped smuggling.”

This year’s theme is “Sama Samang Makiisa sa Pagbabago sa Aduana,” with the BOC celebrating its 112th anniversary on Thursday.

Uvero said reports are circulating in the BOC that  many smugglers have stopped operations and illegal importation has slowed down.

They are optimistic that the illegal entry of cargo would further lessen once the Bureau of Internal Revenue (BIR) assists in the accreditation of importers as dummy companies would no longer be  accredited, he added.

Uvero said they are putting reforms in place. 

“Sooner or later, it would be a lot more difficult to play with the Bureau of Customs,” he said.

Uvero said the BOC had to deal with small-time businessmen, numbering thousands, who are engaged in undervaluation of imported goods. 

“It is not only the players that are causing problems to the BOC,” he said. “There are many more ordinary businessmen who are lying to the BOC... So while there might be fewer (big) players they bring in thousands of container vans. 

“While there are thousands of small-time businessmen who are bringing in smaller quantity of shipments... The losses (in government revenue from the big time players and small businessmen) are just the same... I think we have the same reform agenda for everyone, whether they are a player or not.”

Uvero said the 17 big-time smugglers might already be engaged in illegal trade for more than five years, but admoitted it would be difficult to identify the smugglers. 

Uvero said they cannot be traced by documents since they are not recorded as owners of  companies illegally transacting with the BOC. 

“They would not be directly involved up front,” he said. “They are smart and they would not be easy to catch.”

Customs Deputy Commissioner for Enforcement Ariel Nepomuceno said reforms will affect the X-Ray Inspection Project (XIP) as daily reshuffle of X-ray machine operators will be undertaken.   

“There is a system of assigning who would be the team leader in that area, (it) would be done at random so the familiarity with the usual network would be controlled and the accountability would be established,” he said. 

Under the new setup, a BOC employee will operate the X-ray machine, but people from the Office of the Commissioner, district collector, the Enforcement Group and the Intelligence Group will be able to see the contents of the container via online viewing. 

Uvero said: “One thing that you will see from Commissioner Sevilla is accountability and transparency. Every action involves several offices. The fact that more people would know about the shipments coming in, the lesser chance that they would be able to hide the arrival of the cargoes. It would no longer be a source of corruption since everybody knows about it.” 

Regulation of rice imports

The DOJ is studying other ways of regulating the volume of rice entering the country other than the continued imposition of the quantitative restriction (QR) on rice imports. 

Justice Secretary Leila de Lima said the DOJ is studying the issue carefully before issuing a legal opinion.  

“The fact that there is an ongoing negotiation for the possible extension of the QR until 2017 is precisely the reason why we in the DOJ are being careful of giving a definitive opinion on this,” she said. “Because this might jeopardize the ongoing negotiations. This might also affect the existing injunctions (on rice smuggling) if we are to rule that the QR should remain to be imposed.”   

The law clearly gives the Department of Agriculture (DA) and the NFA the power to regulate the rice trade, but they are still studying if the QR should continue to be upheld as part of this mandate, she added. 

During a televised Senate hearing on rice smuggling yesterday, Agriculture Undersecretary for Policy Segfredo Serrano said the special restriction on rice imports must continue to be enforced as the appeals process for its continued enforcement until 2017 is still ongoing and the country’s laws on rice importation still stand. 

Out of the nine countries at the negotiation table, only three have remaining issues with the Philippines’ petition to keep imposing high duties on rice imports, he added. 

The country’s petition will be tackled again in the special meeting of the World Trade Organization (WTO) Committee on Trade in Goods in March.

A general consensus on the matter is expected to be arrived at, and the petition would be taken up in the WTO General Council.

Serrano said Republic Act 8178, the Agriculture Tariffication Act, removed quantitative restriction on imports on various agricultural products except rice to conform to the country‘s commitment to the WTO.

The law does not specify a timeframe for the exemption of rice from the removal of quantitative restriction on other farm goods, he added. 

Congress has not passed a law repealing a particular section of the law exempting rice from the removal of restrictions, Serrano said. 

Under its commitment to the WTO, the Philippines allows 350,000 metric tons of rice to enter the country under the Minimum Access Volume at 40 percent duty, while imports outside the MAV are levied a 50 percent tariff.

This is meant to limit the entry of cheap rice into the domestic market that would compete with local produce. 

De Lima said the DOJ is studying other means that the NFA can regulate rice importation other than the continued imposition of the QR. 

“For example, through a stricter accreditation system. As to what will prevail, whether international law or domestic law, there may be an apparent conflict but there is no real conflict. And if these can be harmonized, we should do so.” 

Rice smugglers have been using the QR issue to justify the illegal entry of rice into the country. 

De Lima said that with or without the special restriction on rice, an import permit is needed.  

“An import permit is a mode of regulation of the NFA,” she said.  – Marvin Sy, Aurea Calica, Evelyn Macairan, Czeriza Valencia