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Opinion

Smuggling

FIRST PERSON - Alex Magno - The Philippine Star

The mayors of Metro Manila expressed preference for escalating to Alert Level 4 in the face of a sharp spike in infections due, no doubt, to the spread of the Omicron variant. The possibility of escalation has put many businesses on edge.

The IATF maintains that the situation has not deteriorated to an extent that meets the metrics for imposing a more severe alert level. The principal element holding back escalation of restrictions is the fact that hospital utilization remains at moderate levels. While infections numbers are running wild, less people need to be hospitalized.

An escalation in the alert level (that could happen by the time this column sees print) will nip in the bud the 25.3 percent posted by our manufacturing sector the past few months as restrictions on movement were eased. Our manufacturing sector is vulnerable to tightening restrictions and spiking infection numbers. Workers are prevented from reporting for work and factory floor outbreaks force closure of plants.

Manufacturing, to begin with, has not been one of our most robust economic sectors. Philippine manufacturing has one of the smallest shares of GDP in the whole ASEAN region.

Many factors explain why this is so. Power costs are among the highest in Asia. We have the most restrictions on direct foreign investments. Our infrastructure and logistics backbone are primitive, causing congestions from plant to port. Our labor laws, thanks to shortsighted trade unions, are among the most inflexible.

On top of all these, smuggling continues to be a persistent problem. Investors are always hesitant to sink funds in plants and technology only to be undercut by smuggled goods. This is a real problem across the board, ranging from illicit cigarettes to substandard steel products.

The Philippine Iron and Steel Institute (PISI), representing Filipino manufacturers, has its hands full monitoring importation and conducting test buys in the open market to protect consumers from substandard products and manufacturers from unfair competition.

Last month, PISI wrote the Customs Commissioner to call his attention to documented cases of technical smuggling harming local iron and steel manufacturers. The domestic industry is only now recovering from the effects of nearly two years of the pandemic and difficulties posed by broken supply chains.

The PISI letter identified two companies for undervaluing their importation to the detriment of local producers.

The first company, Philippine-Sanjia Steel Corporation, has been importing steel scrap at an average declared value of about $110 per metric ton even as international prices range from $450 to $550 per metric ton. How could a declared value that is merely a fourth of prevailing market prices have passed the Bureau of Customs?

The second company named is AG&A General Merchandise, a licensed importer of wood products. Notwithstanding their license, the company has been importing cold rolled coils with a declared value of only $500 per metric ton even as international prices for the product was between $800 and $1000 per metric ton.

The PISI attached to their letter to the Customs Commissioner graphical representation of prices based on the Platts Steel Business Briefing, an international reference publication used by Filipino manufacturers as well as (at least in principle) the Bureau of Customs. There is no reason our Customs examiners could have missed the wide discrepancy between declared value and international prices except if they chose to look the other way.

All the Filipino iron and steel manufacturers earnestly await the Customs Commissioner’s response to their letter. The viability of their businesses rests on the assurance of an even playing field.

Government also suffers loss of potential revenue from the rampant practice of undervaluing imports. This is doubly significant at this time, considering we need all the revenues we can collect to pay down our pandemic debts.

Options

As we gaze at the possibility of heightened health restrictions, one hopes our commuters will be given more mobility options as the possibility of reducing passenger load in trains and buses looms.

Instead of widening commuter options, our transport authorities recently narrowed them. The partnership between Move It and Grab that enabled the deployment of more motorcycle taxis was revoked a few days ago. That leaves only Joyride and Angkas available in our streets.

Motorcycle taxis have been beneficial to our commuters. In the exigencies of a pandemic, including the limitations imposed on traditional mass transport, motorcycle taxis provide fast rides through the city’s infernal traffic snarls. They are a safe mode of transport, being open-air. They generated thousands of jobs for riders displaced by the numerous business closures.

With an ample supply of motorcycle taxis, there is an incentive for car owners to hail a motorbike rather than take out their cars. In turn, this helps reduce the volume of private vehicles choking our roads.

No clear reason has been given for reducing the number of companies offering motorcycle taxi services. Consumers to be adversely affected by the loss of options deserve an explanation.

Should passenger capacity be drastically reduced with a shift to Alert Level 4, commuting in the city will become even more challenging. It does not help that clustered infections have hit our rail services. Taxicabs have become increasingly scarce as Omicron-driven infections rise – being also precarious because of the enclosed space.

Pray tell, why has competition in the motorcycle taxi sector been curtailed? I have heard no complaints aired about this particular commuting option.

Could it be that our transport authorities have again acted on plain whim against the interests of commuters who need more options for getting to work?

OMICRON VARIANT

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