Armed with an 85-percent trust rating, in his State of the Nation Address, President Aquino confirmed what many fear. By virtually debunking dubious drumbeating and claims of competence, rose-colored statistics and an economic renaissance conjured up by Gloria Arroyo’s economic managers, Mr. Aquino enumerated how the country had been systematically plundered.
From the President’s list, we’ve singled out the issue of financial governance, specifically, the initiative on antismuggling. And upon it we’ve placed a face, albeit one painfully etched with deep lines and a frown.
It is not difficult to sympathize with the local flour industry. For too long the government has been unsympathetic, favoring, instead, smuggled and dumped importations.
We’ve written about this before. Former Senate Minority Leader Aquilino Pimentel Jr. sounded the alarm and even called for a congressional inquiry.
In studies by the Haceteppe University in Ankara, Turkey, the Department of Food Hygiene and Technology of the Istanbul University and the Department of Food Technology of the Balikesir University in Turkey, ochratoxins were found in 81 percent of analyzed samples and on those exported to Asia, 21.7 percent were contaminated with aflatoxins.
Aflatoxins and ochratoxins are mycotoxins. Mycotoxins are toxic products that enter the food chain from fungi that colonize crops. Both are deadly carcinogens. Once ingested, both resist decomposition and digestion. Both cannot be destroyed by cooking or freezing.
Unfortunately, cash registers peal louder than alarm bells. Trade officials have declared Turkish flour safe.
When commissions are earned for importations, nobody cares about toxicity. The rotting rice piled in National Food Authority (NFA) warehouses from recent overimportations is just one example.
Warped as it is, government indifference is typical. Inferior Turkish flour is used on lower-end products by the lower-end market. Add to that Arroyo’s hunger index and the increasing number subsisting on pagpag—the nouvelle cuisine that characterizes Arroyo economics. If the destitute can eat pre-eaten garbage, who cares about toxins?
More than the issue of public health, issues of smuggling—whether outright or technical—were accorded even lesser importance. Note that less than two years ago under the noses of Customs officials at the Port of Manila, five containers filled with Turkish wheat flour were allowed entry, despite protests from local millers who said the shipments were either misdeclared or smuggled.
Never mind that, previously, 10 containers, whose contents were misdeclared as starch but were later discovered to be smuggled flour, were off-loaded in Ozamiz City.
Faced with government dereliction, at wits end, in May local flour millers asked the government to investigate the dumping and technical smuggling of cheap Turkish flour. Submitting to Malacañang’s Review Committee on Smuggling and Tax Evasion Cases, documents detailing Turkish-flour smuggling, the businessmen virtually lined up the ducks.
Aside from inferior-grade Turkish wheat, local millers revealed that of 86,000 metric tons imported from Turkey last year, as much as 19,000 were undervalued—the equivalent of P16.9 million in tariff-revenue losses.
For the first quarter of 2010, they also reported that 80 containers brought in through the Port of Batangas were declared at 88.4 percent lower than statutory values under the Value Reference Information System (VRIS) set by the Office of the Commissioner of Customs.
Given an 88.4-percent undervaluation, all established by a single importer, over P4.6 million in tariff revenues was lost in one quarter. By the May elections, five months into 2010, at least P51 million had been lost through the Turkish importations of at least eight companies.
The report filed with Malacañang shows two of the eight used the Manila International Container Port (MICP), while a third used both the MICP and the Port of Manila.
One imported 8,592 MT, but underdeclared by as much as 37.30 percent. Another imported 7,086 MT, but underdeclared 30 percent. A third imported 10,488 MT, but underdeclared 23.3 percent. In each instance, over P13.8 million, P6.9-million and another P6.9 million, respectively, might have been cheated from the government.
For the accumulated losses, simply do the math. Turkish flour is assessed with a 7- percent duty and a 12-percent value-added tax upon entry. Given volumes imported between 2008 and 2009, undervaluations would have resulted in over P50 million in lost revenues. Add the 2010’s P51 million and one sees the importance of Mr. Aquino’s antismuggling initiative.
Newly appointed Customs Commissioner Angelito Alvarez and Bureau of Internal Revenue Commissioner Kim Jacinto-Henares have their work cut out for them. Fortunately, both are eminently qualified, competent and driven. To both, Godspeed and good hunting.
-Dean de la Paz
Source: http://businessmirror.com.ph/index.php?option=com_content&view=article&id=28229:the-turkish-flour-dump&catid=28:opinion&Itemid=64
Friday, July 30, 2010
Lick it or not
IF ONLY we can lick the collection leaks in the Bureau of Customs…
Well, the new customs commissioner, Angelito Alvarez, who this early got some bad press over his indiscretion in a game of golf, just barred what are known as “haoshiao”— those “fake” employees—at the BOC inspection areas.
From what I gathered, they served as conduits between BOC personnel (real ones) and customs brokers in releasing import shipments. We all know what happens in such transactions.
Still, getting rid of those scalawags may not be enough. Smuggling has become a huge protection racket under that administration.
The IMF estimated that uncollected VAT on our imports alone could amount to more than P20 billion a year.
In business, they are saying that healing the government finances of the smuggling scourge can become one of the priorities of the Aquino (Part II) administration.
Local flour milling companies, for instance, have been complaining about rampant smuggling of flour from Turkey.
Our info is, well, the industry already submitted a detailed report on the smuggling operation of at least eight companies. It is hard to say whether or not Alvarez has already seen it. More likely, the syndicates at the BOC tore it apart, burned the scraps, and buried the ash.
Anyway, reports persisted that, apart from being smuggled, shipments of certain brands of Turkish flour were contaminated. The guys down here, more than anybody else up there, will most likely end up consuming the bad flour.
Reportedly, the government so far this year lost at least P51 million in import duties and VAT on imported Turkish flour—and this was only based on the operation of those eight firms, as detailed in the paper submitted to BOC.
In one case, the importer valued the flour shipment at $24.77 per metric ton. The reference value, which is a guide for the BOC, was $300 per. It’s that kind of cheating!
Word has it that the undervaluation continues even under the Aquino (Part II) administration. We need to stop it right away.
That kind of concrete step, boss!
-Conrado Banal III
Source: http://business.inquirer.net/money/columns/view/20100728-283688/Lick-it-or-not
Well, the new customs commissioner, Angelito Alvarez, who this early got some bad press over his indiscretion in a game of golf, just barred what are known as “haoshiao”— those “fake” employees—at the BOC inspection areas.
From what I gathered, they served as conduits between BOC personnel (real ones) and customs brokers in releasing import shipments. We all know what happens in such transactions.
Still, getting rid of those scalawags may not be enough. Smuggling has become a huge protection racket under that administration.
The IMF estimated that uncollected VAT on our imports alone could amount to more than P20 billion a year.
In business, they are saying that healing the government finances of the smuggling scourge can become one of the priorities of the Aquino (Part II) administration.
Local flour milling companies, for instance, have been complaining about rampant smuggling of flour from Turkey.
Our info is, well, the industry already submitted a detailed report on the smuggling operation of at least eight companies. It is hard to say whether or not Alvarez has already seen it. More likely, the syndicates at the BOC tore it apart, burned the scraps, and buried the ash.
Anyway, reports persisted that, apart from being smuggled, shipments of certain brands of Turkish flour were contaminated. The guys down here, more than anybody else up there, will most likely end up consuming the bad flour.
Reportedly, the government so far this year lost at least P51 million in import duties and VAT on imported Turkish flour—and this was only based on the operation of those eight firms, as detailed in the paper submitted to BOC.
In one case, the importer valued the flour shipment at $24.77 per metric ton. The reference value, which is a guide for the BOC, was $300 per. It’s that kind of cheating!
Word has it that the undervaluation continues even under the Aquino (Part II) administration. We need to stop it right away.
That kind of concrete step, boss!
-Conrado Banal III
Source: http://business.inquirer.net/money/columns/view/20100728-283688/Lick-it-or-not
Showcase government's resolve
For all the brickbats being hurled at the new Customs Commissioner Angelito Alvarez, one thing is for sure, running the Customs bureau is no small feat.
He needs an iron will and a firm resolve to combat smuggling at all points of entry. His precedessors have failed because smuggling is well-engrained in the system. And one thing is for sure, the technical smugglers in particular continue to go about their usual business because somebody inside the bureau is facilitating matters for them.
Smuggling is not only inherently wrong, it also punishes each and every one of us because it deprives government of badly needed revenues which it could have used for public service and infrastructure.
Alvarez has already barred haoshiaos at custom inspection areas, which is believed as a necessary first step in the effort to make all transactions open and aboveboard. But a lot more needs to be done. If the system needs to be overhauled, then so be it. If heads have to roll, then do it. Six years may not be enough for the new Customs chief to accomplish so much, if we are talking about reorienting, reeducating, changing a culture of distrust with anything that has to do with the Customs bureau. But someone has to start the ball rolling.
From what I’ve learned from people complaining about the effects of smuggling, there are two kinds of smuggling: the actual backdoor smuggling and technical smuggling. Backdoor smuggling takes place when goods are brought into the country via big vessels that in turn load the smuggled goods into smaller boats which manage to enter our territory. But the volume of goods smuggled through this process is not as significant compared with those brought in via technical smuggling. After all, how much can the small boats accommodate? Unless the men in these boats carry high-powered firearms, they should be no match to our patrol boats.
Technical smuggling on the other hand can take different forms. It can be through misdeclaration and undervaluation. Misdeclaration happens when goods are declared as another kind of goods which under our tariff schedule has lower import duties. Undervaluation is another form of technical smuggling whereby the actual volume or value (or both) of goods brought in is not reported so that a smaller amount of duties and taxes is levied. But in both cases, the importations are legitimate and brought in through the major ports of entry, complete with papers and stuff.
Take the case of the reported technical smuggling of Turkish flour into the country. According to reports reaching the Customs bureau, already, at least P51 million in import duties and value-added taxes has been lost by government in the first five months of 2010 alone.
The P51-million estimate pertains only to the operation of eight companies. A bigger amount may be involved if the operations of other smugglers are factored in.
According to the report, two of the eight companies used the Manila International Container Port (MICP) as point of entry while a third used both the MICP and the Port of Manila.
The first cheated government of at least P13.8 million by importing 8,592 metric tons but declaring only 5,389; while the second imported 7,086 metric tons while declaring only 4,961, evading the payment of P6.9 million.
Meanwhile, the third importer brought in 10,488 tons but undervalued it by 23.3 percent to save P6.9 million in duties and taxes.
They say the imported Turkish flour had been undervalued for as low as $24.77 per ton when the reference value of Turkish flour at Customs is at $300 per ton.
The big question is, how are they able to get away with this?
This is one question for which Alvarez will have to find the answer himself. He needs to identify the loopholes in the system, the men and women at customs who are given discretion to determine the volume and value of goods brought in, those who are equally given the discretion to impose the amounts payable, among others. Does the customs bureau have the capacity to identify if the goods are properly declared? I remember before when powdered juice is being used as a means to smuggle into the country sugar. Powdered juice has a lower import duty compared with sugar, but it contains as much as 90 percent sugar. There’s something definitely wrong with the system if this is the case.
If I’m not mistaken, the same thing happened with animal feedwheat and breadwheat. The difference between the two is the former is of lower quality. But there has been reports before that what was being declared as feedwheat, and therefore carried with it lower duties, is being used as wheat for food. Isn’t there an internally accepted method to determine which is which?
This huge room for discretion has been used by some unscrupulous people at the customs to fatten their pockets.
But the case of Turkish flour smuggling is not as complicated. Does the system rely on what is being declared? There must be a way of checking the volumes and value declared against the actual. There is no excuse for this practice being allowed to cheat the government of its lifeblood.
President Aquino and commissioner Alvarez should not allow smugglers to continue mocking government. Inarguably the most corrupt agency in the entire bureaucracy, the customs bureau should be used as a showcase of the new government’s resolve to end corruption in the public sector.
He needs an iron will and a firm resolve to combat smuggling at all points of entry. His precedessors have failed because smuggling is well-engrained in the system. And one thing is for sure, the technical smugglers in particular continue to go about their usual business because somebody inside the bureau is facilitating matters for them.
Smuggling is not only inherently wrong, it also punishes each and every one of us because it deprives government of badly needed revenues which it could have used for public service and infrastructure.
Alvarez has already barred haoshiaos at custom inspection areas, which is believed as a necessary first step in the effort to make all transactions open and aboveboard. But a lot more needs to be done. If the system needs to be overhauled, then so be it. If heads have to roll, then do it. Six years may not be enough for the new Customs chief to accomplish so much, if we are talking about reorienting, reeducating, changing a culture of distrust with anything that has to do with the Customs bureau. But someone has to start the ball rolling.
From what I’ve learned from people complaining about the effects of smuggling, there are two kinds of smuggling: the actual backdoor smuggling and technical smuggling. Backdoor smuggling takes place when goods are brought into the country via big vessels that in turn load the smuggled goods into smaller boats which manage to enter our territory. But the volume of goods smuggled through this process is not as significant compared with those brought in via technical smuggling. After all, how much can the small boats accommodate? Unless the men in these boats carry high-powered firearms, they should be no match to our patrol boats.
Technical smuggling on the other hand can take different forms. It can be through misdeclaration and undervaluation. Misdeclaration happens when goods are declared as another kind of goods which under our tariff schedule has lower import duties. Undervaluation is another form of technical smuggling whereby the actual volume or value (or both) of goods brought in is not reported so that a smaller amount of duties and taxes is levied. But in both cases, the importations are legitimate and brought in through the major ports of entry, complete with papers and stuff.
Take the case of the reported technical smuggling of Turkish flour into the country. According to reports reaching the Customs bureau, already, at least P51 million in import duties and value-added taxes has been lost by government in the first five months of 2010 alone.
The P51-million estimate pertains only to the operation of eight companies. A bigger amount may be involved if the operations of other smugglers are factored in.
According to the report, two of the eight companies used the Manila International Container Port (MICP) as point of entry while a third used both the MICP and the Port of Manila.
The first cheated government of at least P13.8 million by importing 8,592 metric tons but declaring only 5,389; while the second imported 7,086 metric tons while declaring only 4,961, evading the payment of P6.9 million.
Meanwhile, the third importer brought in 10,488 tons but undervalued it by 23.3 percent to save P6.9 million in duties and taxes.
They say the imported Turkish flour had been undervalued for as low as $24.77 per ton when the reference value of Turkish flour at Customs is at $300 per ton.
The big question is, how are they able to get away with this?
This is one question for which Alvarez will have to find the answer himself. He needs to identify the loopholes in the system, the men and women at customs who are given discretion to determine the volume and value of goods brought in, those who are equally given the discretion to impose the amounts payable, among others. Does the customs bureau have the capacity to identify if the goods are properly declared? I remember before when powdered juice is being used as a means to smuggle into the country sugar. Powdered juice has a lower import duty compared with sugar, but it contains as much as 90 percent sugar. There’s something definitely wrong with the system if this is the case.
If I’m not mistaken, the same thing happened with animal feedwheat and breadwheat. The difference between the two is the former is of lower quality. But there has been reports before that what was being declared as feedwheat, and therefore carried with it lower duties, is being used as wheat for food. Isn’t there an internally accepted method to determine which is which?
This huge room for discretion has been used by some unscrupulous people at the customs to fatten their pockets.
But the case of Turkish flour smuggling is not as complicated. Does the system rely on what is being declared? There must be a way of checking the volumes and value declared against the actual. There is no excuse for this practice being allowed to cheat the government of its lifeblood.
President Aquino and commissioner Alvarez should not allow smugglers to continue mocking government. Inarguably the most corrupt agency in the entire bureaucracy, the customs bureau should be used as a showcase of the new government’s resolve to end corruption in the public sector.
-Mary Ann Ll. Reyes
Source: http://www.philstar.com/Article.aspx?articleId=596333&publicationSubCategoryId=66
Acid test for BoC chief
COMMENTS on a recent column tend to partake of guarded optimism on whether new Customs Commissioner Angelito Alvarez can deliver on President Benigno “P-Noy”Aquino III’s anti-smuggling marching orders.
The ruckus over Alvarez’s golf scorecard, notwithstanding, Streetlights has wagered that since his track record as a businessman indicated he can deliver, as tariff czar he will acquit himself as well.
Already, the BoC chief is reported to have barred so-called haoshiaos at the Customs inspection zones to ensure transactions are open and aboveboard. Hopefully, this bid for transparency will be buttressed by solid preemptive measures versus smuggling and its coddlers.
Soon enough Alvarez is expected to act on reported detailed findings on eight Turkish flour importers ready for his perusal. Aside from allegedly under-declared or technically smuggled, the flour is said to be below nutrient standards, worse yet purportedly contaminated.
Item – Pertaining to the suspected Turkish flour smugglers, tariff payments have fallen short by P51 million – not counting other importers engaged in same “black trade.”
Item – Two of the eight Turkish flour importers in question used the Manila International Container Port as point of entry even as the third used both the MICP and Port of Manila.
The first is suspected of cheating the government of at least P13.8 million by misdeclaring flour import of 8,592 metric tons as only 5,389; while the second imported 7,086 MT but declared as only 4,961 to evade P6.9 million in payable tariff.
Well, the third apparently wouldn’t be too far behind as it brought in 10,488 MT, undervalued the shipment by 23.3 percent to deprive the BoC of also P6.9 million revenue.
In all, that’s a P27.6-million caper on the BoC by just three Turkish flour importers. Thus, credibly, the P51-million tariff evasion imputed to the eight improters.
Moreover, BoC sources who claim to be privy to the report available to Alvarez at his beck-and-call and, hopefully, appropriate and immediate action – alleged that while the applicable reference value of Turkish flour stands at $300 per metric ton, the questioned shipment has been undervalued to a despicably low of $27.7 MT.
What this tells us is that the Turkish flour smugglers have gone at it with unmitigated impunity during the Arroyo administration. Nothing but the stuff for President Aquino’s State-of-the-Nation-Address on Monday.
Massively perpetrated during the end days of Arroyo economic regime, the Turkish flour smuggling is something to look back to in anguish by the Aquino administration. It’s likely to temper the ebullience embodied by P-Noy’s marching orders to the BoC chief.
Then again, taking on smuggling by the horn, especially the widely published Turkish flour shipment, will be Alvarez’s once- in- a-lifetime acid test as a top business executive harnessed to public office.
There may not be second chances for you, Mr. Commissioner, given the Customs notoriety for graft and corruption. Here’s to all the political will you can muster and as much luck your arms can hold.
-Willie S. Baun
Source: http://www.journal.com.ph/index.php/opinion/14634-acid-test-for-boc-chief-.html
The ruckus over Alvarez’s golf scorecard, notwithstanding, Streetlights has wagered that since his track record as a businessman indicated he can deliver, as tariff czar he will acquit himself as well.
Already, the BoC chief is reported to have barred so-called haoshiaos at the Customs inspection zones to ensure transactions are open and aboveboard. Hopefully, this bid for transparency will be buttressed by solid preemptive measures versus smuggling and its coddlers.
Soon enough Alvarez is expected to act on reported detailed findings on eight Turkish flour importers ready for his perusal. Aside from allegedly under-declared or technically smuggled, the flour is said to be below nutrient standards, worse yet purportedly contaminated.
Item – Pertaining to the suspected Turkish flour smugglers, tariff payments have fallen short by P51 million – not counting other importers engaged in same “black trade.”
Item – Two of the eight Turkish flour importers in question used the Manila International Container Port as point of entry even as the third used both the MICP and Port of Manila.
The first is suspected of cheating the government of at least P13.8 million by misdeclaring flour import of 8,592 metric tons as only 5,389; while the second imported 7,086 MT but declared as only 4,961 to evade P6.9 million in payable tariff.
Well, the third apparently wouldn’t be too far behind as it brought in 10,488 MT, undervalued the shipment by 23.3 percent to deprive the BoC of also P6.9 million revenue.
In all, that’s a P27.6-million caper on the BoC by just three Turkish flour importers. Thus, credibly, the P51-million tariff evasion imputed to the eight improters.
Moreover, BoC sources who claim to be privy to the report available to Alvarez at his beck-and-call and, hopefully, appropriate and immediate action – alleged that while the applicable reference value of Turkish flour stands at $300 per metric ton, the questioned shipment has been undervalued to a despicably low of $27.7 MT.
What this tells us is that the Turkish flour smugglers have gone at it with unmitigated impunity during the Arroyo administration. Nothing but the stuff for President Aquino’s State-of-the-Nation-Address on Monday.
Massively perpetrated during the end days of Arroyo economic regime, the Turkish flour smuggling is something to look back to in anguish by the Aquino administration. It’s likely to temper the ebullience embodied by P-Noy’s marching orders to the BoC chief.
Then again, taking on smuggling by the horn, especially the widely published Turkish flour shipment, will be Alvarez’s once- in- a-lifetime acid test as a top business executive harnessed to public office.
There may not be second chances for you, Mr. Commissioner, given the Customs notoriety for graft and corruption. Here’s to all the political will you can muster and as much luck your arms can hold.
-Willie S. Baun
Source: http://www.journal.com.ph/index.php/opinion/14634-acid-test-for-boc-chief-.html
Friday, July 23, 2010
Lito Alvarez, just do it!
LITO Alvarez is a total bust as a golfer. It is actually good news for golf that he has announced that he is giving up the game. He was suspended as an Alabang Golf Club member after he was caught cheating during the last Mango Tee, Alabang’s most prestigious tournament.
But there may be hope for newly-appointed Customs Commissioner Angelito Alvarez if he can do something about rampant smuggling that has deprived the government of badly-needed revenues.
Latest reports from the BoC indicate that Alvarez has already barred haoshiaos at Custom inspection areas. This is a necessary first step in the effort to make all transactions open and aboveboard. He should follow through with other measures that would send a stern message to smugglers and their protectors in government that their days are numbered.
Perhaps, Alvarez could turn his attention the well-reported rampant smuggling of Turkish flour. A very detailed report on the smuggling operation of at least eight companies has already preceded Alvarez at Customs, something which he should ask the Commissioners’ Office (which he now holds ) to immediately produce said report .
But since Commissioner Alvarez seems to be one with us in wanting to stop smuggling, including that of low-nutrient and, probably even (according to many), contaminated Turkish flour, here are some of the things he will find in the report.
According to the report which Customs should use as a lead to find and prosecute the Turkish flour smugglers, just on the Turkish floor imports, at least P51 million in import duties and value-added taxes has been lost to government in the first five months of 2010 alone.
The P51-million estimate pertains only to the operation of the eight companies. Thus, one can imagine that an even bigger amount is missing from government coffers when the operations of other smugglers are factored in.
Two of the eight companies used the Manila International Container Port (MICP) as point of entry while a third used both the MICP and the Port of Manila.
The first smuggler cheated government of at least P13.8 million by importing 8,592 metric tons but declaring only 5,389 mt; while the second imported 7,086 mt while declaring only 4,961, thus evading the payment of P6.9 million. And, the third smuggler-importer brought in 10,488 mt but undervalued it by 23.3 percent to save P6.9 million which should have been collected by the BoC.
The imported Turkish flour had been undervalued for as low as $24.77 per mt when the reference value of Turkish flour at Customs stands at $300 per mt.
Turkish flour smuggler-importers are doing their thing with total impunity, as if mocking President Aquino and Commissioner Alvarez to try to stop them.
Although the flour smuggling was done in the first five months of this year -- in the dying days of the Arroyo administration –these smugglers-importers can still be taught a lesson if Alvarez acts now.
Or will Alvarez wait for the next report which will be on how Turkish Flour Smuggling was perpetrated in the fist few days of the Aquino watch?
Commissioner Alvarez faces a big challenge in cleaning up the Customs bureau that is widely believed to be one of the most corrupt in the entire bureaucracy. With President Aquino having given him clear marching orders to stop smuggling, Alvarez is in a position to do what others before him have failed to achieve: Restore the credibility of the Customs bureau.
He can very well start his cleaning up by going after the most notorious – the smuggler-importers of Turkish flour.
If he can clean up the BoC, something not even addressed in the last few administrations, Lito Alvarez would have done his country a great service and who knows that even rabid golfers could actually forgive him his golfing transgression.
-Ducky ParedesSource: http://www.malaya.com.ph/07232010/edducky.html
Thursday, July 22, 2010
Smuggling
On the presumption of regularity, we will have to believe that Customs Commissioner Angelito Alvarez means what he says.
The new head of the second most important revenue agency says he will wage war against smuggling. We await the results with bated breath.
Alvarez has landed a tough job. The Bureau of Customs, which accounts for about a third of total public revenues, has been missing its revenue targets. Each time the target is missed, the budget deficit yawns even wider.
Yet everyday, in the streets, we are regaled with stories about how large an epidemic smuggling has become. Everything, from chicken parts to onions to oil to rice to sugar to luxury cars are spilling in, impervious to both the tariff barriers and all task forces formed through the ages to combat smuggling.
Wealth, especially illicit wealth, is difficult to conceal. Yet, it seems, those who made money smuggling stuff are only too eager to flash the cash — much like that guy the BIR has now dragged to court, a pawnshop owner who hardly paid any taxes and then drives around town in a handcrafted Italian luxury car valued at P26 million. That is assuming the proper customs duties were paid on the vehicle.
“Tough job” is an understatement. Alvarez is waging this battle with his back to the wall. There is simply no room for failure.
Over the immediate term, tariffs on a host of imported items will be lifted as part of our commitment to regional free trade arrangements. That will put pressure on the Bureau’s revenue goals.
The loss of revenue from the lifting of tariffs on a large range of commodities included in our free trade commitments must be compensated for by collecting every peso from everything dutiable passing through our ports. Otherwise, the collection gap will make the Bureau of Customs appear like a non-performing revenue agency.
Remember that we have also previously lifted tariffs on oil imports in an effort to appease public complaints about the price of imported oil products. That lifting is unwise. The beneficial effect for the consuming public is hardly palpable; but the fiscal wound inflicted by this policy decision is gaping.
Disagreeable as that decision to lift tariffs on oil might be, the deed has been done. It is now the problem of the Customs Bureau to find other sources of collections to cover the massive loss of revenue resulting from the lifting of tariffs on oil imports.
We can choose to look at it from the upside. Because customs duties on oil products have been lifted, oil smuggling is no longer a problem that created an uneven playing field in the entire fuel industry.
The downside, of course, is that the total revenues the Customs Bureau could collect have become significantly lower. That is bad news for all who wish we could diminish the need to incur even more debt to finance our government.
There is good news for Lito Alvarez, however: there is a large number of imported commodities that seem to so easily slipped through by means of technical smuggling.
The new Customs chief might want to take a closer look at the case of the controversial importation of Turkish flour. This made the news a few months back because the commodity is suspected of being contaminated. Now, traders of the commodity are accused of evading import duties.
According to the grapevine, a very detailed report on the smuggling operation of eight companies importing Turkish flour has been prepared and sent to Alvarez’s office even ahead of his formal assumption of the post. The report concludes that, from only one of the eight companies involved in the racket, at least P51 million in import duties and value-added taxes was denied government in the first five months of this year alone.
Two of the eight companies use the Manila International Container Port and employ similar techniques in evading payment of the proper duties. Both of them declare much smaller shipments to what actually passed through our ports. In one shipment by one company, for instance, imported 8,592 metric tons but only declared its importation as 5,389 metric tons. A second company, at nearly the same time, brought in 7,086 metric tons but declared its shipment as 4,961 metric tons.
In addition to understating the volume of their shipments, the unscrupulous importers also undervalue their shipments. According to the report sent to the Customs Bureau, Turkish flour is undervalued by as much as $24.77 per metric ton. Multiply that amount by tens of thousands of tons and the lost revenue will be very significant indeed.
The operation, involving substantial under-weighing of shipments and undervaluation of the commodity could not have become possible without the connivance of Customs personnel. Surely that connivance did not happen out of pure charity.
To be sure, collecting the proper duties due government from the suddenly hefty importation of Turkish flour will not even approximate the revenue loss from the faulty policy decision to lift levies in oil. But it is one major revenue recovery that, along with several other cases of smuggling, will somehow help offset the loss from faulty policy.
Granted, it might be very difficult to make the importers account for shipments already slipped out of our ports. But if the same racket continues under Alvarez’s watch, in an administration that has made fighting corruption a top priority, it will be difficult to continue believing he means what he says.
If the technical smuggling continues, the market will surely find out. The impact on commodity pricing and the resulting unfair competition cannot be concealed. All the brave talk about snuffing out the smuggling syndicates will sound hollow indeed.
The new head of the second most important revenue agency says he will wage war against smuggling. We await the results with bated breath.
Alvarez has landed a tough job. The Bureau of Customs, which accounts for about a third of total public revenues, has been missing its revenue targets. Each time the target is missed, the budget deficit yawns even wider.
Yet everyday, in the streets, we are regaled with stories about how large an epidemic smuggling has become. Everything, from chicken parts to onions to oil to rice to sugar to luxury cars are spilling in, impervious to both the tariff barriers and all task forces formed through the ages to combat smuggling.
Wealth, especially illicit wealth, is difficult to conceal. Yet, it seems, those who made money smuggling stuff are only too eager to flash the cash — much like that guy the BIR has now dragged to court, a pawnshop owner who hardly paid any taxes and then drives around town in a handcrafted Italian luxury car valued at P26 million. That is assuming the proper customs duties were paid on the vehicle.
“Tough job” is an understatement. Alvarez is waging this battle with his back to the wall. There is simply no room for failure.
Over the immediate term, tariffs on a host of imported items will be lifted as part of our commitment to regional free trade arrangements. That will put pressure on the Bureau’s revenue goals.
The loss of revenue from the lifting of tariffs on a large range of commodities included in our free trade commitments must be compensated for by collecting every peso from everything dutiable passing through our ports. Otherwise, the collection gap will make the Bureau of Customs appear like a non-performing revenue agency.
Remember that we have also previously lifted tariffs on oil imports in an effort to appease public complaints about the price of imported oil products. That lifting is unwise. The beneficial effect for the consuming public is hardly palpable; but the fiscal wound inflicted by this policy decision is gaping.
Disagreeable as that decision to lift tariffs on oil might be, the deed has been done. It is now the problem of the Customs Bureau to find other sources of collections to cover the massive loss of revenue resulting from the lifting of tariffs on oil imports.
We can choose to look at it from the upside. Because customs duties on oil products have been lifted, oil smuggling is no longer a problem that created an uneven playing field in the entire fuel industry.
The downside, of course, is that the total revenues the Customs Bureau could collect have become significantly lower. That is bad news for all who wish we could diminish the need to incur even more debt to finance our government.
There is good news for Lito Alvarez, however: there is a large number of imported commodities that seem to so easily slipped through by means of technical smuggling.
The new Customs chief might want to take a closer look at the case of the controversial importation of Turkish flour. This made the news a few months back because the commodity is suspected of being contaminated. Now, traders of the commodity are accused of evading import duties.
According to the grapevine, a very detailed report on the smuggling operation of eight companies importing Turkish flour has been prepared and sent to Alvarez’s office even ahead of his formal assumption of the post. The report concludes that, from only one of the eight companies involved in the racket, at least P51 million in import duties and value-added taxes was denied government in the first five months of this year alone.
Two of the eight companies use the Manila International Container Port and employ similar techniques in evading payment of the proper duties. Both of them declare much smaller shipments to what actually passed through our ports. In one shipment by one company, for instance, imported 8,592 metric tons but only declared its importation as 5,389 metric tons. A second company, at nearly the same time, brought in 7,086 metric tons but declared its shipment as 4,961 metric tons.
In addition to understating the volume of their shipments, the unscrupulous importers also undervalue their shipments. According to the report sent to the Customs Bureau, Turkish flour is undervalued by as much as $24.77 per metric ton. Multiply that amount by tens of thousands of tons and the lost revenue will be very significant indeed.
The operation, involving substantial under-weighing of shipments and undervaluation of the commodity could not have become possible without the connivance of Customs personnel. Surely that connivance did not happen out of pure charity.
To be sure, collecting the proper duties due government from the suddenly hefty importation of Turkish flour will not even approximate the revenue loss from the faulty policy decision to lift levies in oil. But it is one major revenue recovery that, along with several other cases of smuggling, will somehow help offset the loss from faulty policy.
Granted, it might be very difficult to make the importers account for shipments already slipped out of our ports. But if the same racket continues under Alvarez’s watch, in an administration that has made fighting corruption a top priority, it will be difficult to continue believing he means what he says.
If the technical smuggling continues, the market will surely find out. The impact on commodity pricing and the resulting unfair competition cannot be concealed. All the brave talk about snuffing out the smuggling syndicates will sound hollow indeed.
-Alex Magno
Source: http://www.philstar.com/Article.aspx?articleId=595565&publicationSubCategoryId=64
Wednesday, July 21, 2010
Alvarez's true test
Sports, they say, doesn’t build character as much as it exposes it. In the case of new Customs Commissioner Lito Alvarez, however, perhaps we should let him display more of what he’s made of—through his ability to get the job done—before deciding if he is indeed unfit for the position that he has assumed.
Of course, it’s been let known by some sectors in the golfing community that Alvarez is not worthy of becoming Customs commissioner because he was suspended for cheating at this year’s annual centerpiece Mango Tee golf tournament of the exclusive Alabang Country Club, where Alvarez is a member. One golfer-senator, in fact, has axiomatically declared that if Alvarez cheats at golf, then he will cheat at Customs.
But, in golfing parlance, perhaps Alvarez should be allowed to hit the equivalent of a provisional ball, something that the rules of the game allow when there is a suspicion that the first ball one has hit has gone astray. And then, if he messes up again, we can all decide to penalize him by bundling him out of office posthaste.
Alvarez’s golfing infractions are certainly not unknown to the authority that appointed him. The Customs chief himself has admitted that the incident at Alabang came up during the deliberations concerning his nomination to the post—but that President Noynoy Aquino gave him the job anyway.
Indeed, it seems clear that the President and his advisers have deemed that Alvarez’s golf gaffe did not detract from his ability to collect taxes and duties on imported goods in favor of the government. And because Alvarez has been assigned to head an agency where cheating is not, to be kind, entirely a foreign concept, one has to admire the intended or unintentional irony that surrounds this particular appointment.
On the other hand, Alvarez must be the first to realize that his actions on the golf course have very little to do with the fact that he must perform as expected if he intends to stay long in his job. And that, last we checked, Customs is still expected to collected taxes and duties in the amount of P280 billion this year, whether or not Alvarez touches a golf club again for the rest of his life.
Making that number or surpassing it in terms of collections is the only sure test of Alvarez’s ability as a suitable Customs chief— not the number on any golf scorecard that he signs. And if Alvarez knows what’s good for him and the entire government that is relying on him to hit his collection target, he will move on from what happened in Alabang and devote all his efforts to reaching the goal that has been put before him.
Like the Aquino administration itself, perhaps we should allow Alvarez the opportunity to start afresh and do all he can to get the job done. If we cannot give the new administration the opportunity to show us what it can do, then we might as well have never ended the sniping and partisanship that marked the last election campaign.
Besides, all of us have a stake in seeing this administration succeed, because that will benefit the entire country. And if the Customs bureau gets to shake off its oft-deserved reputation as a hotbed of corruption during the current administration, then that will be a most welcome side effect, as well.
Needless to say, Alvarez should realize that because of what happened in Alabang, he will probably have to work harder than any previous Customs chief to make his collection target. As head of one of the top three revenue-generating agencies in an administration that has had to revise its deficit targets upward in anticipation of flagging income, Alvarez also shoulders the additional burden of helping the Aquino government implement its priority projects without sinking the country deeper into debt.
This is not, after all, some golf game where mere pride and a bunch of trophies are at stake. For the government and the citizenry, Alvarez’s performance at Customs could spell the difference between helping uplift the nation and business as usual for the smugglers and their corrupt co-conspirators inside the bureau.
So Alvarez is in a unique position to breathe life into Aquino’s mantra of no poverty and no corruption. And if he fails to do his job, he will be able to spend the rest of his life explaining how he is not a cheat—and an incompetent one, at that —when he retires to the golf course after his brief, unremarkable stint as Customs commissioner.
* * *
Here’s a quick way for Alvarez to prove how serious he is about collecting revenues for the government at the Customs bureau: he can look into the reported rampant smuggling into the country of Turkish flour.
A detailed report prepared for the bureau recently estimated that smugglers of cheap, low-nutrient Turkish flour has caused the government to lose P51 million in import duties and taxes in the first five months of this year alone. And the foregone revenues were reportedly due to the operations of only eight importing companies that brought in the flour.
According to the report, which Alvarez can very easily access, two of the eight companies used the Manila International Container Port as point of entry while a third used both the MICP and the Port of Manila. The operations of the first company caused the government to lose at least P13.8 million when it imported 8,592 metric tons of the product but declared only 5,389 tons, while the second imported 7,086 MT while declaring only 4,961, thus evading the payment of P6.9 million.
The third importer supposedly brought in 10,488 MT of Turkish flour but undervalued the shipment by 23.3 percent to avoid paying P6.9 million which should have been collected by the Customs bureau. The imported flour was valued at $24.77 per ton when the reference value of the product by Customs is $300 per MT.
While the report details the alleged smuggling and undervaluation of Turkish flour during the previous Arroyo administration, Alvarez now has the responsibility to prove that this irregularity will not continue under the new administration. And a new report concerning Turkish flour smuggling under the Aquino administration, we heard, is already being prepared.
Alvarez can make sure that the new report will not show that it’s business as usual for the flour smugglers. And that his own promise for influence-peddlers at the ports is not just empty talk from someone who really cannot do the job he was contracted to perform.
Get to work, Commissioner. You were selected for the job despite supposed serious questions about your honesty and integrity on the golf course—now it’s time to prove the doubters wrong in the real world, where how you perform really matters.
-Jojo Robles
Source: http://www.manilastandardtoday.com/insideOpinion.htm?f=2010/july/21/jojorobles.isx&d=2010/july/21
Tuesday, July 20, 2010
Gov’t loses over P50M in uncollected taxes to flour smugglers
THE GOVERNMENT reportedly lost P51 million in uncollected taxes as of May to flour smugglers, the Philippine Association of Flour Millers (PAFMIL) said in a statement late last week.
Eight companies are claimed to have undervalued their imported flour shipments for as low as $24.77 per ton, just 9% of the reference value. Some also misdeclared their shipments as having a lighter weight, PAFMIL said. As such, importers got away with paying lower import duties and value-added tax, the group said without elaborating on how the reported revenue loss was computed.
"PAFMIL has already brought the matter to the attention of the Bureau of Customs although the new Customs Commissioner Angelito A. Alvarez has yet to make any official statement on the lingering problem," the group, whose members are currently facing profiteering charges at the Trade department for refusing to lower flour prices, said.
Customs officials, meanwhile, could not be immediately reached for comment.
Earlier reports showed that five of the bureau’s 16 port collectors nationwide missed their targets in the first half.
Source: http://www.bworld.com.ph/main/content.php?id=14384
Monday, July 19, 2010
An Open Letter to President Noynoy Aquino
Our beloved President Aquino
You said in your well-applauded inaugural address last June 30: “We will strengthen collections by the Bureau of Internal Revenue and we will fight corruption in the Bureau of Customs in order to fund our objectives for the public welfare…”
You also said that we, the Filipino people, can bring our concerns to you directly because, to borrow your own words, we are “your boss.”
In this light, we are imploring you to once and for all put a stop to the well-reported technical smuggling of Turkish flour into the country by some unscrupulous traders and their protectors at Customs.
In 2009 alone, it is estimated that government lost at least P50 million in duties and other taxes due to the undervaluation of Turkish flour entering our ports.
If Turkish flour smuggling goes unchecked, it could translate to billions of pesos in foregone government revenues in the six years of your administration.
Likewise, it will undermine your avowed stance that “if no one is corrupt, no one will be poor.”
Mr. President, as you read this, please consider that many of our countrymen unknowingly eat pandesal made from Turkish flour with low nutrient content mixed with local flour to mask its inferior quality.
Thus, this matter requires your immediate and decisive action because some greedy traders are only too willing to endanger our people’s health and well-being just so they can make huge profits.
Again, in closing, we go back to your inspiring inaugural speech, Mr. President:
"To our impoverished countrymen, starting today, your government will be your champion.”
Turkish flour smuggling worsens
Smuggling of Turkish flour went unabated in the first five months of 2010 with government revenue losses for the period estimated to reach P51 million, according to local flour millers.
Ric M. Pinca, executive director of the Philippine Association of Flour Millers, had said that the losses covered only importations done by eight companies and did not include value added tax and import duty losses from misdeclared importations.
Turkish flour had been misdeclared as other items like soybean meal, which enjoyed zero duty and were not covered by VAT.
Pinca said that PAFMIL had already brought the matter to the attention of the Customs bureau although Commissioner-designate Alvarez hasn’t issued any official statement on the lingering problem.
Smugglers had been found to have declared import value of Turkish flours as low as $24.77 per metric ton, or just nine percent of the BOC value reference for Turkish flour of $300/MT.
The losses were the result of the undervaluation of imports by the eight companies, which Pinca had refused to identify.
One of the eight companies imported 8,592 MT of Turkish flour but declared only 5,389MT, with government losing at least P13.8 million, he said.
About 7,086MT was brought in by another company but it declared only 4,961MT, causing the government to lose P12.1 million in duties and VAT.
Pinca said that a third importer declared a total of 10,488MT but that it undervalued it by 23.3 percent, evading tax payment of P6.9 million.
The PAFMIL official revealed that the first two companies’ shipments came in through the Manila International Container Port (MICP) while the third passed through the MICP and the Port of Manila.
Source: http://www.manilastandardtoday.com/insideNation.htm?f=2010/july/19/nation5.isx&d=2010/july/19
Friday, July 16, 2010
Gov’t lost P51M in Turkish flour smuggling, millers say
The government might have lost P51 million in revenues from the technical smuggling of Turkish flour in the first five months of the year, according to Ric M. Pinca, executive director of the Philippine Association of Flour Millers (PAFMIL).
Pinca said the estimate was contained in documents submitted by PAFMIL to the Bureau of Customs (BOC).
Pinca said these losses do not include value added tax and import duty losses from flour importations which were declared as other items, such as soybean meal, which enjoys zero duty and are not covered by VAT.
He said smugglers declare import values as low as 24.77 per metric ton or only nine percent of the BOC value reference for Turkish flour of $300 per mt.
Pinca said the losses were incurred from the undervaluation of imports by just eight companies alone but PAFMIL would not reveal the names of the flour importers pending the BOC investigation.
Pinca said one company imported 8,592 mt of Turkish flour but declared only 5,389 mt.. PAFMIL estimates government loss here at P13.8 million.
Another company brought in 7,086 mt. of Turkish flour but declared only 4,961 mt., evading payment of P12.1 million in duties and VAT.
A third importer declared a total of 10,488 mt importation but undervalued it by 23.3 percent, thus evading payment of P6.9 million in VAT and import duties.
Pinca said the first two companies’ shipment came in through the Manila international Container Port (MICP) while the third’s passed through both the MICP and the Port of Manila (POM).
Source: http://www.malaya.com.ph/07162010/busi8.html
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