Foreign businessmen urge gov't to decide on fate of SGS

The Association of Foreign Chambers of Commerce and Industry is urging the government to make a final decision on whether to retain the services of the Societe Generale Surveillance (SGS) when its extended contract expires at the end of this month.

SGS conducts pre-shipment inspection and valuation under a contract with the Bureau of Customs (BOC).

According to a Cabinet source, foreign businessmen are wary of the bureau's ability to ensure that imports will be released without delay once SGS's contract expires.

According to the source, the foreign chambers have made representations urging government to settle the issue once and for all, preferably to retain the services of SGS.

Under the present system, imports entering the Philippines land first in Singapore and other major ports where they are valued and processed before entering the country. By the time they are landed at the domestic ports, the bulk of the documentary work has already been completed and they are immediately released from the customs warehouse.

However, as government shifts its customs valuation policy from home consumption value to transaction value, the services of the SGS will no longer be necessary since the BOC only needs to refer to its databank of historical transaction values to determine the customs duties applicable.

The Cabinet source said the SGS had been critical in expediting the processing of imports under the HCV-based valuation system. But the source expressed doubts that the company has been doing any real service after a batch of uninspected toxic garbage shipment from Japan got through without being apprehended by the SGS.

Despite differing opinions in the Estrada administration the usefulness of the SGS, the business sector especially foreign companies, and strongly lobbying for the retention of SGS if only to assure that the BOC will not be completely responsible for processing imports.

Government extended SGS's contract until February to give the BOC time to adjust to the shift from HVC to TV as basis for determing tariffs and import taxes.

But businessmen have repeatedly expressed doubts on the bureau's capacity to make the shift without causing disruptions that could cost millions for importers in terms of delays in the release of their imports. They expressed fears that without a procedure for pre-shipment processing, their imports could be stranded at the customs warehouses for days, possibly disrupting production especially where imported raw materials are concerned.

Aside from making sure that the BOC would be able to make the shift as painlessly as possibly government also has to negotiate for the restructuring of its P4-billion arrears with the SGS, possibly realigning part of the 2000 national budget to be able to meet its obligations.

The P4-billion arrears was accumulated over a period of over two years.

The problem, however, was that the 2000 national budget did not include any provisions for setling this debt and government may have to realign some funds in order to come up with the amount.