Massive smuggling of petrochem products bared

The country’s local petrochemical industry has pledged its support to the government’s drive against smuggling as the Association of Petrochemical Manufacturers of the Philippines (APMP) threw its full support behind President Arroyo’s strong position against smuggling in her State of the Nation Address (SONA) last July 17.

Due to the rampant cases of smuggling into the country that has deprived the government of much needed revenues, the private sector must closely work with government in its anti-smuggling campaign. "Only a strong government-industry partnership can effectively end smuggling," said Wilfredo Paras, APMP chairman. Paras also emphasized the need for industries to share information with government to empower it to effectively catch and prosecute smugglers.

In a report to DOTC Secretary Leandro Mendoza, who was designated by the President as head of a multi-agency anti-smuggling task force, the APMP reported that in 2000 alone, smuggled petrochemical resins reached 87,000 metric tons valued at P2.61 billion. Losses in terms of taxes and duties to government is estimated to be over P574 million.

Customs bonded warehouses (CBWs) are also used in smuggling of resins. The APMP said that while CBWs are allowed to import tax and duty free, they are required to use imported resins exclusively as raw materials for plastic export products. Instead, these are diverted to traders’ warehouses and sold in the domestic market. APMP recommended the immediate audit of CBWs.

The APMP also reported to Mendoza the modus operandi of petrochemical smugglers. According to APMP, smuggling is committed through the outright undocumented importation of goods using ports outside Metro Manila or through misdeclaration, misclassification and outright undervaluation of polymers and plastic resins.

Smugglers have also damaged the economy by unfairly undercutting legitimate business. APMP said that smuggled petrochemical products have grabbed an alarming 18 percent of the local market, seriously undermining the strategic industry and compromised its viability.

"While the country benefits from the local industry due to P50 billion in direct investments into the counry, millions of taxes paid to the government as well as direct employment and the creation of economic opportunity, these benefits are being threatened by the predatory practices of economic saboteurs," APMP stated.