Phl needs to control smuggling to preserve economic gains, experts say

MANILA, Philippines (Xinhua) - The Philippine government needs to control rampant smuggling that's threatening the country's economic gains, foreign businessmen and experts said today.

In an annual assessment of the progress made by the Philippines on economic reforms, The Arangkada Philippines Project (TAPP) of the Joint Foreign Chambers (JFC) rated efforts of the government to fight smuggling as "backward/regression." The report was presented in today's second Arangkada Philippines forum and experts estimate that the "smuggling hole" is worth $20 billion a year.

"Compared to the other metrics (in the Arangkada Philippines) annual assessment, we did worst in smuggling. (We do need) an oversight committee which will monitor the Bureau of Customs (BOC) activities, " Roberto Batungbacal, president of the Chemical Industries Association of the Philippines, said during the forum.

Industry participants said it's the manufacturing and farm sectors which suffer most from smuggling as smuggled products were not charged with the requisite duties and taxes and compete with locally-produced goods.

The manufacturing sector, former Finance Secretary Roberto de Ocampo noted, is a generator of jobs. If left unchecked, smuggling could also pose a threat to efforts of the Philippine government to create more jobs.

Based on figures released by the National Statistical Coordination Board, the industry sector grew 7.6 percent year on year, faster than the 7.5 percent posted by the services sector in the third quarter of 212. In the last quarter of 2012, the industry sector again posted faster growth at 7.5 percent compared to the 6.9 percent posted by the services sector.

Rolando Dy, executive director of University of Asia and the Pacific's Center for Food and Agribusiness, cited a study made by the center which examined the magnitude of smuggling in the Philippines in 2011.

"In 2011, 500,000 metric tons of palm oil left Malaysia as palm olein (but) some 350,000 tons arrived in the Philippines under a different value-added tax classification. There has to be a serious oversight on the informal trade of farm products," Dy said.

Meanwhile, the Philippine agriculture department and rice industry participants have come up with measures on how to curb rice smuggling in the country.

Agriculture Secretary Proceso  Alcala said that the multi- sectoral groups of the rice industry composed of farmers, rice traders, millers, processors, and retailers from Luzon area have committed, through a covenant, not to buy, process and sell smuggled rice.

"To control the inflow of imported rice, the government through the National Food Authority (NFA) shall now be the sole importer," he said.

It was also agreed that only ordinary rice will be imported by NFA to cater to the needs of the marginalized consumers and not to compete with the private sector.

The farmer groups were previously allowed to import rice as part of the private sector allocation but, with this agreement, they will instead be allowed to distribute imported rice under the NFA's Institutionalized Farmers as Distributors program.

The covenant also contains that all smuggled rice shall be seized by the BOC while NFA warehouses shall be used for its storage where a certain fee shall be charged including other expenses for its quality maintenance.

When the seized smuggled rice shall be offered for bidding, NFA shall be given the right of first refusal and match the offer of the highest bidder.

As added safety nets and as a mid-term solution to smuggling, rice millers and processors agreed to have their brand name/s registered with NFA so that smuggled rice can easily be tracked down and identification of accountabilities.