MANILA, Philippines – Despite the slump in oil prices, the Department of Finance (DOF) has kept this year’s collection target of the Bureau of Customs, the agency’s chief said.
“Of course, the target will still be set higher so that you are aiming for something. If I were the head, I would still increase it,” Customs Commissioner Alberto Lina told reporters last Tuesday.
“Besides, you cannot put the target too low. Targets should always be high,” he said on the sidelines of the central bank’s annual reception for the banking community.
Customs, which traditionally accounts for a fifth of state revenues, is tasked to collect P498.7 billion this year, up by around 14 percent from its 2015 goal of P436.5 billion.
Lina earlier said he would ask the DOF to set a lower goal amid declining oil prices that pulled down Customs’ haul to only P366.9 billion last year, down 0.6 percent year-on-year.
Lower oil prices result into lower valuations, where Customs duties are based. The customs chief said 40 percent of the agency’s collections are from oil.
“Given that it’s a downside, you have to adjust as you go along. Oil going down is a reality. Besides, if prices go up anyway, you also have to adjust,” Lina said.
Global oil prices continued their slump into the new year after a 40-percent decline last year, Dubai crude, the benchmark for Asia, ended 2015 at $34.70 a barrel from $60.39 a year ago.
To recoup possible losses from oil, Lina said the bureau is consistently working on upgrading its valuations of other products as well as its crackdown on smuggling.
The passage of the Customs Modernization and Tariff Act (CMTA), currently at the bicameral conference committee, could also help.
Administrative measures are also being improved, Lina said, one of which is by instructing state agencies to submit in advance import documents for analysis.
“What we did is to ask them to file in advance their manifesto, bill of lading and invoice and other permits, and then we will analyze it and then sign,” Lina said.
“It’s because before the practice was just once these documents are submitted together with the arrival of the shipment. So now, it’s more regulated,” he added.
Sought for comment, Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said the current administration is unlikely to benefit from any reforms that they will undertake to boost collections.
“If they could improve administrative measures, certainly that will help, but that could only be reflected on figures later on,” Neri said in a phone interview.
“For instance, if they pass the CMTA now, they will only have until May to benefit from it. I don’t think that’s enough,” he added.
A weaker peso, which increases the value of imports, could also increase Customs collections, but not that much.
“That could offset, but that will not totally compensate (for the losses in oil) since the magnitude of decline in oil is higher than the peso’s five-percent drop,” Neri said.