Ever imagine where P1 coins are going?

Every peso counts, or so smugglers believe.

The peso is worth more than it is given credit for and, because the peso is worth less than the metal it is minted on, containers of coins are being spirited out of the country to be melted down and sold for their metal content.

The Bangko Sentral ng Pilipinas (BSP) reported an unprecedented rise in the smuggling of one-peso coins out of the country since last year, spurred by the increase in commodity prices, especially metals, in the world market.

The BSP has been campaigning aggressively this month for the public to re-circulate coins that accumulate in households but BSP officials denied speculations that coin smuggling was the real culprit behind coins that were unaccounted for.

The BSP estimated that there are at least seven billion pieces of coins in circulation at present, worth about P1 billion in denominations of 5, 10 and 25 centavos as well as 1 peso, 5 and 10 pesos.

However, BSP Gov. Amando Tetangco Jr. said households tend to accumulate coins that need to be re-circulated to avoid the unnecessary cost of minting new coins to fill the demand.

Tetangco said accumulated coins add to the BSP cost but

officials have been unable to estimate exactly how much was missing from the system and whether they all the missing coins are in households or elsewhere.

"It’s a coincidence," Tetangco said, when asked whether coin smuggling was the real problem and not household accumulation. "Coin smuggling is a problem, but we still think that the bulk of (the problem) is due to the tendency of people to accumulate jars of coins in their kitchens, for example, just because (coins) are inconvenient to carry around."

Tetangco said however, that criminal elements have been siphoning

Philippine coins out of the country to the extent that the BSP officials are concerned about the matter as well.

The BSP reported that, as early as April last year, customs officials

intercepted an attempt to smuggle P1.2 million worth of 25-centavo coins through an export processing zone.

According to a BSP investigator who refused to be named, another

shipment of one-peso coins worth P971,000 was interdicted in February this year and another smuggled shipment was intercepted in May involving about P400,000 worth of coins.

The latest shipment to be apprehended was estimated to have a face value of P3 million and BSP investigators said the coins were still packed in bags identifying the banks that released them.

The investigator said the operators were foreign nationals, most of whom were businessmen with bank accounts in Philippine banks and some of whom had legitimate businesses.

"Initially, we think the bulk of the coins are being taken directly from banks," he said. "Some of them have bank accounts and, if they tell their banks they want to withdraw P2 million in one-peso coins, for example, that’s not illegal per se."

The BSP investigators said they are still trying to determine the

network of participants in this criminal activity and whether it involves local accessories, but they said there was initial evidence that the coin smuggling was a syndicated act.

"At this point, we are almost certain that this is the deed of criminal

syndicates," he said. "We are looking into all the angles."

Tetangco said the culprit behind the rising incidence of coin smuggling was the increase in the world prices for metals, which now makes the one-peso coin worth more than its face value.

The BSP estimated that the intrinsic value of a one-peso coin is at

least P1.50 per piece. This translates into a significant profit

margin when the coins are melted for their metal content.

According to Aurora Cruz, acting managing director of the BSP’s Cash Department, there were no previous records of coin smuggling and the rise in the incidence was extraordinary.

Cruz said the economy of scale is determined by the one-peso coin, so coin smugglers might have already stopped smuggling smaller-denominated coins to focus on the one-peso coin.