True reformist: In defense of Customs Commissioner Jagger Guerrero

If one is generous, then one might consider the anticorruption track record of the Duterte administration as “mixed.” Frigate scandal, Pharmally, leakage-prone “ayuda,” recycling of government appointees facing corruption charges, and the “Build, build, build” program are among the key examples that raise doubts on the anticorruption drive of the last six years.

Perhaps, one shining area of effective evidence-based and systems-oriented (as opposed to appointee-focused) anticorruption and reform work here is that of Commissioner Rey “Jagger” Guerrero and his reform team in the Bureau of Customs (BOC). While Commissioner Jagger and his team have recently been the target of corruption allegations, this contradicts the generally held view by reform stakeholders — including academic and international development partners — that Commissioner Jagger is a straight arrow and a true reformist.

In 2014, under the Aquino administration, we wrote an article in defense of “a few good men” pushing for reforms in Customs. This time, we write this to do the same—rise in defense of reforms and reformists. We cannot speak highly of Duterte’s other appointees; but when it comes to Commissioner Jagger, we believe he pushed good governance in an agency that now performs better because of his reform programs, which were implemented in partnership with many reform partners.

Early indicators of reform traction. Commissioner Jagger’s “BOC Transformation Program” has been well received by development partners like World Bank, and stakeholders observe that it has produced results and benefits not just in terms of increased BOC revenues, but also in terms of better trade facilitation. We highlight here a number of key reforms implemented under his administration.

The implementation of the fuel marking program in 2019 enabled proper monitoring and reporting of oil import volumes. Moreover, the TRAIN law enabled BOC to collect additional revenues of P24.2 billion in 2020. While oil volume in 2021 was 12 percent lower than the 2019 level, revenues even continued to grow, ending with a historical record of P201.2 billion.

Trade facilitation also improved across various ports and subports. Based on the 2021 UN global survey, the Philippines scored 86 percent in trade facilitation, a significant improvement from 65.6 percent and 69.9 percent in 2015 and 2017, respectively.

BOC also adopted the use of data analytics to monitor and audit import transactions by partnering with the Ateneo School of Government in March 2020. Anchored on operational requirements, the partnership generated the “BOC Governance Tool Suite” (BOC-GTS), comprising of three governance tools which were turned over to the agency in October 2020.

What is evidence-based and systems-oriented reform? The BOC-GTS is a set of data-driven and reform-oriented governance tools designed to help the agency operate more efficiently and improve tax collection efforts.

Since revenues are largely dictated by the country’s volume of imports, BOC needed to forecast revenues based on prevailing macroeconomic conditions. Thus, Governance Tool #1 was developed as a revenue forecasting model using the marginal propensity to import which is defined as the increase in demand for imports with respect to a percentage point in nominal gross domestic product.

With 4 million import transactions processed annually across more than 40 ports and subports, BOC needed better monitoring for each point of entry. Governance Tool #2 provides the agency with detailed information on top revenue-generating import commodities, their corresponding

valuation, and tax profiles. This helps BOC leadership and port managers to manage revenues and import activities, especially during times of global and domestic shocks, such as changes in global prices of oil and food commodities.

To detect anomalies at the transaction level, Governance Tool #3 was designed to flag transactions which violate thresholds set by BOC managers.

Overall, this model of transparency and citizens’ participation in governance appears rare in our public sector—and we should encourage and build on it when and where we find it. The road ahead for BOC is much more promising because of the reform programs implemented by Commission Jagger and colleagues. If we want continuity in reforms, then we have to better appreciate what has been built and on top of this, invest in the further work necessary to secure and sustain good governance.

RONALD MENDOZA
Professor and Dean
Ateneo School of Government;

RANDY TUAÑO
Professor and Dean
Ateneo School of Government;

PHILAMER TORIO
Senior Research Fellow
Ateneo School of Government; 

PAUL NEILMER FELICIANO
Economist
Ateneo School of Government;