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A guide to reforming the Bureau of Customs

/ 08:14 PM September 10, 2013

When, in 1573, the Spanish conquistador Miguel Lopez de Legazpi established the “Customs Service of Manila” to generate badly needed revenues for the colonial government, little did he dream that he was creating a den of iniquity that seems immune to reforms even in this digital age.

In trying to solve the Bureau of Customs’ growing problem of corruption, President Aquino and Commissioner Ruffy Biazon may do well to take a look at history.

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In the post-Marcos era, there was an extended period when the bureau performed remarkably  well. From 1987 to 1998, a 12-year interregnum, graft opportunities were so slim that customs employees were reduced to taking  public transportation rather than driving around in  flashy sedans and SUVs.

Thoughtful and enlightened customs technocrats—the likes of Guillermo Parayno and Titus  Villanueva—introduced landmark changes in customs service, each taking steps to drastically curtail corruption by minimizing  human intervention and discretion.

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Adopting the wizardry of information technology, they also relied on a great deal of common sense. One disarmingly simple notion was the introduction of a “selectivity system” that classified importers based on their track records.

Shipments of legitimate importers with good or excellent track records passed through a green or super green lane, subject only to random checking. A yellow lane was dedicated to importers with no record of any violations, subject only to documentary check.

However, importers with questionable track records were confined to a red lane: All their shipments were physically examined and their documents scrutinized. Only about 20 percent of all cargoes passed through the red channel, and only these were subject to the whims and caprices of corrupt customs personnel.

As increasing trade volumes called for more sophisticated customs services between 1987 and 1993, technology virtually transformed the bureau’s operations into a paperless, cashless, and queueless process. Yet in spite of these advances, smugglers continued to deprive government of over P200 billion annually.

What to do? The response was an import supervision system (ISS), which a number of countries had successfully adopted. A major problem was that the ISS covered only a few countries whose exports to the Philippines were frequently misdeclared, misclassified or undervalued.

The solution, thus, was not a fragmented ISS but a comprehensive ISS (CISS). On the recommendations of the Department of Finance and the World Bank, the government awarded the novel system to the Société Générale de Surveillance (SGS), which won a  competitive bidding in  1986.

To strengthen this valuation and surveillance system, the bureau fostered other elaborate electronic data innovations. All these, however, could  be sabotaged by a lack of  sure-footed management and forceful leaders who have the wisdom  to do things right and  the courage to do the right things.

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Both the DOF and the World Bank did not reckon with the quality of President Joseph Estrada’s leadership. Early in March 2000, Estrada terminated the SGS contract, with the astounding boast (in his third State of the Nation Address on July 24) that by doing so, “we not only saved P4.2 billion a year in fees, we also exceeded our customs collection target by P3.7 billion without their help.”

Contradicting  Estrada’s claims, the BOC reported that in 1999 alone, CISS generated some P10.3 billion, in  additional  customs revenues. It also disclosed that, between 1987 and 1998, CISS contributed P67.82 billion in  additional  revenues. For the same period, collections expanded annually by an average of 30.1 percent.

What exactly did Estrada’s deed accomplish? Without CISS constraints, fixers, smugglers, extortionists, and politicians soon reclaimed the bureau. And customs employees returned to  la  dolce  vita.

Our continuing tragedy is that succeeding administrations remained partial to a Bureau of Customs with poorly maintained systems and elastic norms. This situation persists, not only engendering our collective poverty but also creating, every single year, shadowy titans of ill-gotten wealth beside whom Janet Lim-Napoles comes across as a low-class piker.

Rex D. Lores is a member of the Philippine Futuristics Society.

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TAGS: Bureau of Customs, column, reforms, rex d. lores
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