Is there reason to hope?

Can it be possible, just possible, that the Bureau of Customs might be heading to a real cleanup? Well, I went to a briefing conducted by Commissioner John Sevilla and all his deputies on what they intended to do. Sevilla has a charming frankness about him that, by his admission of the failings, gives you some confidence that these might indeed get addressed. But there are some dastardly, well-entrenched systems that ensure the prevalence of corruption at the BOC. A cleanup has been tried before, with dismal results, so it’s not going to be easy.

Sevilla’s plans are impressive, but I’ve seen countless government plans. They save me paper; I can write columns on the back as they’re not much use for anything else. But the most important plan is, I think, achievable: a fully electronic, paperless system, with a simple, centralized assessment service and valuation database. They say it will be in place by next year. I’d give it toward the end of President Aquino’s term.

For me, what came out of it was this: The key to making it work is computerization, divorcing humanity from the process. Getting rid of paper, speeding it all up. Now mind you, you can screw up computers, and I had a personal experience some years back when a computer system that the BOC had installed didn’t work—didn’t because the employees sabotaged it.

Full computerization will take quite a bit longer if the Philippine bureaucracy follows its normal course.  Without it, the cleanup task is impossible. Some 4,500 containers pass through the ports daily, 90 percent through the two Manila ports. Of those 4,500, only 200 are X-rayed and another 200 are physically inspected—that’s an ineffective 10 percent. And they must be inspected against a product database of some 8,000 tariff items. That is not computerization. It’s in the budget to do.

Apart from computerization, what will also help is preinspection. This was done many years ago, but it was discontinued because of cost. Cost? Do they know what it costs to not have preinspection? The levels of smuggling blow the mind. Much of it can’t be stopped; with more than 36,000 kilometers of coastline and 24 reasonably sized ports, it’s impossible to stop it all.

But what comes through the top ports can be stopped, or at least greatly reduced. The issue is being revived because there are huge discrepancies between data from exporting countries and import data here. They don’t match, by a large margin. With two sets of papers to compare, discrepancies will show up. Finance Secretary Cesar Purisima has approved the renewal of preinspection, and it should start shortly.

I know this won’t stop the corruption, but it might reduce it. And that’s to follow the suggestion of Bert Lina, a former BOC commissioner who was effective in his time: Raise salaries. Do you realize that BOC personnel have monthly salaries that go from below P15,000 to about P30,000, with senior assessors and collectors (the ones where money matters) in the P50-P60,000 range? You can’t live on that, you can’t resist temptation on that. The government has to realize that the “savings” made in paying low salaries (not only in Customs) are costing the economy far more in not only encouraging a need to steal, but in making a poorly motivated staff more inefficient. It’s time a major rethink of government salaries was done. And that includes the P120,000 paid the president of 100 million people. A New York banker spends that much on cocktails in a week, and isn’t building a country but tearing a world financial system down. What must also be done is to pay overtime promptly.

Sevilla is getting to the heart of problems by identifying where the big losses are, and forgetting the peripheries. For instance, when looking at all the inputs under a specific tariff classification, examine only those that are outside a standard deviation. Those within an acceptable range of pricing will be automatically cleared. Those outside the range will be inspected. He applied something like that on a batch of resins and ordered inspection of all resins where the declared value was below $1500/ton. The industry caught wind of it and, what do you know, a week later declared values rose 25 percent as unscrupulous importers realized that 25 percent was cheaper than being inspected and caught for much more. Clever.

One problem Sevilla raised was smuggled oil because of the large volume, and value, of it. In an earlier time a marker dye in a legitimate product was tried, but for various reasons didn’t work. What might work, and be relatively simple to do, is to see if a gas station is issuing VAT-paid receipts. Smuggled products will have no input VAT, so no sales receipts can be issued. What can also be done, but a bit more technically difficult, is to test for the mandated 10-percent ethanol in gas and 2-percent coco-methyl ester in diesel. Test equipment exists. Smuggled gas and diesel have an added disadvantage: risk. Can you imagine transferring highly volatile gas into tanker trucks on a Ro-Ro (which is being done)? It’s a front-page disaster waiting to happen.

So it’s all encouraging, but the corruption in and of the system is so widespread and entrenched that a revolution may be necessary. Or something far more dramatic. But at least there’s real effort being tried as a first step. Let’s see if it works.