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The hard reforms

/ 12:16 AM December 08, 2016

For the first time in a long while, the Bureau of Customs surpassed its monthly target for November. It managed to collect P40.239 billion against the target of P37.45 billion. Actual collections are 12 percent higher than projected and 27 percent higher than the same month last year.

This is an impressive achievement by any reckoning—especially for a bureau much derided for corruption. Remember how then President Benigno Aquino III bitterly criticized the BOC in a State of the Nation Address. Despite the verbal assault, corruption in the bureau continued unabated. Estimates of the volume of smuggling—from agricultural products to steel bars—continued to climb. This tells us one thing: Speeches do not change anything.

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Customs Commissioner Nicanor Faeldon, assigned to the job precisely to crack down on the smuggling syndicates, instituted sweeping reforms over the last five months. He simplified procedures and computerized processes to make them more transparent. He conducted consultation meetings with 12,000 importers all over the country. He involved ordinary citizens in policing the graft-prone bureau, mainly through the use of social media for reporting illegal activities.

He took to the job with much energy and worked with much passion. Now the results are beginning to show in the second most important revenue agency. Collection has been on the upswing month after month. Given that income tax rates are due to be cut soon to match those imposed in the rest of the region, increased Customs collections will help offset revenue losses. Improved Customs collections will go a long way in helping fund the administration’s ambitious poverty-reduction goals.

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The achievement of the BOC provides us important lessons in the conduct of bureaucratic reforms. This set of reforms, aimed at improving efficiency and limiting corruption, is the most difficult to undertake. It is the last set of reforms we need to undertake to achieve modern governance.

Over the previous period, our government has been implementing important reforms. In the wake of the crushing debt crisis we went through, the Philippine government has had to undertake painful structural reforms to cut chronic budget deficits and reduce the propensity to rely on debt. We undertook reforms in economic policies aimed at making the economy more competitive and more liberal. In the late 1990s, we undertook a comprehensive tax reform package. In the next few months, another comprehensive tax reform package will go through the legislative mill.

Previous administrations were a little hesitant to undertake the hard bureaucratic reforms we need to do. Despite the mantra of “Daang Matuwid,” the previous administration did virtually nothing to advance the reforms in the public service. This is because reforming the bureaucracy is much like attacking your own army. But these reforms can no longer wait. It is the duty of the Duterte administration to finally undertake these reforms.

Reforming a vast, tangled bureaucracy is a huge task. It requires removing duplications that bloat the public payroll. This will unavoidably involve closing down redundant or obsolete agencies. It involves increasing efficiency to match those that pertain to the private sector. It involves simplifying procedures so that we improve on the ease of doing business. It involves curtailing opportunities for corruption by enhancing transparency and accountability.

The end goal of bureaucratic reform is to make government more nimble and more responsive. It must be an enabler for economic progress rather than an obstruction to productive activity. Reform of the public sector is indispensable if we seek to build a national economy driven by investments rather than by consumption. Investment-led economic growth will be more inclusive, providing the quality jobs our people expect.

The Duterte administration aspires to bring down poverty levels to below 15 percent by 2022. That is only possible through truly inclusive growth that enhances enterprises. Bureaucratic reform is indispensable to the achievement of the economic goals.

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TAGS: Benigno Aquino III, Bureau of Customs, daang matuwid, Nicanor Faeldon, reforms
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