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Excerpts from a recent Quijano de Manila Symposium at the
Cherry Blossoms Hotel, Ermita, Manila, where Commissioner
Napoleon Morales discussed issues on revenue collection,
modernization and staff morale at Customs, and measures to
lick corruption. The panel of journalists included
BusinessMirror publisher T. Anthony C. Cabangon,
Philippine Graphic magazine editorial board chairman Butch
del Castillo; Roy Acosta of Graphic and BusinessMirror;
broadcast journalist Jimmy Gil and Bert Mozo of dwIZ.
Del
Castillo:
From what I have gathered, Commissioner Morales is a
self-made man in this career; he supported himself through
college while working at the Bureau of Customs as a
utility man. We have here a self-made man, and on his
shoulders the government is relying in the task of
collecting more money for the government coffers so that
the Arroyo administration may operate on a balanced
budget.
Morales:
Simply put, the Bureau of Customs has a mandate to do two
things: collect revenues for the government; and two,
secure, facilitate trade—that requires us to prevent
smuggling and entry of prohibited goods and provide
world-class Customs service to our clients.
On the
revenue side, when I took office last year, I was faced
with a so-called impossible target of P196 billion. The
bureau collected P198.2 billion, P43.5 billion higher than
in 2005 and an unprecedented collection performance in the
bureau history.
This year,
we are faced with yet another record-breaking revenue
target of P228 billion for the year-end. This is 16
percent higher than what was set for 2006. For October,
the bureau collected P17.7 billion—P2.95 billion or 13.6
percent lower than the P21.7-billiion target for the
month, and P129 million lower than the actual collection
for the same month last year. Compared with actual
collection for the same month last year, the bureau’s
collection barely moved with a negative 0.7 variant
despite the big difference in the foreign exchange of P52
[to the dollar] last year and only around P43 last month.
The
bureau’s cumulative collection shortfall against target
for the past 10 months is P14.99 billion, or negative 0.8
percent. However, the P171.7-billion cumulative collection
this year is P7 billion higher than that collected for the
same period last year. These reflect a collection growth
of 4.3 percent, again, despite the big difference in
foreign-exchange rates between 2006 and 2007.
To augment
revenue collections and cushion the impact of the peso
appreciation on our collection, we have initiated
revenue-enhancement measures. The x-ray operations have
enhanced revenue due to the “fear factor,” reducing
misdeclaration of goods. On trade security and
antismuggling measures, the integration of the x-ray
scanning machine in port operation has not only plugged
revenue leaks by eliminating misdeclaration,
undervaluation and misclassification, but also tightened
our watch against antisocial goods such as guns,
ammunition, weapons of mass destruction, illegal
chemicals, drugs and other contraband like fake designer
goods and pirated DVDs and CDs.
We have
entered into an agreement with several agencies for closer
monitoring and better enforcement. The memorandum of
agreement [MOA] with the Department of Agriculture [DA]
has resulted in [the apprehension of] agricultural goods
found to be either banned or highly regulated or of
substandard quality and not fit for human consumption.
Just this morning, we presented to the media over P36
million worth of imported onions seized for misdeclaration
and lack of import permit from the DA.
This MOA
also protects the interest of local farmers and producers
greatly affected by the influx of imported and cheaper
agricultural products. We recently signed an MOA with the
Land Transportation Office to stop registering motor
vehicles that are smuggled and undeclared.
To address
the rampant smuggling at the Subic Freeport, the Bureau of
Customs and SBMA [Subic Bay Metropolitan Authority] signed
a MOA to provide a more efficient clearance and mechanism
in the release of goods, similar to a MOA signed with the
Maritime Industry Authority or Marina, on the registration
of vessels used in undervaluation. There is also a pending
MOA with ATO [Air Transportation Office] to address air
dues for aircraft and airplane registration.
We have
purged our list of accredited importers. When an importer
or broker is involved in any smuggling or misdeclaration,
we immediately block their access to prevent them from
doing further transactions. With all legitimate importers
transacting with Customs, we have decreased the risk of
smuggling at its first stage. We have also intensified our
run-after-the-smugglers or RATS program. This investigates
and prosecutes smugglers and unscrupulous importers,
brokers, customs officials and employees who connive with
them. Even pending result of investigation, these
officials are suspended, and if found guilty, they are
sacked.
To give
world-class Customs service to clients, we have the
e-customs project. The pilot implementation in the Port of
Manila is ongoing. We anticipate full implementation in
all ports soon. With e-customs, we will migrate to
paperless and queueless transactions, and a bank-to-bank
payment [system] that will minimize face-to-face
transaction.
As
chairman of the National Single Window Task Force, we have
been convening relevant agencies that will become part of
the National Single Window Network—an integral component
of the Asean single window, and the building is a regional
commitment of the
Philippines.
The
concept of the Asean single window is [one-time]
submission of documents and data, synchronous processing
of all agency concerns, and single decision-making for the
release of cargos.
The
National Single Window can provide the most efficient
services for traders and will enable the trading community
to be more competitive; it could be seen not just as an
electronic data-handling system but rather as a potential
mechanism to stimulate new and better reforms in business
and governance.
I’ve been
a Customs man all of my adult life—almost 40 years in the
bureau come 2008. Beginning as a mere messenger, and
rising up the ranks, perhaps collecting for the government
is what I do the best.
I’ll make
sure that under my watch, proper duties and taxes are
collected for every single transaction with the bureau by
eradicating smuggling in all forms and fronts, and pushing
for the continued development and growth of the Bureau of
Customs through personnel [improvement] and better
infrastructure and technology to provide world-class
Customs services to our client.
Gil:
Can you
tell us again, considering that the dollar has been
weakening vis-à-vis the peso, how this has affected your
chances of achieving your target?
Morales:
We know that every budget is based on macroeconomic
assumptions. For this year, macroeconomic assumptions as
far as volume is concerned, as well as the rate of
exchange, did not materialize. Let’s just discuss the rate
of exchange. Simply put, the P228-billiion target was
based on an exchange [rate] of P48 to the dollar.
Now the
exchange rate is P43. What’s the effect? This was already
discussed with the Department of Finance [DOF]. Per DOF
computations, for every one-peso change in the exchange
rate, the revenue impact is P3 billion. From the change in
the exchange rate—the peso rising from 48 to 43, we’re
talking of P5, so if we use the DOF computation [P3
billion for every peso change], that means a revenue
impact of P15 billion. Our computation at Customs is even
more conservative: P2.7-billion revenue impact for every
one peso. So if we use that computation, we have a revenue
impact of P13.5 billion.
Now, how
did Customs perform compared with last year? Last year,
our rate of exchange was P52. This year, on the average,
let’s just say it’s P44, or even P43.
Now,
despite the fact that we see the peso appreciating, last
year’s collection exceeded target by around P7.7 billion.
What I’m saying is that from that accomplishment, we even
have efficiency of less than 5 percent.
By
December we’re told the rate of exchange would be only
P42. Despite that, we’re not retreating from our target,
we’re hoping to get the absolute amount of the target;
we’re relying on our postentry audit because under this,
we can still run after those who [underpaid government].
We are implementing RA 1508; their accreditation is
suspended until they respond to our demand letters.
Del
Castillo:
In your estimate, by year-end, what would be the
collection shortfall of the bureau?
Morales:
The Department of Finance did an assessment, and decided
to reduce the P228-billion [target] to P223 billion.
Del
Castillo:
Okay, assuming the target is P223 billion, what do you
forsee as the total collection of Customs by the end of
the year?
Morales:
I think we’ll be exceeding that [P223 billion]. But P228
billion would be a tall order.
Del
Castillo:
So you deem unrealistic the [original] Finance target on
account of the strengthening of the peso against the
dollar.
Okay,
congratulations for your performance, Commissioner, but
your detractors are saying that under you, the Bureau of
Customs has not caught a single big fish among the
smugglers. Please comment.
Morales:
Actually, we don’t distinguish between big and small fish.
If someone did wrong, my instruction is just to do what
has to be done. What’s important is we have evidence to
prove it, and then file a case with the Department of
Justice [DOJ].
On the
issue of “big fish,” I cannot remember the name, but when
I assumed office, in 2006, a name was mentioned in the
Senate, and that’s one of those we filed a case against.
In the
case of these onions we recently seized, we told them
we’re taking the onions, but I waited 30 days to open
because we were waiting for a broker [to claim], because
in filing cases, we must include the broker. But that
doesn’t mean we’ll stop seizing smuggled onions. Whoever
appears in the “inward-foreign manifest” is included.
T.A.
Cabangon:
Do we have statistics —comparative in the region—about
smuggling?
Morales:
Right now we don’t have that data. I attended the World
Customs Organization-World Trade Organization’s meeting,
and one of the topics was smuggling. Smuggling is all over
the world because it’s a very, very lucrative business.
Now, we discussed in the World Customs Organization what
Customs-Philippines will do in terms of capacity building
on smuggling as well as, you know, rate of facilitation.
How can we
reform Customs? In the last week of October we put out
this notice that we’ll start the value-added service
provider. That means we make service paperless and
queueless.If you file an import entry, you don’t have to
go to Customs anymore, do it from your office computer. If
you’re an importer, broker, have yourself accredited with
Customs. The PIN code you’ll get will give you access.
With
automation, you take out human intervention. That helps
wipe out smuggling, corruption. January 2008 is our time
frame. Customs will no longer accept cash and checks. An
importer must get a bank account, and pay by bank transfer
the duties and taxes. Your bank will transfer it to the
Customs account. That helps us keep track of money flows,
for purposes of antimoney laundering.
Gil:
I have two questions: How many cases have you filed, and
have there been any convictions?
Morales:
Customs doesn’t prosecute. We do case-building. Now, for
2008 we have already filed 108 cases.
At the
DOJ, for preliminary investigation, there are 15 cases;
resolved cases, 85—these are the ones in court already. To
speed things up, some of our people have been deputized by
DOJ—we are deputized up to the Office of the Solicitor
General.
Roy
Acosta:
What are you doing to weed out the insiders in cahoots
with smugglers?
Morales:
Most of the smuggling uses are on the issue of
misdeclaration or undervaluation. Now, we’ve fully set in
motion the Asycuda e-world, the Customs automation system.
With technical smuggling, meaning their description of
goods is vague, you cannot even classify it in its correct
heading. Naturally, the effect is that its value goes down
in the computer. With Asycuda, the computer will reject an
entry if the description of goods is vague.
Until it’s
corrected, the computer won’t process it, so you’d have to
pay storage while your goods sit there.
Now, in
order to answer smuggling and corruption, automation
without human intervention will resolve everything. In
2008 our target is full automation.
Cabangon:
These are experiences of my friend. Sometimes even if you
want to pay the right taxes, they make it hard for you.
They’ll say P300,000 is the assessment, but you pay only
P250,000 because they have a cut there. They make it hard
for the importer to pay the right taxes. Will automation
solve those problems?
Morales:
Human intervention is removed by automation. As I’ve said,
valuation in our database is now automated. That’s
important because as you know, here at Customs, sometimes
even appointments of janitors are politicized. So we
really have to remove avenues for human intervention.
Del
Castillo:
But if automation will take three years to be realized,
won’t that be like a dream? But under the present system,
Commissioner, how many signatures are required to clear a
shipment through Customs? I heard more than 30 signatures
are required and each person has a receiving box, or
import papers don’t move.
Morales:
I would like to correct that statement, it’s not
2010—January of 2008—we won’t wait till 2010. Actually,
the system is complete, we’re just tweaking the parallel
systems; this is a revenue-collecting agency of
government, so it must be foolproof.
Del
Castillo:
I’m sure the resistance to this automation move is very
great.
Morales:
This value-added provider service we implemented was
opposed by brokers. Without that, people turned to parties
offering to fix things up for them for a fee, but we’ve
removed the system that allows that. I told them, “We
really have to automate Customs.”
Customs
must be consistent with other Customs all over the world
because this is a global economy. We are only using a
single administrative document. When you go to Japan, the
system is the same; also in Malaysia, Indonesia, Europe
and the United States. We’re only doing it fully in 2008.
That’s why
I sought the understanding of those affected by the
changes we’re making. We have to go with the modern
times, with modern technology. Otherwise, nobody would
invest in the Philippines. That’s why President Arroyo is
pushing the single window for Asean; we have a pilot
project with Thailand, funded by the European Community.
We’ve a similar one with Korea, financed by Korean
Customs. What does this mean? If there’s a shipment in
Thailand, I just push the button from Thailand Customs,
then the container number, and see the export declaration
from
Thailand.
I’ll find out the items, the quantity and the value. So if
they gave me a value other than those real transactions in
the receipt, I can see the discrepancy.
On the
matter of recycled import permits, we’re coordinating with
the Department of Agriculture. We’re sourcing money from
Jica to buy the software because the DA has no money.
We’re also
working with the Land Transportation Office on smuggled
cars.
Del
Castillo:
What happened to the attrition law?
Morales:
Well, last year when the attrition law took effect, our
target was P196 billion, we collected P198.2 billion. We
submitted that to the Department of Finance because we are
claiming for a reward. The lateral attrition law provides
for three things: first, if you hit the target, you’re
given a reward; you’re assured that you retain your
position. Two, if you overshoot your target, you’re also
given two rewards, you’re assured of retaining your
position, and a cash reward of 15 percent. Three, if you
do not hit your target, but the gap is less than 7.5
percent, you’ll be put in a not-so-favorable post. If the
deficit hits 7.5 percent, you lose your job. But in the
case of Customs, we have exceeded our target [in 2006].
Del
Castillo:
Mr. Commissioner, once in a while we encounter news
releases from your deputy commissioners that sometimes
sound critical of you. Why does the Bureau of Customs not
speak with one voice?
Morales:
In the 40 years that I stayed in Customs, I’ve not seen
perfect harmony. That’s nothing new.
Del
Castillo:
Can you say that many are grumbling because you’re doing
your job?
Morales:
Many are saddened. You cannot please everybody. I really
want to help the government. My first job is Customs, and
I think this will be my last job.
Del
Castillo:
Are you happy with the performance of all your port
collectors? If you are not, are you planning a
reorganization?
Morales:
I’m not totally happy. That’s why I said they must come up
with alternative measures, remedial measures to get the
absolute amount, and this is the mandate of the President.
Second, we’ll have a reshuffle.
Del
Castillo:
When?
Morales:
We’ll discuss it with the Secretary [of finance]. The
[assignment of] district collectors needs approval of the
Secretary.
Del
Castillo:
Is this a big reorganization?
Morales:
Nationwide.
Cabangon:
What happens to the smuggled luxury cars, the other batch
that’s supposed to be ordered by GMA to be destroyed in
Subic?
Morales:
You must
have seen the first batch destroyed on TV. The
antismuggling task force wanted immediate destruction, we
said that must await litigation. Before Customs destroys
cars, these must be forfeited in favor of the government.
The logic is simple: you cannot destroy what you do not
own.
Now, for
the rest, litigation has been finished in favor of the
government. These are being auctioned. I don’t know if
they’ve finished auctioning off everything. |
