CONGRESS—doing its best to meet a self-imposed deadline—is set to ratify this week the final version of a reconciled bill updating the Tariff and Customs Code of the Philippines (TCCP), a long-awaited move “modernizing” customs procedures to facilitate trade and increase revenue collections.
“It will be submitted for final ratification [by the Senate and the House] on Wednesday,” said Sen. Juan Edgardo Angara, chairman of the Senate Committee on Ways and Means and chief sponsor of Senate Bill 2968, embodying the proposed Customs Modernization and Tariff Act (CMTA).
In a brief interview, Angara disclosed on Monday that the consolidated CMTA bill is now being circulated for signatures by members of the bicameral panel that met for two days to reconcile conflicting provisions on the Senate and House versions of the measure.
Angara admitted that the timely approval of the CMTA bill before the current Congress finally adjourns sessions next week was being “pushed heavily” by the Department of Finance and the Bureau of Customs (BOC), as well as the Palace.
Angara acknowledged the stepped-up Palace lobbying efforts to get the bill enacted into law soonest “kasi po-pogi ang Pilipinas sa business-community worldwide.”
“We will look good with the international community as a business-friendly destination,” Angara told the BusinessMirror.
The soon-to-be-enacted law amends the existing TCCP to fully comply with the Revised Kyoto Convention (RKC), considered a blueprint for “modern and efficient customs procedures” of the World Customs Organization.
According to Angara, the proposed CMTA is not seen to result in any revenue loss to the government, citing projections that its early implementation would even lead to an estimated 10-percent increase in customs collections.
He explained that the CMTA was crafted to “simplify, modernize and align the country’s customs procedures with global best practices” by introducing amendments to the TCCP.
In crafting the CMTA, Angara confirmed that lawmakers also wanted to overhaul and modernize the BOC, “long been perceived as one of the most corrupt and underperforming government agencies in the country.”
The senator noted that “approximately $277 billion in revenues was lost by the government from 1960 to 2011 due to technical smuggling, according to a 2014 study of Global Financial Integrity.”
Angara added that the CMTA was also crafted to increase transparency and simplify procedures in the BOC, increase the de minimis value, raise the tax-exemption ceiling for packages sent by balikbayan and returning residents, and provide harsher penalties for smuggling. He explained that de minimis covers small items that are usually minor or lacking importance.
The senator said the CMTA also carries a provision raising the tax-exempt value of balikbayan boxes from P10,000 to P150,000, and the de minimis value from P10 to P10,000. “Tax-exempt and de minimis values may also change every three years. Donation and relief goods will also be duty- and tax-free during times of calamity,” he added.
Angara asserted that the bill also “clearly defines the exercise of customs police authority, customs jurisdiction and customs control.”
The senator recalled that during the public hearings on the measure, BOC officials told lawmakers they anticipate a 10-percent increase in revenue collection once the bill is enacted into law, with the BOC pegging revenue collection at P369 billion in 2014. In a separate statement, Senate President Franklin Drilon acknowledged that upgrading the current customs systems to electronic processing would make the BOC’s importation and exportation procedures faster, more effective and more convenient, especially for the public.
Drilon said the modernization envisioned under the CMTA will “benefit millions of ordinary Filipinos who suffer from the inefficiencies in the handling of incoming and outgoing goods, especially during holiday seasons, when Filipinos endure the cumbersome process of trying to claim gifts or packages which are stuck at the ports.” He notes that the CMTA also envisions the use of information and communications technology and other appropriate applications to “reinforce the BOC’s functions toward simplified, secured and harmonized trade facilitation.”
Foreign businessmen have been urging the 16th Congress to ensure the approval of the CMTA, aside from ensuring the transparency of transactions at the BOC. European Chamber of Commerce of the Philippines President Guenter Taus said having the CMTA in place will allow the Philippines to be compliant with international trade commitments and regulations.
“[CMTA] will accelerate the automation of customs procedures and the full implementation of the National Single Window, thus, preparing the Philippines for the Asean Single Window,” Taus told the BusinessMirror.
“At the policy level, [CMTA] will align customs procedures to the Philippines’s commitments under the Revised Kyoto Protocol of the World Customs Organization and the Trade Facilitation Agreement of the World Trade Organization, with the condition that provisions on Pre-Shipment Inspection are not included,” he added.
Taus said the passage of the proposed CMTA would send a signal to the European Union (EU) that the Philippines is “serious” about strengthening its economic ties with the 28-member bloc and in pursuing a free-trade agreement with the EU.
“The enactment of CMTA will significantly improve market access to the Philippines and the ease of exporting Philippine products. It is an important measure to strengthen the competitiveness of the country vis-à-vis other Asean member-states and the wider global market.” the ECCP added.
Local exporters belonging to the Philippine Exporters Confederation Inc. are also urging Congress to enact CMTA, as reforms in the BOC is expected to boost its bid to become part of the Trans-Pacific Partnership Agreement.
Image credits: Alysa Salen