Reforming the Bureau of Customs: Start at the top

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RICARDO SALUDO

AFTER Commissioner Nicanor Faeldon exits the Bureau of Customs — President Rodrigo Duterte should let him go for the nation’s and his own good — what should his successor do to fix the BoC and stop the flood of contraband, including guns and drugs, gushing through our ports and airports?

Before the what, however, first the who: Who should replace the colonel who rose to prominence in the failed Oakwood and Peninsula mutinies, and is now making headlines again in another botched enterprise—the reform of the tariff-collecting, ports-policing agency notorious for corruption.

Ask the IMF. Not the cinematic Impossible Missions Force, though the task awaiting the new BoC chief could very well be called impossible.

Rather, the International Monetary Fund can suggest a topnotch candidate from among its consultants on customs reform, who have advised governments in different countries on upgrading and computerizing customs bureaus.

From one colonel to another
After a sterling stint as BoC chief during the Ramos administration, retired Col. Guillermo Parayno was hired as customs reform consultant by the Fund. That’s because he pioneered the computerized import processing system at the bureau, and turned the BoC from one of the most corrupt agencies in the country, to among the least sleazy of 30 agencies rated by a Social Weather Stations poll.

In 2004, he took over the Bureau of Internal Revenue, aiming to institute his systems reform there as well. But the next year, he joined the Hyatt 10 Cabinet officials, who quit in protest against then-President Gloria Arroyo.

Back in July 2010, Parayno nearly got back to his old post. Then-President Benigno Aquino 3rd interviewed him and businessman Angelito Alvarez for the top BoC job. Evidently, Aquino didn’t care for IMF-grade reform; he chose Alvarez.

A year later, more than 2,000 containers had vanished without inspection and taxes while transiting between Manila port, where the boxes were unloaded, and Batangas, where suspiciously they would supposedly be released.

When a deputy customs commissioner for intelligence raised the alarm after 600 containers had disappeared, the Office of the President filed charges against the whistleblower and suspended him. Afterward, the missing cargo more than quadrupled. And the purportedly graft-hating Aquino ordered no investigation.

Back to Parayno: At Customs, he instituted reform without firing hordes of staff. Instead, he offered attractive rewards for seized contraband, so agents made money catching smugglers, not helping them. And his computerized system reduced human intervention and the graft that goes with it.

How things got bad at BoC
Whether one President-defying colonel gives way to another, reform must be done at Customs. Otherwise, drugs, violence, and even bird flu — Peking duck is smuggled, too — would continue flourishing and endangering our people.

What to do?

First, realize that this problem, just like narcotics, was many years in the making, and would not be quick to eradicate. And what took, say, a decade to get this bad would probably take at least five years to beat.

As it happened, after the strong revenue years under President Fidel Ramos, Customs went very bad in the succeeding administration. From nowhere, the Philippines shot up to the No. 4 drug-transit hub in the world.

That deterioration was arrested somewhat in the Arroyo decade, with estimated smuggling falling to $1 billion or less in value, based on IMF trade data. Contraband is estimated by totaling all our imports from all nations, as tabulated by the BoC, and subtracting it from the sum of all exports to the Philippines, as reported by other countries.

Under Aquino, however, smuggling trebled, from $7.9 billion estimated in 2010, to $26.6 billion in 2014. Fellow columnist Rigoberto Tiglao estimated that total undeclared or undervalued shipments totaled ₱4 trillion, with the evaded value-added tax alone exceeding ₱700 billion.

One cannot switch off that sleaze machine just like that. And it revs up even more when shabu smugglers don’t even get prosecuted due to botched evidence, and containers are charged perhaps the lowest flat duty rate ever, while collecting agents get thrice as much, if recent congressional testimonies are true.

Three must-do reforms
So, how does one slowly, but surely wind down the Customs scam spiral? The next head should consider three must-do reforms, whatever else he or she may undertake.

First, upgrade and clean up the computerized shipment processing system. This was set up two decades ago, and has had limited upgrades, partly because BoC insiders actually want it to fail. With the computer down, shipment release is delayed and subject to negotiation. You know what happens next.

Second, expand and modernize the container X-ray machines, with secure online connections to selected law enforcement, trade and intelligence agencies, including those monitoring narcotics, food imports, weapons and explosives. Then smugglers know that if they bring in contraband in any port from north to south, the expert eyes of all those agencies could be watching.

Third, there are some 100 private ports nationwide, many with just one Customs staff assigned to monitor them. No surprises if many shipments get in through those places with little inspection and taxation. Of the 3,000 more staff BoC plans to hire, maybe 300 should watch the private ports.

Two other possible reforms could be:
1) Privatize or outsource Customs services in selected ports, with companies outbidding each other on how much they can collect and what monitoring facilities they will provide.

2) Institute advisory boards at the central and regional offices, with stakeholders’ representatives advising on anomalies and inefficiencies, putting the onus on key officials to address these failings or face charges for neglect of duty.

But the first order of reform is having the right man at the helm, with the full support of the President. That happened in the Bureau of Customs under President Fidel Ramos and Commissioner Guillermo Parayno in the 1990s. We need it again today.

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1 Comment

  1. The Third Possible Reform To Be Done – from a professional working abroad who has very good experiences with the host country Dept. of Customs. If this author wanted my 2 cents advise he can e-mail in private to me because it is a little technical in nature and lengthy expalantions to boot…but the host country found this very effective.

    Sometimes good professionals working abroad can be resource tools for getting some inputs related to national problems…but because they are abroad the gov’t does not care but they remittances only. It is diaheartening but that ia what it is OFWs are heroes because of their remittances nothing less..