May 28, 2013
“Smugglers should be brought to justice as soon as possible and such criminal plunder of the Philippine economy stopped forthwith” asserted American Chamber of Commerce of the Philippines’ President Rhicke Jennings in a statement released on May 28.
The statement was prompted by the recent action of the Court of Appeals on May 9 to issue a Temporary Restraining Order for 60 days against the Department of Justice in the case against the President and CEO of Phoenix Petroleum Philippines and its customs broker and other parties.
AmCham Philippines, the oldest American chamber of commerce outside the United States, observed that the scourge of smuggling has plagued the Philippine economy for decades and has long given the Bureau of Customs (BOC) the reputation of being the most corrupt agency of the government. This was most recently confirmed by the September 2012 enterprise corruption perception survey of Social Weather Stations, which revealed the lowest level of satisfaction of any government agency was with the BOC with a ‐45% rating.
While cleaning up the BOC is a noble objective of President Aquino under his administration’s commitment that “kung walang corrupt, walang mahirap” (“with no corruption there will be no poverty”), an equally important objective is to prosecute and punish the big fish among smugglers who are the private sector partners of corrupt BOC officers.
Under the Run After the Smugglers (RATS) campaign of the Department of Finance, numerous cases over the last three years have been brought against businessmen suspected of underpaying proper VAT and duties on imports. The Department of Justice and judicial system should move with determination to investigate all these cases and to initiate actions to prosecute alleged offenders.
Oil smuggling has been an especially pernicious means of economic plunder because of its large volume, estimated to cost the Philippine Government for many years as much as P30 billion a year in lost revenue.
Oil importers who engage in smuggling conspire and connive with BOC officials at certain ports to underreport the volume of their imports, thus significantly reducing the 12% VAT revenue which the BOC should collect on these imports. They then sell the oil in competition with other firms, which pay the legal taxes and duties, creating a very unlevel playing field.
This pattern – often repeated for other imports ‐ severely harms the country’s investment climate and discourages domestic and foreign investors from risking their capital in the country. As a result, fewer jobs are created and more Filipinos are forced to seek work abroad, away from their families.
The revenue lost from smuggling can also be measured in classrooms and health clinics not built, roads not improved, and other neglected physical and social infrastructure. Oil smugglers and their accomplices rob from the poor to enrich themselves. They claim to be large taxpayers, but the government accuses them in actuality of being tax evaders. This should be decided by a criminal court as soon as possible based on the evidence presented by the Department of Justice. Such cases in China are adjudicated speedily and usually result in severe punishment, including execution. The least that should occur in the Philippines ‐ which does not have capital punishment – is speedy justice for the people against smugglers.
A few years ago slow judicial action contributed to the decline of the automotive assembly industry in the Philippines. Government actions to enforce an Executive Order banning the import of used cars was thwarted by the Regional Trial Court in Olongapo, followed by the Court of Appeals, until the government’s finally won its case after the denial in October 2007 by the Supreme Court of a motion for reconsideration by the used car importers. In so doing, the Supreme Court enforced the law established by an executive order in 2002.
As the wheels of Philippine justice ground slowly for five years, more than 150,000 used cars junked from Japan and Korea were imported, resulting in severe undermining of investments by major automotive firms in the Philippines. Rather than building a domestic auto industry as Thailand and Indonesia have done, creating hundreds of thousands of jobs for their workers, the Philippines instead followed policies that destroyed investment and high‐quality jobs for Filipinos.
“The importance of the case against Phoenix cannot be overestimated and is of equal importance to the case against the used auto smugglers at Subic, who were never prosecuted. If the accused are successful in delaying justice, other private sector smugglers and their corrupt accomplices will be encouraged to continue to plunder the economy,” advised AmCham Senior Advisor John Forbes.
AmCham calls on the Court of Appeals to lift the TRO and allow the case against Phoenix to tried expeditiously. We are hopeful that the three justices will carefully weigh the negative cost to the economy of further delay and the positive impact against smuggling that an early and highly punitive decision will have on investor confidence.
The Bureau of Customs is to be commended for the large seizures it has made in recent months of improperly declared imports or rice and cars in Cebu, Davao, and Subic. It is also to be commended for questioning the legality of used car imports at Port Irene for resale outside the special economic zone in that region.
“Catching and successfully and expeditiously prosecuting and punishing “big fish” smugglers and their cronies in government are essential to the nation’s future economic growth, “observed AmCham Executive Director Ebb Hinchliffe.
Comment here