Jun 16, 2013

Philippines - Customs revenues ‘lost’ on FTAs reach P60B

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The country’s compliance with free trade agreements (FTAs) has resulted in foregone revenues of about P60 billion in 2012, Customs Commissioner Rufino Biazon said.

If it weren’t for the Philippines’ commitments under different FTAs, the Bureau of Customs could have exceeded its collections target last year, Biazon said in an interview with Malaya Business Insight.

FTAs are agreements between trading partners that provide for elimination of tariffs, import quotas, and preferential treatment on goods from either side.

“Our revenue loss is not just on smuggling. In 2012, we had foregone [customs] revenues of about P60 billion, due to FTAs,” Biazon said.

Last year, the Bureau of Customs’ total collections amounted to P289.86 billion, which was 16.5 percent below the full-year target of P347.07 billion. “We actually surpassed our target, because the goal imposed on us [is based on] assumptions on the volume of trade. But there are FTAs,” Biazon said.

The Philippines is part of several FTAs, such as the ASEAN FTA; the Japan-Philippines Economic Partnership Agreement; ASEAN-Australia-New Zealand FTA; ASEAN-China FTA; ASEAN-India FTA; ASEAN-Japan Economic Partnership Agreement; and the ASEAN-Korea FTA.

Biazon said that the foregone revenues because of the participation in these FTAs have been increasing by P10 billion a year since 2010.

“It’s growing, from P40 billion in 2010, to P50 billion in 2011, to P60 billion in 2012,” Biazon said.

“Especially in 2015, with the ASEAN economic community, our revenues will really be affected,” he said.

The ASEAN economic community hopes to “transform ASEAN into a region with free movement of goods, services, investment, skilled labor, and freer flow of capital.”

“When the DBCC (Development Budget Coordination Committee) sets the target, they take into account assumptions of volume of trade. But there’s no way, or it would be difficult, to compute how many of the importers will be availing of FTAs,” Biazon said.

The customs chief also said that the participation of the country in FTAs has become a loophole and allows “technical smuggling.”

“There are those who legitimately avail of the FTAs, while there are those who smuggle using the FTAs,” Biazon said.

“Smugglers avail of the FTAs with the use of fake documents and fake certificates of origin,” the customs chief said.

Biazon said that the issue on smuggling through FTAs would hopefully soon be addressed through computerization.

For the current year, the Bureau of Customs is tasked to collect P340 billion.

Angela Celis

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