BOC reforms hailed as ‘bold, encouraging’ but pre-shipment inspection draws concern

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Pre-shipment inspection of containerized cargoes
Pre-shipment inspection of containerized cargoes
The cost of pre-shipment inspection of containerized cargoes is a key concern among Philippine port stakeholders.

Philippine port stakeholders described the reform program of the Bureau of Customs (BOC) as “bold”, “ambitious” and “encouraging”, but were especially concerned about the implementation of pre-shipment inspection of containerized cargoes by middle of the year.

John Forbes, senior advisor of the American Chamber of Commerce of the Philippines, Inc., told PortCalls in an email that “strong leadership from the BOC to manage customs honestly and efficiently is welcomed by the private sector.”

“The reforms described by Commissioner (John Phillip) Sevilla are bold and encouraging. Whatever has to be done to reform one of the most corrupt government agencies and to fight smuggling and corruption is a positive development,” he added.

Forbes said “maximum application of computers and online processing are extremely important to speed up the process and reduce opportunities for corruption. E-governance, e-filing, and e-payment for government transactions in the Philippines are starting to happen.”

The BOC is targeting a one-to-one employee-computer ratio as well as full automation of customs processes by June 2015. These along with a mountain of other reforms, including pre-shipment inspection, were rolled out by Sevilla at a recent meeting with stakeholders.

A draft Customs Administrative Order earlier obtained by PortCalls requires all bulk, break-bulk, containerized and non-containerized cargoes arriving and entering any port of entry in the Philippines to a load port survey (LPS) at the port of origin, unless otherwise exempt. Currently only bulk and breakbulk shipments are required to undergo pre-shipment inspection.

Dan Lachica, president of the Semiconductor and Electronic Industries of the Philippines, Inc., said the industry would like to see “24/7 corruption-free BOC operations, no duties on import/export for companies on ITH (income tax holiday).”

He added that full automation of the BOC system is “good” but added that if the pre-shipment inspection will entail added costs, SEIPI will oppose it.

The fee charged by accredited cargo surveyors for bulk and breakbulk shipments is one-half of the 1% free on board value of shipments and this will likely also be the fee for pre-shipment inspection for containerized cargo, according to Customs Deputy Commissioner for Assessment and Operations Coordinating Group Atty. Agaton Teodoro Uvero.

Ma. Flordeliza C. Leong, assistant vice president for Advocacy and Communications at the Philippine Exporters Confederation, Inc. (PHILEXPORT), said the “export industry finds the BOC’s computerization and load port survey programs as trade facilitative, except that the BOC system should be redundant to guard against system downtimes and failures.  Otherwise, the manual procedures must be clear and streamlined.  Meanwhile, fees, if any, for implementing the load port survey should not be prohibitive.”

Leong added that “PHILEXPORT is also reviewing the new procedures for importers’ accreditation “for further streamlining”. The Bureau of Internal Revenue and Bureau of Customs recently required accreditation for both importers and customs brokers.

The PHILEXPORT has likewise sent its recommendations to Commissioner Sevilla urging the immediate approval of the draft revised policies for offdock container yard/container freight stations amidst soaring rates.

Nelson Mendoza, director of the United Portusers Confederation, said the group considers BOC’s full automation target “welcome”.

Mendoza is also a little wary of the LPS though, and would like to know how it differs from the pre-shipment inspection implemented by SGS in the past.

He described the BOC’s targets as both “ambitious considering the timeline” but “practical”.

Association of International Shipping Lines general manager Atty Maximino Cruz said the reform program is likewise “ambitious, earthshaking considering the age-old culture at the bureau.”

“It will be an extremely tough challenge for him because the problem is systemic. To attain it, the Customs hierarchy needs a strong and well-focused kind of leadership that must be sustainable, unwavering and insulated from politics,” Cruz said.

Asked what reform would most affect foreign shipping lines, he replied: “Full automation of the cargo clearance process starting from vessel arrival up to the withdrawal of shipments from the port that will meet the exacting international standards of trade facilitation.”

He added this “is the AISL dream for Philippine ports” as it boils down to faster processing of cargoes and reduced time of vessel stay at ports.

Samson Gabisan, executive vice-president of the Chamber of Customs Brokers, Inc., said the group will submit a position paper on the LPS as brokers want it to be “voluntary rather than compulsory” because of added costs.

What the BOC should fast track is the “the auction of seized cargoes to help in the unclogging of the ports,” Gabisan added.–– Roumina M. Pablo

Image courtesy of potowizard / FreeDigitalPhotos.net