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Customs Trends & Developments for 2007

WE have just started the year and a lot of people have been asking me for the latest trends and deve-lopments in the customs front for 2007. Except for the controversial law for customs brokers (RA 9280), we have not seen major changes and developments in the customs front in the last year. This early, however, we foresee significant changes, mostly arising from the regulatory and policy reforms being promoted to effect a better environment for the trading community. We will outline below some of these changes and developments.

E-Customs and AsycudaWORLD. We expect customs to fully implement its computerization program before the end of the year, with the migration of the present system to AsycudaWORLD and the adoption of additional applications to address the specific requirements of customs.

As we wrote last year, the impact of the customs computerization program to importers can be immediately felt in the area of trade facilitation and trade compliance. An enhanced online system with simpler procedures and documents starting with the filing of import entry to releasing of the imported goods should result in time savings and lower transactions costs.

For the export community, the same should likewise happen particularly in the area of liquidation of raw materials and surety bonds. In terms of trade compliance, a better and more transparent selectivity system for importations, supported by an enhanced VRIS system, will simplify the procedures for assessment. With better information system, customs should likewise be able to implement a computer-aided system for risk management at the border.

RA 9280 – Customs Brokers Act. Issues on the implementation of RA 9280 will remain contentious and controversial for this year and we do not foresee this matter to be resolved soon. As the contending parties continue to sharpen their knives, so to speak, we expect matters to be elevated to the courts and we expect suits and counter suits to continue. As early as 2004, as the one who first publicly wrote and discussed about the new law, we already noted that the law is full of gray areas incapable of being Òfilled up by mere issuance of implementing rules and guidelines.

Our observation then was that unless the law is amended or unless there is a final court ruling on the proper interpretation of the controversial provisions, there will be conflicting interpretations of the law and government agencies (BOC, PEZA, PRC/PRBCB, etc.) will have difficulties in implementing the law. Our observation made 3 years ago remains the same and has become more apparent today.

Customs Compliance Audit. Early last year, we wrote that customs has issued Audit Notification Letters (ANLs) to at least 100 companies, most of whom are multinational companies and major local trading entities in various industries (e.g. garments and textile, automotive, pharmaceutical, food, steel, consumer goods and other major importing industries). With the appointment of a new head and the reorganization of the Post Entry Audit Group (PEAG), we expect a better and more aggressive customs audit program and consequently, the issuance of many ANLs in the coming months.

To prepare for possible audit, importers and customs brokers should first verify if import records (e.g. import entry, commercial invoice, packing list, bill of lading) are kept within three years from importation. Additionally, companies must ensure that financial and accounting records for value declarations to customs are not only available but also readily accessible to customs. In general therefore, companies must not only keep the records but must also ensure that the records are available and accessible.

This, however, poses a problem to many companies for three main reasons: (a) companies look at customs operations more from a logistics perspective rather than from an indirect tax compliance concern; (b) customs operations are normally outsourced to logistics companies which are mostly not concerned with compliance issues; and (c) companies do not have internal knowledge and competence for ensuring customs and trade compliance.

ASEAN Single Window. In 2004, we wrote about the agreement of ASEAN leaders to facilitate the establishment of the ASEAN Single Window, which aims to ensure the expeditious clearance of imports through single submission of data, single data processing and single decision-making for the release of imported goods. A pilot program is being tested and numerous trainings have been conducted for the trading community. The implementation of the single window concept mainly depends on the technological and computer capabilities of customs and other government agencies.

At present, there are many more hurdles to pass before the single window project is implemented. We expect the project to be operational only by 2009.

Revised Kyoto Convention. Part of the agreements of the ASEAN countries involves the adoption of numerous customs and trade facilitation programs, including the adoption of the Revised Kyoto Convention, formally known as Òthe International Convention on the Simplification and Harmonization of Customs procedures (Kyoto Convention).

The Philippine government has announced its plan to accede to the Revised Kyoto Convention (RKC) this year and thus, adopt the international best practices on customs procedures. Accession to RKC will not only result in major changes in existing rules and procedures but will require an overhaul of the present tariff and customs code. Preparations for implementing the RKC will start this year and once completed, we expect major policy and regulatory changes to be implemented in the coming years.


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