Digitalization, partnerships key to a modern, transparent customs administration

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Digitalization, partnerships key to a modern, transparent customs administration
Bureau of Customs' 122nd anniversary celebrations on February 13, 2024. At the lectern is Customs commissioner Bienvenido Rubio. Seated in center is Finance Secretary Ralph Recto. Photo by Roumina Pablo.
(Special supplement: Bureau of Customs’ 122nd founding anniversary)

The Bureau of Customs (BOC) plays a pivotal role in international trade and logistics, as it has for more than a century.

As it celebrates its 122nd founding anniversary this month, the agency hopes to keep in step with the world of fast-moving trade through various projects, some of which have already been realized and many more still in the pipeline.

Established on February 6, 1902 through the Customs Service Act No. 355 as the Philippine Customs Service, the agency later transformed to the Bureau of Customs and Immigration, and finally to the Bureau of Customs when the Bureau of Immigration became a separate entity in 1940.

According to a 2022 International Monetary Fund publication entitled “The Multifaceted Role of Customs and Its Importance for the Economy and Society”: “…. the customs administration’s mission is composed of three elements, all related to international trade in goods: the fiscal element (revenue collection, directly and in support of the tax administration), the economic element (implementation and oversight of certain government economic policies), and the protection and security element (safeguard of citizens’ health and protection of society from transborder criminal activity).”

The agency’s real challenge is therefore in how well it can achieve a delicate balancing act in the performance of these three elements.

Revenue collection

Amid volatile trade heavily impacted by the global pandemic, the BOC has consistently surpassed its annual targets since 2020, hitting its highest collection to date in 2023 with P883.624 billion. That is 1.09% more than the 2022 goal of P874.166 billion.

The latest preliminary revenue collection was also 2.46% higher than the P862.419 billion recorded in 2022.

For 2024, Customs commissioner Bienvenido Rubio committed to hitting the P959-billion collection target through continued vigilant monitoring and improvement of modernization projects.

For the first month of the year, BOC collected P73.329 billion, surpassing its P71.779 billion target by 2.16%.

To further bolster revenue collections and prevent revenue leakages, the latest BOC initiative addresses the burgeoning e-commerce industry. The agency is implementing an ICT-enabled clearance system for express shipments and has already drafted an order covering clearance procedures for cross-border e-commerce shipments, volumes of which have been growing and are expected to only continue doing so in the foreseeable future.

READ: BOC drafts e-commerce clearance rules, seeks stakeholders’ input

Border protection

In the area of protecting national borders, the bureau also apprehended a record high P43.295 billion worth of illegally imported and illicit goods in 2023.

To address smuggling, the BOC has said it will continue to strengthen border control by engaging and collaborating with other law enforcement agencies for seamless coordination and information sharing against the entry of illicit goods, contraband, drugs, and high-value commodities.

Digitalization, partnerships key to a modern, transparent customs administration
At the 122nd anniversary celebrations of the Bureau of Customs

In addition, the BOC is fully implementing the new National Customs Intelligence System (NCIS) to enhance actionable intelligence, support case build-up, and conduct risk profiling and analysis to effectively curb smuggling. The NCIS serves as a secure data warehouse for intelligence information from various units of the customs bureau. Launched in 2022, it provides a database for actionable intelligence information, supporting case build-up, risk profiling, and analysis. The system’s capabilities empower authorized officials with data-driven insights, enhancing the agency’s operational efficiency and effectiveness. This reinforces its ability to safeguard national borders and facilitate international trade.

The BOC also seeks to implement a digital system for the pre-border technical verification of agricultural imports and cross-border electronic invoicing to increase operational efficiency and deter smuggling of agricultural products. A technical working group has been created to study the pre-shipment inspection of agricultural goods and the mandatory use of digital invoices for all agricultural commodities.

Digitalization and trade facilitation

The latest United Nations Global Survey on Digital and Sustainable Trade Facilitation report revealed continued improvement for the Philippines, which scored 87.1% in 2023 from 86.02% in 2021.

READ: BOC welcomes PH jump in UN trade facilitation score

Buttressed by various digitalization projects as part of its commitment to enhance trade facilitation, the improvement in trade facilitation score was welcomed by the BOC.

So far, the bureau has digitalized 161 out of 166 customs processes, or a 96.99% digitalization rate. Notable projects include the Enhanced Value Reference Information System, Customs Customer Care Portal, E-Travel Customs System, Electronic Tracking of Containerized Cargo System, Pre-Payment System, Automated Bond Inquiry System, and Goods Declaration Verification System.

Other initiatives to further digitalize the BOC’s processes and facilitate trade through the use of technology are in the works. These include:

  • BOC e-Pay Portal System for the settlement of miscellaneous fees
  • Customs Auction Monitoring System, a web portal that enables users across all ports to manage online registration and bidding enhancing transparency in the auction of seized goods
  • Integration of the Automated Export Declaration System (AEDS) to the Automated Export Documentation System. The AEDS, part of the BOC’s Electronic-to-Mobile System, facilitates the receipt and processing of export declarations by exporters. AEDS allows for the electronic submission of authorized Export Declaration-Single Administrative Document from economic zone/freeport zone/investment promotion agencies AEDS through BOC-accredited value-added service providers to the BOC Electronic to Mobile-AEDS for loading at all international seaports and airports.
  • Overstaying Cargo Tracking System, which provides updated data on the disposition activities of all ports
  • E-Service Catalog System (internal), a web portal that allows users across all ports to manage online registration and bidding
  • Document Management System (internal), which captures, tracks, and stores electronic documents such as PDFs, word processing files, and digital images of paper-based content;

E-Travel Customs System is also a notable project. It is a unified digital platform that simplifies data collection and streamlines customs procedures for all air travelers at Philippine airports. The initiative bolsters national security, integrating into one form border control requirements of the Bureau of Immigration, Bureau of Quarantine, BOC, and Bangko Sentral ng Pilipinas.

READ: E-Travel Customs System integrates airport forms into one digital platform

It combines BOC’s Electronic Customs Baggage Declaration Form and Electronic Currencies Declaration Form into BI’s eTravel System. Its key feature, the Electronic Customs Baggage and Currency Declaration interface.

Another project, which is expected to improve the BOC through streamlining, automation, and development of a world-class customs processing system (CPS) is the World Bank (WB)-initiated Philippine Customs Modernization Project (PCMP) that was launched in 2021.

The project has a total cost of $104.38 million, of which $88.28 million will be funded through WB’s official development assistance, and the balance shouldered by the Philippine government.

After much delay, the contract for the consulting firms that will assist in all aspects of the execution and implementation of the PCMP was finally awarded in November 2023 to the joint venture of Spain’s Quality Institute, Belgium’s Emerging Markets International, and Spain’s GT Capital.

READ: WB chooses consultants for Customs modernization project

The award is a critical first procurement that will jumpstart the implementation of the PCMP, including other key procurements such as the CPS, which will upgrade the BOC’s existing Electronic-to-Mobile System.

Aside from these digitalization projects, the BOC is working on other initiatives designed to further streamline trade documentation.

The agency is spearheading the conduct of a national trade release study—a World Customs Organization-recommended performance tool—to quantify cargo release time from arrival to out-of-charge for imports, and arrival to carrier departure for exports. This will help the BOC benchmark against global standards and identify areas for improvement and use these data in formulating and improving policies.

On top of the national time release study, the bureau has been conducting time release studies in its districts yearly since 2019 to identify supply chain bottlenecks affecting the release of imports and exports and come up with recommendations to mitigate such bottlenecks.

Together with its mother agency, the Department of Finance, the BOC is working to implement the Philippine Trade Facilitation Committee Roadmap, an action plan containing short- and medium-term activities that aim to achieve full paperless transactions for the import and export of essential goods by 2028.

Other trade facilitation projects in compliance with international commitments/agreements and best practices are likewise being implemented, including:

  • TradeNet, the country’s national single window (NSW). The NSW provides for automated and integrated licensing, permitting, clearance and certification system of Trade Regulatory Government Agencies involved in the import and export trade of regulated goods.
  • Association of Southeast Asian Nations customs declaration document (ACDD) portal. The portal facilitates ACDD message exchanges through TradeNet and/or the Philippine ASEAN Single Window (ASW) Gateway and ASW gateways of other ASEAN member states. The ACDD is a multipurpose document used for faster exchanges of export declaration information among ASEAN member states.
  • Portal for electronic certificates of origin registration where exporters can register and apply for an e-CO.
  • Authorized Economic Operator Program which so far has at least three companies accredited under Level 1, namely Toyota Motor Phils, Panasonic Manufacturing and Coca-Cola Beverages Phils. The AEO program represents a customs-to-business partnership that seeks to enhance international supply chain security and facilitate movement of legitimate goods.

READ: BOC opens AEO office, accredits Coca-Cola

Partnerships

Forging partnerships and collaborations with other relevant government agencies and the private sector to further enhance trade facilitation and help implement various policies is a key concern of the bureau.

Government partners that the BOC has recently collaborated with include the Philippine Postal Corporation, the Philippine Drug Enforcement Agency, the Philippine Coast Guard, the Philippine Economic Zone Authority, the Department of Information and Communications Technology, and the Department of Trade and Industry-Strategic Trade Management Office.

A testament to the bureau chasing after greater partnerships is the recent creation of the Customs Industry Consultative Council (CICAC) under Customs Memorandum Order No. 02-2024. CICAC is expected to function as a consultative body between the BOC and the business-industrial sector to address existing and potential issues related to Customs and industry matters.

Functions include conducting regular consultative meetings and dialogues to discuss trade environment trends and updates, apprise industry partners about Customs policies and programs, and address issues relating to their implementation.

The CICACs will be established in the BOC’s central office and all of its collection districts, and will be composed of the “most trusted, honest, and compliant companies and trade organizations/associations operating in the country.”

The business and trade associations approved by the Customs commissioner include, but are not limited to, the Philippine Chamber of Commerce and Industry; Chamber of Customs Brokers, Inc.; Federation of Filipino-Chinese Chamber of Commerce and Industry; Association of International Shipping Lines;  Airline Operators Council; Philippine Retailers Association; Distilled Spirits Association of the Philippines; Common Bonded Warehouse Operators, Inc.; Confederation of Truckers Association of the Philippines; Philippine Chamber of Arrastre and Stevedoring Operators, Inc.; Port Users Confederation; Foreign Buyers Association of the Philippines; Federation of Philippine Industries; Philippine Association of Meat Processors, Inc.; Philippine Chamber of Agriculture and Food Inc.; Philippine Exporters Association; and the top 20 importing companies of the Philippines and other relevant businesses and trade associations.

Internally, as part of efforts to promote integrity and improve its quality management systems, the BOC secured 23 ISO 9001:2015 Quality Management System certificates as of the middle of 2023, and continues to prepare for ISO Certification for its other offices.

Hire and promotion of personnel and the conduct various initiatives that focus on the welfare and morale of its employees are ongoing.

Criminal charges against erring employees have also been filed, with a total of 19 show-cause orders against erring employees from January to December 31, 2023. Ninety-four personnel are either under investigation or have been investigated, 16 of whom are facing administrative charges.

Moreover, 14 employees have been suspended, while one has been disciplined.

Moving forward, the trade and logistics industry can expect more BOC projects geared towards improving efficiencies while adapting to evolving trade dynamics.

The more modern and efficient a country’s Customs organization the greater its attraction to global investors, and today’s BOC continues to take major strides to be among the world’s best.  – Roumina Pablo