THE recent appointment of a new economic team by the President has definitely provided a boost to the economy. Together with this, the appointment of Mr. Bert Lina as the new commissioner of customs has been applauded by the trading community, albeit with muted but lingering concerns of possible “conflict of interest” from the forwarding and brokerage industry.
Notwithstanding the reported divestment of business interests, the commissioner will definitely have to allay the fears by really providing a level playing field for all the service providers in the gateway community.
In his inaugural speech during the turnover ceremony held last February 23, the new commissioner laid down his priorities by promising to focus on the revenue targets at the same time enhancing the facilitation of trade at the customs border.
While the pronouncement has been couched in general terms, what do we really expect under the new customs administration? We have outlined below the positive developments that we foresee under the helm of the new customs commissioner.
E-Customs and Trade Facilitation. While heading the FedEx franchise in the Philippines, the commissioner was at the forefront in the automation and streamlining of the customs declaration process for both export and import particularly at the NAIA Collection District.
He has been regarded as the person behind the Automated Export Declaration System (AEDS) which has tremendously benefited industries operating on a just-in-time system, that is, the electronic and semiconductor industry.
His exposure in the use of the latest communication and information technologies to maximize efficiencies in the logistics, warehousing, distribution and forwarding business should give him the perspective in resolving problems in the area of customs bonded warehousing, liquidation of exported materials, liquidation of surety bonds, etc.
The appointment of a commissioner with such a background and experience has never been timelier with the ongoing implementation of the P500-million customs modernization program. Part of the customs modernization program is the conversion of the present automated customs operating system to a modern version for electronic customs declaration, the AsycudaWorld.
Under this program, we will be expecting the full automation of the export declaration system and the warehousing system, including the liquidation of bonded materials used for exports. A better system for entry declaration should help customs in securing all the relevant information necessary to manage revenue collection. Plugging Revenue Leaks.
There is no doubt that the main focus of the commissioner will be the high revenue target set for customs. This is certainly a daunting task considering the economy has yet to recover from the seemingly endless natural disasters and economic difficulties.
With his experience in the forwarding and brokerage business, the commissioner should know by instinct the real problems in the customs front. For one, he will have to focus on the activities of smugglers which reportedly remains unabated due to alleged collusion and protection of customs insiders and political higher-ups.
To many in the gateway community, the problem of smuggling has always been seen as a political issue rather than a problem with the lack of resources or personnel on the part of customs. With his record and reputation as a hardworking and astute businessman, there is no doubt that the new commissioner has the political will to provide policy direction on this problem.
On the issue of the technical smuggling (e.g. undervalued and misclassified goods), the implementation of the customs modernization program should result in a custom risk management system for addressing these concerns.
Using the latest electronic information and database system, customs will have the tools necessary to identify revenue leakages in real time Customs Audit as a Deterrent. The implementation of the Post Entry Audit (PEA) system has elicited mixed emotions from both customs and the trading community.
For customs personnel, the audit system is something akin to the ongoing “lifestyle checks”, considering that it provides the mechanism for internal audit and for verifying malpractices committed by customs personnel.
For some importers, concerns have been raised as to the possibility of harassment and shakedown even against legitimate traders. While we have yet to confirm the actual impact of customs audit on actual collections, there is no doubt that the threat of a customs audit has significantly affected the activities of smugglers.
The PEA system is under the control and supervision of the Office of the Commissioner. Being directly accountable for its operation, the new commissioner is expected to provide better direction as to how it is implemented and as to how audits are actually conducted. Having worked for so long for the trading community, the commissioner will certainly address the concerns of the private sector.
Under his direction, we should therefore expect a more transparent system for the PEA not only in the selection process but also in the conduct of actual audits. For many non-compliant companies, the customs audit will certainly be wielded like a big stick by the commissioner not only to make these companies compliant but moreover, to assist customs in collecting additional taxes and duties on previous import transactions.
A Better System. By and large, the trading community should expect great improvements in customs services, from automation to streamlined processes. For non-compliant companies and erring customs personnel, the new system will make it easier for customs to identify and plug revenue leaks, and to go after specific import transactions suspected for violation of customs rules.
The author is an international trade, indirect tax (customs) and supply chain expert. He is the Editorial Board Chairman of Asia Customs & Trade, an online portal on customs and trade developments affecting global trade and customs compliance in Asia. He was also Bureau of Customs Deputy Commissioner for Assessment and Operations Coordinating Group (2013-2016). For questions, please email at agatonuvero@yahoo.com and agatonuvero@customstrade.asia
