Undervalued rice imports cost government P890 million–farm group

THE Federation of Free Farmers (FFF) on Wednesday claimed that undervaluation of rice imports continues with at least P890 million in lost tariff revenues from over 766,000 metric tons of staple imported from January to April.

In a statement, the FFF alleged that the Bureau of Customs (BOC) “continued to fail to check the gross undervaluation of rice imports, which has resulted in huge shortfalls in tariff collections.”

Citing BOC data, the FFF said tariff collections from January to April rice imports reached P4.8 billion, but noted that some shipments entered the country at lower freight on board (FOB) prices than the Customs’ own reference prices.

“Based on the FFF’s latest analysis, the BoC failed to collect an additional P471 million in tariffs during the first four months of 2020 due to the apparent undervaluation of FOB prices of imports,” the group said.

“About one-third of the volume imported was undervalued by at least 10 percent and accounted for 84 percent of the tariff shortfall,” the group added.

Citing BOC data, FFF said one shipment of  6,014 metric tons of rice with 5 percent brokens arrived from Vietnam in April 2020 with a declared FOB value of $319.63 per MT, which was 30 percent lower than the Customs’ $447 per MT reference price.

“BoC officials have maintained that they have to respect the declared FOB values of importers for as long as documentary proof is submitted, even if the values fall below their reference rates,” the FFF said.

“If this is the practice, what then is the purpose of the reference rates? What will now stop an importer from conniving with the exporter to issue undervalued invoices or issue two separate invoices to split the total cost of the imports?” the FFF added.

Furthermore, the FFF claimed that freight and insurance costs of the rice imports were also “grossly” misdeclared, resulting in lost tariff collections of about P416 million.

“An analysis of the BoC data reveals that importers spent less than 2 centavos per kilo, or about $0.30 per metric ton, to insure and ship rice from countries like Thailand and Vietnam all the way to Manila,” it said.

“In comparison, internationally published rates peg regular freight and insurance at a minimum of $33 per MT, or 110 times the value declared by importers. An estimated P416 million in tariff collections were lost because of this anomaly,” it added.

The FFF proposed that the BOC adjust its reference prices “to include internationally recognized insurance and freight rates so that it can properly detect undervalued imports.”

The FFF said it estimated that undervaluation in rice imports last year resulted in a tariff shortfall of P1.9 billion.

“By not diligently enforcing its rules, the BoC did not only reduce the government’s collection of much-needed tariff revenues. More importantly, it deprived millions of small rice farmers of a cumulative amount of almost P3 billion since the Rice Tariffication Law or RTL took effect in March 2019,” it said.

The amount, he added, “should have helped farmers cope with the ill effects of liberalized rice imports and even Covid-19.”


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