THE Federation of Philippine Industries (FPI) asked the government to tighten the monitoring of smuggling of goods, saying the lost revenues from the illegal activity could have been used to boost economic development in the countryside and strengthen pandemic response amid the ongoing crisis.
FPI Chairman Jesus Lim Arranza said in a virtual briefing on Thursday that the country is losing about P250 billion in terms of value-added tax annually due to smuggling based on a study it commissioned a few years ago. This figure has gone up now, factoring in the price increases of the goods, he explained.
Nevertheless, Arranza stressed that lost revenues could have better served the country if they were properly accounted for.
“We appeal to the government to concentrate on this. The FPI has been doing this without any let up, but we really need the government to do its part because it has all the power given to them by law and we will be there to help as we have been doing,” the FPI official said.
He said that it can be used to incentivize manufacturers to locate their operations in the regions with less economic development.
“That way, you will decongest traffic in Metro Manila and you will also create a balanced economic development in the far-flung provinces,” he explained. “And if you have a balanced economic development, there will be no second-class workers in the Philippines.”
He explained that the lost revenues are substantial funding source for goverment projects and pandemic response.
In addition, it could have offset the tax burden of the Filipinos amid the financial struggles in pandemic, the official pointed out.
Smuggled goods entering the Philippines, Arranza said, would eat into the market share of locals, putting domestic industries at the losing end.
He warned of the eventuality: a downsizing of the firms, sparking further unemployment.
“[It] could even increase the prices of production of our manufacturers since downsizing will result in smaller volumes that will absorb the fixed cost of the companies. As less volume absorbs the fixed cost making prices go up and it will create inflation,” he added.
“We must protect our local industries, for we need to have a strong domestic market. It is only when you have a strong domestic market that will allow you to compete in the world market,” Arranza stressed.
While the FPI’s call covers the protection of local industries, it also considers the impact of purchasing smuggled goods on the part of consumers.
“It is also a consumer protection issue because of the dangers posed by substandard products, especially construction materials like reinforcing bars,” he explained.
Meanwhile, Arranza called on the government to focus on improving the post-harvest facilities of the agriculture sector, especially for rice production, to avoid wastage.
“To prevent wastage in post-harvest, we want the government to put a stop to the practice of drying palay on roads,” he said.
Arranza asked for an investigation as to how the budget is allocated in the sector amid the continued use of sun-drying.
“The Department of Agriculture should today look into this post-harvest facilities fiasco,” he said.
Arranza also encouraged the use of certified seeds for palay planting to increase the production by two to three times.