Can we change the corrupt customs at the bureau?

The recent P6.4-billion shabu smuggling at the Bureau of Customs (BOC), now under investigation in Congress, has brought to fore again the question: Can we rid the agency of its custom, or culture of corruption?

Culture of corruption and corruption of culture. By all indications, corruption at the BOC has not improved, but may have worsened, which is a big challenge the Duterte administration must hurdle to wipe out or reduce corruption substantially.

Corruption has taken root in the bureau and has even gained momentum, even defying former President Benigno S. Aquino III’s battlecry of tuwid na daan (straight path) with smuggling trebling from $7.9 billion in 2009 to $26.6 billion in 2014, say reports from the International Monetary Fund (IMF) by subtracting total imports recorded from total exports to the Philippines declared by all our trading partners. Total value smuggled may probably be over $30 billion by now.

Worst, the culture of corruption has become so ingrained at the bureau that it has resulted in the corruption of the culture. Even the last Social Weather Stations (SWS) survey shows that BOC recorded the worst negative rating of -68 percent in terms of sincerity to fight corruption among government agencies. Land Transportation Office (LTO) was the second worst at -47 percent; House of Representatives, -28 percent; the Bureau of Internal Revenue, -27 percent; the Department of Transportation, -25 percent; the Department of Public Works and Highways, -22 percent; Philippine National Police, -13 percent; and the Department of Budget and Management, -10 percent.

Why not incentives instead of penalties? The entire governance in the bureaucracy has always been based on varying penalties, depending on the Nature and intensity of violation. For enforcers, there are no incentives for doing their job right, which makes corruption an incentive.

Let’s take a simple traffic violation, for instance, with the cheapest penalty of P150. An enforcer gets no incentive at all or a mere incentive of 5 percent, equivalent to only P7.50, although it varies per city. With bribes at P50 or P100 for the lowest violation, the incentive to be corrupt is higher than the incentive to do good.

What if we make the incentive, say, 50 percent of the penalty, do you think he will still be tempted to be corrupt? They will become overzealous enforcers that will force motorists to follow traffic rules. To correct possible abuse by law enforcers, stiffer countervailing measures must be imposed with strict one-strike policy, which means enforcers are punished and fired automatically at first abuse. Perhaps, we can apply the same system at Customs.

Top studes vs corruption

As government is subsidizing tuition at the state universities and colleges (SUCs), top graduates, say 2,000 of them, can be mobilized to clean up corruption at Customs. A friend, Dave Garcia, suggests a minimum salary of, say, P20,000, with P15,000 released every month and the remaining P5,000 by the end of the year if they perform effectively and honestly. This carrot-and-stick approach is effective because if they foul up they lose the accumulated P60,000 in forced savings, lose their jobs, tarnish their names and be barred from future employment as they get blacklisted.

This will cost only P40 million a month or P480 million a year, but could potentially recover $30 billion of yearly smuggled value. The huge lost revenues can be channeled to fund productive impact projects. These young graduates can, indeed, change the customs of the people at the bureau. Apart from actual physical inspection, they can also cross-reference the differences in value between the export documents from other countries with our import manifests.

Cementing concrete policies on imports?

Meanwhile, the debate between freer trade and imports versus the equally important need to regulate import abuses continues. One concrete example is Trade Secretary Ramon M. Lopez’s recent Department Administrative Order (DAO) requiring import commodity clearance (ICC) on imported cement.

A friend, Nick Ferrer, a PR guy, claims certain importers want the lifting of this ICC on cement imports, claiming this will open the doors to rampant smuggling of cheap inferior cement, without passing through post-import product standards, and thus, affect the administration’s “Build, Build, Build” infrastructure program.

He claims the ICC system protects consumers as it guarantees quality and identifies sources, unlike open imports, “whereby importers don’t put their company names and addresses, cement brands and origins. And if something bad happens, we cannot file cases against manufacturers in countries like Vietnam, China and Indonesia, where most of imports come from.”

I told Nick I don’t know anything concrete about cement, but generally I would favor local cement factories as they contribute more to local value-added, earnings, job generation, etc. However, my support stops when it can mean too much rent-seeking protectionism at the expense of consumers and the development of the local industry itself.

On either side of the controversy, there is big money involved and I do not want to be a part of either side, but I just want to please a friend NICK who must be up to his NECK in pressure. While we seek ways to stop corruption, involving mostly imports at Customs, perhaps the government, led by the Department of Trade and Industry (DTI), must initiate more lasting programs that will strengthen the local cement industry through technological upgrades, financing support and innovative but aggressive marketing mechanisms to enable the industry to compete effectively against imports.

What is important is that the government and industry can cement better ties and do concrete programs that will redound to the benefit of the economy and the people in general.

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Michael Alunan was for many years a full time business journalist tasked to mind other people’s businesses, but he tried venturing later into business going left and right, up and down, zig and zag till he broke down with heart surgeries for aortic valve replacement and two cases of aneurysm. He is now busy with pro-bono coop organizing and social entrepreneurship development for basic sectors and just keeps a weekly column for the love of writing and to have fun and make pun, while contributing to policy reforms and program development.