Furthering modernization in Bureau of Customs

In a globalized world, the importance of trade and commerce is paramount. One of the biggest economic advantages the Philippines has over its neighbors is its strategic location in the Asia-Pacific, serving as a gateway between Southeast Asia, East Asia, and Oceania.

This is why the role of the Bureau of Customs (BoC) is integral to the country’s continued growth. Especially so as the Philippines redoubles its efforts to attract more foreign investments and boost its exports once the Regional Comprehensive Economic Partnership (RCEP) trade deal takes effect as early as May this year.

The Regional Comprehensive Economic Partnership (RCEP) is a free-trade agreement (FTA) between the ten member-states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and its five FTA partners (Australia, China, Japan, New Zealand and Republic of Korea).

“With the country’s participation in RCEP, the Philippines has now further strengthened its position as an ideal investment hub in the region as we expand market access, facilitate trade, and align our rules and procedures with participating economies,” National Economic and Development Authority Secretary Arsenio M. Balisacan said in a statement.

Trade Secretary Alfredo E. Pascual told the media that he expects Philippine-based companies to be ready to avail of the export opportunities brought by RCEP.

“But more than that, investors that are eyeing the Philippines as a production hub will now be really implementing their intentions and their plans to set up manufacturing hubs in the Philippines and making their investments in our country,” Mr. Pascual said.

In its vision to become a modernized and credible Customs administration that is among the world’s best, the BoC must step up to the task of facilitating this development, as well as maintain and bolster its border control, and improve the collection of lawful revenues from the resulting commerce.

In lieu of the RCEP, the BoC has raised its revenue collection target for 2023 to P901.3 billion, in anticipation of a depreciating Philippine peso against the US dollar for the year.

“Based on the emerging target approved by the Development Budget Coordination Committee (DBCC), the Customs bureau is expected to generate P901.3 billion in revenue next year,” according to the BoC Financial Service.

“The emerging collection target is (18%) higher by P135.8 billion compared to the 2023 Budget of Expenditure and Sources of Financing (BESF) program level of P765.6 billion due to higher exchange rate assumptions despite lower projected Dubai crude oil price and slower import growth compared with 2022,” the BoC Financial Service added.

The peso-dollar exchange rate forecast was raised by the DBCC earlier from P51-P55 to P55-P59 for 2023. Economic managers noted the peso “continues to depreciate due to heightened global uncertainties and aggressive monetary policy tightening of the US Federal Reserve.”

The most recent projections made by the DBCC predict that the price of Dubai crude oil will decrease to $80-$100 per barrel in 2023 from $98-$100 this year.

The DBCC also reduced the imports growth target from 6% to 4% in 2023. Compared to this year’s target of 20% growth, this is substantially slower.

Despite this, Customs is expected to collect P570.3 billion in value-added tax (VAT) from imports this year, P207.4 billion in excise taxes, P105.1 billion in import duties, and P18.5 billion in other fees.

The BoC’s collection target for 2023 is 24.9% higher than this year’s P721.5-billion target, which has already been exceeded.

President Ferdinand R. Marcos, Jr. lauded the accomplishments of the BoC in 2022, saying that the more than P862-billion revenue it collected last year, 34% higher than the P643 billion it collected in 2021, was “commendable.”

This is the Customs bureau’s highest revenue collection in history, which the President noted went a long way towards funding local governments to generate more employment opportunities, build more infrastructure, and provide better welfare support for the people.

Aside from the improved collection performance, the President highlighted the Bureau’s gains in protecting the country’s borders.

“In 2022, the Bureau of Customs’ Anti-Smuggling Campaign has recorded 729 apprehensions with a total estimated value of more than P24 billion, which I hope you will further sustain and toughen in the years ahead,” he said.

“I am thus very pleased as we recognize these and all the other achievements of the Bureau of Customs,” he added.

Until the end of his term as Customs Commissioner, Yogi Filemon L. Ruiz had pushed the BoC digitalization program forward in accordance with the President’s socioeconomic plan in order to deliver transparent and effective services while reducing corruption and boosting legal revenue collection.

The new BoC Commissioner Bienvenido Y. Rubio pledged to build on this initiative and said that digitizing the bureau’s process will be his main priority, with the aim of making governance more data-driven.

“I aspire to foster a healthier trade environment, which will contribute to the expansion and economic recovery, by equipping the Bureau of Customs with better and modernized mechanisms for trade facilitation, and a more improved collection efficiency, through the introduction of these sustainable reforms,” Commissioner Bienvenido Y. Rubio said at his turnover ceremony earlier this month.

The push for digitalization was backed by Finance Secretary Benjamin E. Diokno, who called on the BoC to set the effort as a key priority to achieve modern governance.

“Digital customs administration allows the government to focus its resources on identifying higher-risk entities, while enhancing the ease of doing business,” he said in a speech.

In order to implement significant institutional reforms “that will shape the Bureau’s immediate and future plans,” Mr. Rubio made clear his intention to bring data-driven decision-making to every level of the organization.

“I am confident that Commissioner Rubio will take on this mission with utmost commitment, integrity, and excellence,” Mr. Diokno said.

“A digital customs administration allows the government to focus its resources in the identification of higher risk entities, while enhancing the ease of doing business,” he added.

The Finance chief also expects Mr. Rubio will bring in a fresh vision to the Customs bureau.

“As we enter 2023, I trust that Commissioner Rubio will bring in a fresh vision and even loftier targets to move the Bureau closer to the goal of becoming a modern and world-class Customs agency that ranks among the best in the world,” he said. — Bjorn Biel M. Beltran