Most cement imports undervalued, says industry group

The Cement Manufacturers Association of the Philippines (CeMAP) has long reported to the Bureau of Customs (BOC) that most imported cement shipments were valued below standard rates set by the government.

But no formal charges have been filed against erring companies, including Bonjourno Trading, which is owned by the son and namesake of Sen. Panfilo Lacson.

Memo of agreement

CeMAP president Ernesto M. Ordoñez told the Inquirer that he reported to the BOC last year that 70 percent of imported cement shipments were declared below the standard rates of between $16 and $22 per ton.

The biggest of these shipments came from Bonjourno Trading, Ordoñez said.

CeMAP’s report on the undervaluation of imported cement came after the BOC and the Federation of Philippine Industries Inc. (FPI)  signed a memorandum of agreement (MOA). CeMAP is a part of FPI.

Under the agreement, CeMAP was asked to look at data like freight evaluation and freight reporting.

Bonjourno Trading, which accounts for the biggest shipments of that underdeclared freight costs, has been valuing its freight costs at $9 per metric ton, said Ordoñez.

CeMAP report

Upon gathering the data, Ordoñez said it was up to the BOC to declare whether this constituted technical smuggling. He said he was “very disappointed” that no formal charges had been filed.

Bonjourno is not the only company that should be accused of undervaluing freight costs. This is based on CeMAP’s report which covered the first quarter of 2016 up to July of the same year, said Ordoñez.

“We found many companies dealing freights that were way below the rates prescribed by DTI as the regular rates. Most of these are from Vietnam. Seventy percent of all imports were underpaid. The biggest one was Bonjourno, which is still charging $9 [per metric ton] today,” Ordoñez said in a phone interview.

He said that the numbers were still “conservative,” since the report covered the freight costs that were valued below $10, but not those between $10 and $15, which were still below the $16-$22 standard rate.

Senator Lacson said there was no cement smuggling as the product was no longer subject to customs tariff and duties.

However, this is not entirely true because there are other ways that smuggling can happen, according to an industry source.

Under the Asean Free Trade Area (Afta), the trade in cement is subject to zero tariff and duties. In this case, cement shipments from Vietnam, for example, do not have to pay any tariff and duties.

However, smuggling can still transpire through other means, which include undervaluing the freight cost to avoid having to pay a higher value-added tax (VAT), the industry source said.

“You can have many motivations to smuggle. Maybe they are not trying to save on the tariffs, but they are saving on other taxes, like VAT,” said the source, who requested anonymity given the sensitivity of the issue.

Ordoñez said he was not taking sides in the feud between former BOC head Nicanor Faeldon and Lacson.

Since CeMAP filed its report under the leadership of then Customs Commissioner Alberto Lina, he said that violations of the freight rates had gone down to 30 percent. But without any formal actions filed, the numbers went back up, he added.

“However, I pursued it into the Faeldon regime. I continued reporting and they didn’t move. I got mad because they thought they were saints. Why didn’t they move?” Ordoñez said.

“I am severely disappointed because we risked our own safety by reporting it and there was no action,” he said.