Doing business at the customs bureau

In yesterday’s meeting of different business business leaders in Cebu, several issues were raised that relate to the operation of the Bureau of Customs and other government offices dealing with foreign trade. The meeting was initiated by Canadian Chamber governor Jack Gaisano. He is very much concerned with the need for importers from different parts of the country, including Cebu, to go to Manila to get their accreditation papers approved.

It turned out during the meeting that many other procedures being practiced at the customs bureau are seen by the business sector in Cebu as unnecessary or unfriendly to business. In this highly interconnected global economy, businessmen cannot afford to waste time or money dealing with cumbersome procedures or unnecessary steps to complete their transactions because any delay or extra cost could mean a loss of advantage or opportunity and outright business loss or lower business viability.

Records from the Cebu Chamber of Commerce and Industry that were made available during the meeting  showed that the same issues affecting traders in Cebu, including the concern of Jack, were already raised  two years ago but remained unaddressed by the  officials in Manila. Those in the meeting included the president and/or other officials of the Canadian Chamber, American Chamber, Cebu Chamber of Commerce and Industry, Mandaue Chamber of Commerce and Industry, PhilExport and Cebu Business Club. They agreed to raise these issues again with the commissioner of Customs and with the secretary of the Department of Finance and the Office of the President when necessary.

The major problems in the trading sector in Cebu include:

1. The need to localize the accreditation of importers in Cebu instead of in Manila, limit the number of documents required of the importer, and extend validity of the accreditation from one to three years.

2. The need to simplify the system at the customs bureau by reducing the number of law enforcement agencies and officials dealing with importation. There is a duplication of functions pertaining to some divisions in the bureau originally handled by the Customs Intelligence and Investigation Service (CIIS), Enforcement and Security Service (ESS) and Scanning Unit; and

3. The need to simplify the Post-Entry Audit procedure by simultaneously doing it together with assessment as a practical means of defraying costs incurred by both government and business sectors.

These issues are not new because the CCCI already sent them to the head of the customs bureau before, including when he visited Cebu last Oct. 28, 2011. The group that met yesterday believes that their request complements the goal of the bureau to enhance its services and generate more revenue for the government through a transparent, more client-friendly office, and better collaboration with the business sector in particular or the stakeholders at large: the Filipino people.

It may be good to note also that doing business in the Philippines is not fun at all because in its latest report, the World Bank shows that the Philippines ranks number 136 only in ease of doing business among the 183 countries covered in its study. In this study, the objective was to know how easy it is to do business in different countries in the world with respect to 10  areas. These are in: (1) starting a business, (2) dealing with construction permits, (3) getting electricity, (4) registering property, (5) getting credit, (6) protecting investors, (7) paying taxes, (8) trading accross borders, (9) enforcing contracts and (10) resolving insolvency.

Under trading across borders, it is good to see that the Philippines ranks 51st but this can still be improved if we further reduce the number of documents and simplify procedures at the customs bureau. Here exactly is what the WB revealed for the Philippines in its 2012 Doing Business Study with respect to trading across borders: (1) Documents required for exports is 7,  imports, 8; (2) Time needed to export is 15 days, import, 14 days; and (3) Cost to export is $630 per container, import $730 per container.

This result is for the country as a whole. This may differ from port to port such as in Cebu where traders have to deal not only with many officials from the customs and other government agencies in Cebu but also in Manila for some matters.

It is good that the local business sector is looking more deeply now into the issues affecting foreign trade because Cebu is the second biggest trading center in the country. But as the WB study shows, the Philippines still lags in many other aspects of doing business. I hope that these too will be looked into so that we can further enhance our competitiveness in attracting more investments, grow faster economically, and become more prosperous as a nation.