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But now smuggling is prevalent even in the country's free ports. Smuggled products are shipped as ordinary goods and unloaded in broad daylight for trading in the local market. From garments to ceramic tiles, second-hand and luxury cars, agricultural products, electronic gadgets, home appliances and jewelry, smuggled goods are flooding the local market and wiping out the earnings of small Filipino traders.
In 2000 the Philippines' trading partners reported that they had exported US$45 billion worth of goods to the country, but government figures registered only US$34 billion worth of imports. This means more than $10 billion worth of goods were unaccounted for or missing.
Since 2006, an estimated 100,000 smuggled vehicles have been shipped in to just one free port north of Manila. Last year, 4 billion liters of oil were lost to smuggling.
Technical smuggling is accomplished through undervaluation, misclassification, misdeclaration and abuse of tax incentives. The most common mode of smuggling involves the undervaluation of imported goods. Traders misdeclare or undervalue their imports to evade paying the right duties and taxes.
Many sectors want to make smuggling an act of economic sabotage since it hurts the country in many ways. Every year, the government is losing US4 billion in revenues because of smuggling activities. The foregone revenues could have been used for vital social and economic services. The amount is enough to cover the government's budget deficit.
Smuggling affects local industries in a negative way. The manufacturing sector is down, companies lose profit and many small traders have gone bankrupt. Smuggling wipes out jobs in the local economy and destroys the livelihood of farmers. According to an advocacy group, smuggling has displaced 300,000 vegetable farmers, 60,000 shoe workers and 7,000 workers in the auto parts industry.
Smuggling also endangers the health and welfare of consumers since smuggled goods do not undergo the necessary procedures for quality screening.
Smuggling is booming because there is widespread corruption in government. Technical smuggling can only thrive if unscrupulous traders collude with Customs officials. Many politicians are protectors of big-time smugglers. According to the head of the anti-smuggling agency of government, the former speaker of the House of Representatives has lobbied for the protection of a suspected smuggler. The camp of the former speaker retorted that it was the First Gentleman who is behind the rampant smuggling operations in the country.
The trading and auditing systems are also prone to corruption. There is inefficiency in strictly monitoring accuracy of import documents, especially those involving transshipment activities. There are no regular inspections of Customs bonded warehouses. The tedious administrative and judicial processes restrict Customs officials in seizing and disposing of smuggled goods.
Government bodies have all failed in the campaign to fight smuggling. The government has not yet prosecuted a major smuggler in the country. In fact, no smuggler has ever been jailed.
To defeat smuggling, the Bureau of Customs needs to be reformed and modernized. Customs personnel should be insulated from political patronage. Increasing the salaries of employees can also minimize corruption in the bureaucracy.
Government agencies have to coordinate efforts and strategies to arrest smuggling operations. Laws need to be strictly enforced. Auditing and recording of trade data should be improved.
Three years ago, the Lower House passed a bill amending the Tariff and Customs Code of the Philippines. This measure would have addressed the loopholes of the law which prevent authorities from detecting and curbing smuggling in the country. But the senate has failed to tackle and approve a similar bill.
Today there is a pending proposal to amend the obsolete provisions of the law. Preventive measures can be implemented to reduce opportunities for technical smuggling. This bill should be certified as a priority measure of Congress.
An amended law can require greater participation of the private sector in the fight against smuggling. Local industries can be tapped by the Customs in determining transaction values of imported goods.
Current penalty provisions against smuggling are too light. There should be more severe punishments for importers, financiers, Customs officials and politicians who are involved in smuggling activities. It's about time to increase penalty provisions to deter smuggling. The government should set an example by arresting and punishing big-time smugglers and their political patrons.
The Philippines can also ratify the Revised Kyoto Convention. Compliance with the treaty can minimize the cost of clearing Customs in other countries, reduce delays in getting goods into the country and remove opportunities for extortion in Customs procedures.
Many people assume that smuggling is beneficial since smuggled goods are priced cheaper than locally made products. But smuggling doesn't contribute to the well-being of the people. Smuggling is not good for the economy. Smuggling weakens transparency in governance and engenders disregard for the rule of law. Smuggling poses a great risk to consumer welfare. In a social set-up where smuggling is rampant, the poor suffer the most.
Smuggling reflects the weak governance in the Philippines. It further proves how corruption exerts a negative impact on the economic life of the country. Smuggling is rampant today, but it can be defeated. Transparency and good governance are needed to stamp out corruption in the bureaucracy. Political will is required to eliminate smuggling operations.
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(Mong Palatino is a Filipino youth activist, news editor of Yehey!, a Philippine-based Web portal, and a Global Voices correspondent. He can be reached at mongpalatino@gmail.com and his Web site is www.mongpalatino.motime.com. ©Copyright Mong Palatino.)
