Research Ra 11032 - Copy

Lyceum of the Philippines University-Manila College of Business Administration Bachelor of Science in Customs Administration

The Implementation of Ease of Doing Business Act (R.A 11032) on Trade Facilitation at Manila International Container Port (MICP)

Submitted by: Barrientos, Kristine Sotelo, Ivan Salvador, Gideon B - 416

January 22, 2020

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Chapter 1 Introduction

Background and Rationale “Red tape” has since evolved from the practice of Charles V, King of Spain and Holy Roman Emperor, of using red ribbon to identify important state documents. Now, it describes a system of regulations and official actions which restrict or deny access to swift and quality government services. The problem of red tape has proven to be perennial unlike the empires from which it began. Like all modern political regimes, Philippines is no stranger to red tape.

Today, with the newly enhanced law, the Republic Act No. 11032, known as the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018,” business in the country nowadays becomes even more promising. The law which amends RA No. 9485, otherwise known as the Anti-Red Tape Act (ARTA) of 2007, seeks to solve the perennial problem of bureaucratic red tape in the Philippines with the failure of the latter to firmly function in addressing this concern. The strengthened version of the law is poised to facilitate prompt actions or resolution of all government transactions with efficiency.

The Department of Trade and Industry (DTI) together with the Civil Service Commission (CSC) is working on a massive promotion of the newly - enhanced law, conducting public consultations on its implementing rules and regulations (IRR)

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nationwide. This activity is organized by the Competitiveness and Ease of Doing Business Group. It is a functional group of Department of Trade and Industry.

RA 11032 will also strengthen Local Government Units (LGUs) by introducing a simpler specification and standardized process that will effectively spare our people in long lines or long waiting times in government agencies on the front line. Now that it is in full force, its mark is becoming prominent. The new law will now cover all government transactions compared to the previous ARTA law that only provides frontline services. In relation with Customs Modernization and Tariff Act (RA 10863) governing the facilitation of international trade, the Bureau of Customs is mandated to strengthen security and expedite transactions with the stakeholders in line with the globally accepted international standards of the Revised Kyoto Convention.

The researchers conducted this study in order to assess if the implementation of RA 11032 in import transactions at MICP is effective and efficient. This study will be beneficial to the development of customs procedures, in line with international best practices prescribed by our agreement with the World Customs Organization (WCO).

This research is relative to the Customs Administration, in general, it will provide apt understanding of the customs procedures and pertinent implementing rules and regulations. In line with the new curriculum of the Customs Administration, this research will be relevant to the study of International Agreements and Customs practices and will serve as a material for further researches and development of the Bureau of Customs.

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Statement of the Problem

The researchers will primarily study the effectiveness and efficiency of the implementation of R.A 11032 to ease trade facilitation in MICP.

1. How does Manila International Container Port implement RA 11032 in terms of? 1.1.

Accreditation of Importers and Customs Brokers

1.2.

Customs procedures for goods declared through consumption entry

2. How efficient and effective is the implementation of RA 11032 at MICP, in terms of?

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2.1.

Accreditation of Importers and Customs Brokers

2.2.

Customs Procedures for goods declaration through consumption entry.

Significance of the Study

This study will provide the overall assessment towards the efficiency and effectiveness of R.A 11032 to ease trade facilitation in the Bureau of Customs (BOC). The research will be of aid to the stakeholders transacting with the BOC, specifically to the importers and customs brokers by understanding the rationale of newly implemented rules and regulations, since most of the customs brokers that are transacting with the BOC are outdated and generally familiar with the TCCP, the research will provide them updated information with the Customs Modernization and Tariff Act (CMTA), in connection with the implementation of RA 11032 and be up to date with the technicalities used in transacting with the BOC, in line with the international best practices prescribed by the WCO. The conduct of this study will benefit the future researchers who will delve into trade facilitation and international trade practices in the Philippines. This study will benefit the Government in assimilating the current situation of import transactions in BOC at MICP, to determine if the Philippines’ import process is in line with international trade practices and to address the hitches and problems in the implementation of RA 11032. This study is relevant to the Senior Officials Meeting and Ministers Meeting (SOMM) – the main consultative forum and platform for EAGA countries, because the Philippines is the lead country in SME Development, Customs, Immigration, Quarantine and Security. Thus, further development of our Customs procedures will provide enhanced core operational mechanism of BIMP-EAGA as a sub-regional economic cooperation initiative in Southeast Asia to accelerate economic development thru increased trade, tourism and investments both inside and outside the sub-region.

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Objectives of the Study

1. To determine the implementation of the Manila International Container Port (MICP), in terms of: 1.1.

Accreditation of Importers and Customs Brokers

1.2.

Customs procedures for goods declared through consumption entry

2. To assess the efficiency and effectiveness of RA 11032 at MICP, in terms of: 2.1.

Accreditation of Importers and Customs Brokers

2.2.

Customs Procedures for goods declaration through consumption entry.

Scope and Limitation of the Study

The scope and limitation of this study will concentrate on the implementation of RA 11032 in the Manila International Container Port (MICP) and how it will affect the capability of the BOC in providing international best practices in trade facilitation. The study covers the accreditation process for importers and Customs Brokers transacting with the MICP and the import procedures of goods declaration through consumption entry. This study will be conducted at Manila International Container Port (MICP) – Accounts Management Division (AMO) and Formal Entry Division (FED).

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Conceptual Framework

INPUT

PROCESS

OUTCOME

REVIEW OF RELATED LITERATURE REGARDING THE EFFECTIVESS AND EFFICIENCY OF R.A 11032 TO EASE TRADE TRANSACTIONS IN THE BOC

QUALITATIVE DATA GATHERED FROM THE IMPORTERS AND CUSTOMS BROKERS THROUGH THE CONDUCT OF INTERVIEWS

EFFECTIVENESS AND EFFICIENCY OF R.A 11032 IN INTERNATIONAL TRADE FACILITATION

LEGISLATION/IRRs IMPLEMENTED BY BOC AND THE PHILIPPINE GOVERNMENT TO COMBAT CORRUPTION AND EASE TRADE FACILITATION

ANALYSIS AND INTERPRETATION FROM DATA GATHERED

PROVIDES RECOMMENDATION, CONCLUSION AND STRATEGIC RESPONSE TO COMBAT POSSIBLE HITCHES OF RED TAPE

Figure 1. Conceptual Framework

The operational procedures implemented by the BOC to ease trade facilitation in the BOC must be studied and reviewed in order to show the outcome benefits and drawbacks of R.A 11032 to the Philippine Economy, specifically the facilitation of international trade. At the end of the study, the researchers must provide the overall assessment in trade facilitation of BOC and give recommendations, conclusion, and strategic response in order to combat the hitches of red tape and corruption in the BOC – if there is any.

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Operational Definition of the Variables

Regional Economic Partnership Agreement: a proposed agreement in order to broaden and deepen the engagement among the parties and to enhance parties’ participation in economic development of the 16 nations in the Asia-Pacific Region. It includes the 10 member countries of the Association of Southeast Asian Nations (ASEAN), namely Brunei, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, and the existing FTAs, namely Australia, China, India, Japan, New Zealand, and South Korea. Source:

Regional Comprehsive Economic Partnership (2016, October 3).

Retrieved from https://asean.org/?static_post=rcep-regional-comprehensiveeconomic-partnership

Chamber of Customs Brokers Inc. (CCBI) - refers to Accredited Professional Organization (APO) for Customs Broker. Customs Broker - refers to an acts as a professional-agent for an importer or exporter, prepares and submits all documents for clearing goods through customs, and is paid customs brokerage. Customs Modernization and Tariff Act (CMTA) or Republic Act (RA) No. 10863: refers to the amended Tariff and Customs Code of the Philippines (TCCP). Revised Kyoto Convention (RKC): refers to the main trade facilitation Customs convention. It was developed by the World Customs Organization and entered into force on 3 February 2006. 1-Assessment System: Refers to a web-based queue management software/application that provides bias-free assessment by randomly assigning Appraisers and Examiners to goods declaration filed.

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Tariff and Customs Code of the Philippines (TCCP): refers to the first enacted Philippine legislative during the year of 1957. The first tariff and customs code passed in the history of the Philippines congress which was signed by a Filipino President and superseded the 48 years’ colonial regime of the tariff act of 1909. World Customs Organization (WCO): refers to an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of Customs administrations. World Trade Organization (WTO): refers to the only global international organization dealing with the rules of trade between nations. Attorney-in-fact: refers to any person who is authorized to perform business-related transactions on behalf of someone else (the principal). In order to become someone's attorney in fact, a person must have the principal sign a power of attorney document. Declarant: refers to Importer, consignee, broker, agent or attorney – in fact who declares an imported shipment for payment of customs duties and taxes and other charges. Bureau of Customs (BOC): refers to the Philippine government agency that tasked to collect Duties and Taxes and other charges on imported goods, combat smuggling and promote trade facilitation. Effect: A change which is a result or consequence of an action or other cause. Source: Oxford University Press (2018). Retrieved from https://en.oxforddictionaries.com/definition/effect Domestic Consumption: Products and services that are bought and used in the country that makes or offers them. Source: Cambridge University Press (2018). Retrieved from https://dictionary.cambridge.org/us/dictionary/english/domestic-consumption

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Importation: Refers to the act of bringing imported goods from a foreign territory, whether for consumption, warehousing, or admission. Source: Republic Act No. 10863 Exportation: Refers to the act, documentation, and process of bringing imported goods out of the Philippine territory. Source: Republic Act No. 10863 The Customs Modernization and Tariff Act International Trade Agreements: are when two or more nations agree on the terms of trade between them. They determine the tariffs and duties that countries impose on imports and exports. Source: Free Trade Agreements, Their Impact, Types and Examples (2018, November 7). Retrieved from https://www.thebalance.com/free-trade-agreementtypes-and-examples-3305897

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CHAPTER 2 Review of Related Literature

This chapter includes the ideas, studies, generalization or conclusions, and mythologies. Literatures that were included in this chapter helps in familiarizing information that are relevant and similar to the present study.

R.A 11032 “Ease of Doing Business Act” This Act shall apply to all government offices and agencies including Local Government Units (LGUs), Government Owned Corporations, and other government instrumentalities, whether located in the Philippines or abroad, that provide services covering business and non-business related transactions as defined in the Act. All government agencies, including departments, bureaus, offices, instrumentalities, or GOCCs, or LGUs, shall set up their current and updated service standards to be known as Citizen Charter in the form of information billboards which shall be posted at the main entrance of offices or at the most conspicuous place, in their respective websites and in the form of published materials written in either English of Filipino, or in the local dialect that detail: (a.) Comprehensive and uniform checklist of requirements for each type of application or request; (b) The procedure to obtain a particular service; (c) The person/s responsible for each step; (d) The maximum time to conclude the process; (e) The document/s to be presented by the applicant or requesting party, if necessary; (f) The amount of fees, if necessary; and; (g) The procedure of filing complaints.

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All applications of request submitted shall be acted upon by the assigned officer or employee within the prescribed processing time stated in the Citizen Charter which shall not be longer than 3 working days in case of simple transactions and 7 working days in case of complex transactions from the date the request and/or complete application or request was received. For applications or requests involving activities which pose danger to health, public safety, public morals, public policy, and highly technical application, the prescribed processing time shall in no case be longer than 20 working days or as determined by the government agency or instrumentality, whichever is shorter. The number of signatories in any document shall be limited to a maximum of three (3) signatories, which shall represent offices directly supervising the office or agency concerned: Provided, that, in case the authorized signatory is on official or official leave, an alternate shall be designated as signatory. Electronic signatures or pre-signed license, clearance, permit, certification or authorization with adequate security and control mechanism may be used. All government agencies covered by Section 3 of RA 11032, when applicable, develop electronic versions of licenses, clearances, permits, certifications or authorizations with the same level of authority as that of the signed hard copy, which may be printed by the applicants or requesting parties in the conveniences of their offices.

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Trade Facilitation

According to Grainger (2011), the idea of trade facilitation attracts unparalleled publicity and is the center of various customs initiatives. It is simply defined as the simplification and harmonization of international trade procedures wherein it includes activities, processes and formalities involving the collection, presentation, interaction and storage of information essential for the movement of goods in international trade (World Trade Organization, 1998). Occasionally, the word trade facilitation is also used more literally and expanded to include developing transport infrastructure – for instance, the facilitation of transport, eliminating government corruption, increasing customs tariffs, removing inverted tariffs, overcoming non-tariff barriers to trade, selling exports and encouraging exports (Butterly, 2003). While on the other hand, Moise, Orliac and Minor (2011) defined a broader concepts of trade facilitations that may include issues such as customs, transport and finance, banking and insurance, business practice and telecommunications. The definition of trade facilitation has recently been expanded to include transparency, customs competence, coordination of different standards, and compliance with international or regional regulations (Buyonge & Kireeva, 2008).

In lieu to this, Teo, Tan and Wei (1997) defended that in reducing trade-related transaction costs is an equally important national agenda item. The purposes of the trade facilitation policy may be pursued by national customs administrations, trade

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ministries, or any other government department involved in cross-border environmental governance.

The

advantages

to

economies

of

international

trade

cannot

be

overemphasized. This proves the study of Sakyi, Bonuei and Opoku (2018), where it stated that trade has been reinforced as one of the key drivers of countries’ economic growth and development due to the effect of integrating economies around the globe, generating foreign exchange, growing technological transfer, generating competitive productivity among businesses, increasing employment and reducing poverty.

In a broader sense, the trade facilitation includes improving transportation of goods and services (Narayanan, Sharma & Razzaque, 2016), energy, business, customs, telecommunications (Portugal-Perez & Wilson, 2009), banking and insurance, and transparency in trade (Rippel, 2011).

In addition to the relatively recent stresses from international trade agreements, there are a range of structural factors driving today’s trade facilitation situation. According to Staples (2002), he adequately describes trade facilitation as an international trade plumbing.

Given such, trade facilitation explores how to strengthen processes and controls regulating the movement of goods across national borders to reduce

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associated cost pressures and maximize efficiency while safeguarding legitimate regulatory goals (Grainger, 2007).

Philippine news published an article about a forum that was held on July 20, 2018 at New World Manila Bay Hotel with the theme with the theme “Ease of Doing Business at MICP: A stakeholders’ Forum on Trade Facilitation. According to Atty. Vener Baquiran who was appointed as District Collector that time, said he has issued special orders to allow BOC-MICP deputy collectors for assessment and operation to sign on his behalf several kinds of documents to speed up the approval of voluminous documents received by his office. He added that it usually takes time, sometimes even a whole day, before the documents for approval arrives at his office causing delays in the delay of processing of shipments.

Baquiran explained to Port Calls after the forum that there is another initiative re-creation of multinational lane to fast track the clearance of shipment of multinational companies of good standing with BOC. Multinational lane user will still have to go through the usual clearance process but clearance under this lane are expedited.

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E2M Customs Project

The e2m Customs Project is one of the mission-critical and high-impact ICT projects of the national government launched in January 2005 through a multi-million grant from President Gloria Macapagal Arroyo’s e-Government fund. The e2m seeks to streamline the core processes (imports and exports) of the Bureau of Customs (BOC) and enhance trade facilitation through the development and integration of various systems allowing Internet-enabled and later SMS-enabled, thus less face-toface transactions, towards the realization of the National and ASEAN Single Windows. It envisions the queue less, cashless and paperless environment. E2M features: Online submission of declarations; Automatic advice on declaration status; Engagement of VASPs; Online submission of manifests by airlines and shipping lines, including consolidators; Automated process for other types of import transactions such a informal (including passenger baggage system), warehousing and transshipment entries; Automated process for liquidation of raw materials; Centralized management of bonds transactions; Links with relevant government agencies; and Online resource access through BOC website on issuances, processes, policies, guidelines and other related information. Accreditation of the stakeholders of the BOC BOC Modernization to Create New Opportunities for Customs Brokers. A news article written by Edu Lopez from Manila Bulletin (2014) states that the modernization of customs administration is expected to create new opportunities for custom brokers who are adept and flexible enough to adjust to changing market conditions, according 16

to the Philippine Institute for Development Studies (PIDS). The study noted that efficiency gains from a modernized customs administration will result in a more efficient trade facilitation that can create a higher volume of trade. This will then lead to a new demand for a type of expertise in customs rules and regulations that brokers should possess, the study said. “With the economic integration in the Association of Southeast Asian Nations (ASEAN), the Philippines must successfully implement seamless, efficient, and transparent trading procedures to maximize the potential benefits from such integration,” the study noted. As a signatory to the Revised Kyoto Convention or the International Convention on the Simplification and Harmonization of Customs Procedures, the Philippines, through the Bureau of Customs (BOC), is required to institute customs procedures that comply with best practices and standards in the global markets. However, attempts of policymakers to modernize and introduce efficiencies in customs administration are facing strong opposition from custom brokers who contend that these measures could significantly diminish, if not permanently eliminate, their role in the customs administration process. Under the present setup, cargoes undergo mandatory assessments by licensed custom brokers. Moreover, only customs brokers can sign the import and export entry declarations. However, in Section 108 in the proposed Customs and Tariff Modernization Act, anyone — including importers and exporters — can now declare their goods or can designate a person to declare the cargo on their behalf. Brokers interviewed for the study argue that this will not only endanger heir jobs but will also jeopardize the processes, integrity of transactions, and the revenue

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collections targets of the BOC. However, while customs brokers see themselves as an essential part of trade facilitation, the direct users do not see any value added from the customs brokers’ services. For some import-export firms, mandatory use of customs brokers can be minimized or totally removed without affecting the flow of trade since the bulk of trade facilitation services are actually performed by freight forwarders that are in charge of efficiently transporting goods. “Since the customs broker’s role is merely to formalize the transaction by affixing his or her signature on the documents as required by the Customs Brokers Act of 2004, customs brokerage can be integrated into the services of the freight forwarders,” the study said. The study pointed out that minimizing the role of customs brokers can be beneficial to both exporters and importers because this could result in minimizing costs arising from brokerage fees. “The proposed Customs and Tariff Modernization is expected to introduce greater efficiencies in customs and trade. However, proponents of customs modernization must also recognize that it is necessary to ensure that the proposed bill is not inconsistent with existing laws such as the Customs Broker Act of 2004.” The study recommended for BOC and oversight agencies to recognize that the primary indicator used to gauge the BOC’s performance is its revenue collection effort and not the revenue collection targets per se. “They also need to consider that the role of the BOC is evolving under a globalized and liberalized trading environment especially in view of the ASEAN Economic Community where tariff walls will become a thing of the past. A more relevant indicator of performance will thus be the timely and efficient facilitation of the volume of trade,” the study added. (Lopez, Edu; Manila Bulletin, March 25,2014)

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Customs Brokers: Tossed by Issues. From the Philippine Star, Anonymous (2014) informed the public that the Bureau of Customs suspended the accreditation of 115 of importers and customs brokers who have repeatedly violated Customs policies and procedures in filing import documents. Additional issue reported by Almonte (2014) that Phoenix Petroleum was alleged on oil smuggling and the controversial 1,700 containers of imported goods vanishing in thin air while being trucked to Batangas City. Customs brokers were linked to the said controversies and alleged to have participation in smuggling. The above report made by an Anonymous and Almonte has relevance to the present study because this is one of the problems encountered by customs brokers by not conforming to the rules and regulations enforced by the government. Importers and brokers habitually failed to disclose the detailed descriptions of the imported articles. Failure to provide detailed information about the goods is a form of technical smuggling, specifically misdeclaration that intends to lower the customs duties and taxes charged to the imported products averting the target revenue collection of the Bureau. Tabirara (2014) stated that every time an importer is charged with smuggling, the broker is usually included. Sometimes, importers are misleading them on the facts and value of the goods being imported and yet pressed the customs brokers to clear it as soon as possible. Notwithstanding, smuggling is not just happening with the joint participation of the customs brokers and importers. “There are however, smugglers who know who to talk and there are also customs employees who allow ‘negotiation’” Alex (2014). The statements of Tabirara and Alex are connected to the present study because these are contributory factors of the tarnished image of the customs brokers

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which was frequently cited corrupt that limits the nation’s development ambitions and desires. On the point of Tabirara, he argued that brokers don’t really want to be in the bad light, but it happened for the fulfilment of duties to their clients. For the realization of their duties to the importers to clear the importations as fast as possible, they are forced down to be in bad situation. On the disclosure of Alex, he is saying that smuggling also occurs because the people working inside the government agency permit it to happen. They adopt the under the-table transactions and accepts large amount of money from the brokers or importers just to tolerate the fast and immediate clearance smuggled importations. Customs brokers admit they have been hit by recent reports of colleagues being linked to smuggling (Almonte, 2014), yet there are still importers and customs brokers who are true to their businesses. Pablo (2014) reported the top customs broker and importer (as cited in government data portal, 2013) in terms of volume of imports and paid the highest duties and taxes. The biggest importer by volume was Petron Corporation who imported 22.307 billion kilograms and processed P178.905 billion worth of CIF (Cost, Insurance and Freight); it paid P902.205 million in customs duties while Fedelina Pascua, one of the oil giant’s brokers topped the list. The statement of Almonte and the report of Pablo have direct bearing to the current research because it is being implied that there are still companies and brokers who comply with the proper exposure of the details of the imported articles and payment of the right duties and taxes levied on goods imported. Customs brokers are effective in the processing of importations and their role should not be underestimated. Further, their services not just beneficial to the importers in the instantaneous cargo

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facilitation but they also can secure the collection of the Bureau of Customs through correct assessment of the duties and taxes. The Challenged Profession. Due to the gross mistakes made by some customs brokers which created negative public perception about their role in trade facilitation, Almonte (2014) said that this lead to the national outrage that the fuelled law (Customs Modernization and Tariff Act) makers push for a revamp of the Customs and Tariff Act. The article of Almonte has relationship to the study of the researchers because the CMTA or the proposed modernization has direct impact to the role of the customs broker. The government sees the call to modernize the law on Customs Administration. Further, due to Philippines’ accession to RKC, it is compelled to update and review the existing trade framework and policies of the country paralleled to the harmonized international customs procedures. But it would apt to diminish or the worst is eliminating the important role played by the customs broker in the facilitation of trade by allowing the importers to make entry and declare their imported articles. From the published article, the proposition acquired collective resistance from the customs brokers. “We are waging a battle because we are affected” (Tabirara, 2014). The argument of Tabirara has an affiliation to the present study because it stressed out the concern of Customs brokers to fight and secure their learned profession. They studied for 4 years just to practice the brokerage services and passing the examination is never been easy as eating peanuts as he expressed that out of 4000 graduates of the Customs Administration course yearly, only 300 to 400

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pass the examination. So, it is unjust to diminish their role because of the modernization. Customs Administration is difficult and complex that even importers and ordinary persons are not capable of doing without the knowledge on customs administration. They could hardly or cannot assess and compute precise duties and taxes on imports as accurately as a licensed customs broker could perform like Singhco (2013) argued that “a customs broker is unequally knowledgeable individual in dealing with Tariff and Customs matters.” The matters governing customs administration, like puzzle is complicated and covered with technical and legal knowledge that only customs brokers could understand as well as solve. After all, in a published article, (Maala, 2013) believed that customs brokers are vital to the supply chain. Maala’s statement jives to the present research because it shows the vital role of the customs brokers in terms of the distribution and flow of supplies. As a mediator, they facilitate the flow and clearance of goods from Bureau of Customs custody as importers needed them to continuously run and operate their businesses. Huge volume of trade enters the Philippine jurisdiction and customs brokers supply the services to facilitate these goods. Other people especially the proponents of the CMTA are not aware of what they are doing in trade facilitation and they didn’t fully understand their importance in the economy as a whole. Regulation, Role, Duties and Responsibilities. According to the book of Nague (2005) the primary purpose of regulating the practice of customs broker profession is to insure that the customs broker services are to be rendered by competent and licensed

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persons in order to promote public welfare in general and the Philippine economy in particular. The book of Nague, correlates to the current work because it directly pertains to profession of the customs brokers. The profession requires mental or intellectual skills which will be tested through examination and to be competent, the customs broker must pass it. Customs brokers are knowledgeable about the goods entering the Philippine borders and they know the classifications or types of importations. They can easily distinguish what imported articles would harm the people and the nation itself. In addition, in terms of the Philippine economy, they ease trade facilitation. Hence, they contribute to the fast supply of the goods needed by the country. Carlos discussed in a book that customs brokers (as cited in Dascil, 2004) are little known in the economy but in the field of international trade they are the hub of importers playing a vital role in the movement and flow of foreign trade. The discussion of Carlos has connection to the present study because it also showcased the importance of the customs brokers in providing communication between the importers and the government. They are the link between the importers and the government to collaborate and fulfil the customs requisites to equalize the supply and demand and at the same time contribute to the collection of revenue of the Bureau of Customs. There are additional duties and responsibilities customs broker play. From the book of Dascil (2004), he stated that it is a role and responsibility of a customs broker to ensure that the client will comply with the rules and regulations. He has to make sure that the importer shall not produce false and misleading information before the

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Bureau of Customs. As a representative of the importer before the government agency, he/she must convey the necessary documents regarding the importation in conformity to the existing policies. Omission of factual and essential information may be considered smuggling; therefore, a custom broker should warrant that all necessary details will be exposed. A customs broker or his representative shall not influence or attempt to influence the conduct of any BOC official or employee of the BOC in any matter pending (Dascil, 2004). Just to hasten the process, some brokers offer special inducements to the BOC officials in the form of gifts, valuables and even money. This should not be practiced by customs brokers. “Do not accept the notion that the ‘kalakaran’ is the way it has always been and the way it will always be (Biazon, 2009).” Walk on the right path, work with etiquette and spurn the ways of “kalakaran”. Customs brokers should possess high self-discipline to free themselves from illegal practices. The book of Dascil and the statement of Biazon relate to the study of the researchers because ethics must be conformed in doing the brokerage profession. As Government’s Partner. In his sponsorship speech, Senator Pimentel (2003) conveyed, “the customs broker profession is an indispensable partner of the Bureau of Customs.” The speech of Senator Pimentel has direct association to the present study because the role of customs brokers is beneficial to the government. They help the government specifically, the Bureau of Customs in collecting the right amount of duties and taxes through proper valuation, classification and taxing of imported goods. Reaching the target of revenue collection, customs brokers also aid in upholding the

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interest of the government from the imported articles crossing the Philippine borders. According to an article from Manila Times, the Department of Finance (DOF) said Customs brokers have a “crucial role” in nation-building and in helping the Duterte administration in its plan to shift the Philippines to a federal form of government. In a statement, Finance Undersecretary Antonette Tionko said the brokers play as among the lead partners of the administration in its campaign to lick official corruption, eliminate poverty and promote trade and investments in the country, which has become one of Asia’s fastest-growing economies. She pointed out that the Customs brokers will help the new government raise an extra P1 trillion each year for massive investments in infrastructure, human capital and social protection, for it to keep up the growth momentum and reduce poverty incidence from the current 21.5 percent to 14 percent by 2022. “The role you will be playing from this day forward will be crucial in the coming years as our government ramps up its spending activities to foster a sustainable and an equitable growth and development,” Tionko was quoted as saying at the recent Customs brokers’ oath-taking at the Tent City of the Manila Hotel. She said the government’s full support for the profession of Customs brokers is underlined in the Customs Modernization Act (CMTA), which has declared the State’s policy ‘to give priority attention and support to professionalizing the practice of the Customs brokers’ profession in the Philippines which will be beneficial to the country in general and to the economy in particular. “As the government’s partner in nation-building,” Tionko added, “each of you will hold in your hands, and hopefully not in your pockets, the much needed revenues that will allow us to build new roads, airports, schools and

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other public facilities, as well as fund services our great people badly need and rightfully deserve.” Given the government plan to shift to a federal form of government, she also pointed out, local governments, which largely rely on their share of Bureau of Internal Revenue collections, will have a larger piece of the total revenues of the national government, which include contributions from Customs collections and other sources.” The Finance department, Tionko said, already set in motion public consultations on the drafting of the implementing rules and regulations for the CMTA, which was enacted to modernize rules and procedures for faster trade, reduce opportunities for corruption, improve service delivery and improve the supply chain. (Caraballo, Mayvelin U., February 27,2017) The Bureau of Customs (BOC) has started cleansing its list of more than 11,000 accredited importers and customs brokers of misfits and those who have repeatedly violated existing laws and the bureau’s policies and procedures as part of its continuing reform efforts. A news article published by Manila Times stated that Customs Commissioner Nicanor Faeldon ordered the suspension of the accreditation of about 100 Customs importers and brokers who are facing charges for violation of the Customs and Tariff Code of the Philippines, including misdeclaration and undervaluation, among other forms of technical smuggling for the July to December 2016 period. All suspensions, revocations and cancellation of accreditation are under the jurisdiction of the Account Management Office (AMO), formerly known as the Interim Customs Accreditation Registration or I-CARE.

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Customs Administrative Order (CAO) No. 8-2007 and Customs Memorandum Order (CMO) 28-2007 state that the imported articles must be described in sufficient detail for proper valuation and tariff classification. Importers and brokers are responsible for enumerating details such as specific product description; make, model, variant and brand; and retail packaging or stock-keeping unit (SKU) in the import entries filed with the bureau. Section 3.5 of Customs Memorandum Order (CMO) 042014 states that “the existing accreditation of an importer or Customs broker may be suspended, revoked or cancelled” if there are violations of the ‘Sworn Undertaking’ to strictly abide with existing rules and regulations on the Statement of Full Description of Imported Articles covered by entry declarations.” Faeldon called on importers and brokers to strictly follow the bureau’s rules and policies, warning that he has zero tolerance for corruption and other shenanigans. Under CMO 04-2014, all importers and Customs brokers transacting with the Bureau of customs should apply for accreditation, except once-a-year importation; importation by parcel post or by informal entry; importation of the Philippine Government, its agencies and instrumentalities; and importation of foreign embassies, consulates, legations, agencies of other foreign governments and international organizations with diplomatic status and recognized by the government, like the Asian Development Bank and the World Health Organization. (Depasupil, William, January 13, 2017) The study showed that a modernized customs administration can create a higher volume of trade, which in turn can lead to a new demand for brokers with expertise in customs rules and regulations.

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As a signatory to the Revised Kyoto Convention or the International Convention on the Simplification and Harmonization of Customs Procedures, the BOC is required to institute customs procedures that comply with best practices and standards in the global markets. However, attempts to modernize customs procedures are being opposed by some custom brokers, who believe that these measures will adversely affect their role in the customs administration process. The brokers also said the proposed measures will also jeopardize the processes, integrity of transactions, and the revenue collection targets of the BOC. The study also reminded BOC and oversight agencies that the primary indicator used to gauge the BOC's performance is its revenue collection effort and not the revenue collection targets. "They also need to consider that the role of the BOC is evolving under a globalized and liberalized trading environment especially in view of the ASEAN Economic Community where tariff walls will become a thing of the past. A more relevant indicator of performance will thus be the timely and efficient facilitation of the volume of trade," the study said. (ABS-CBN News, March 21,2014) An article published by Pricewaterhouse Coopers entitled Philippines: Customs Modernization and Tariff Act (CMTA) 2011, concerns raised by customs brokers expresses information and issues which will be most likely involved in the said CMTA. In August 2011 the House Committee endorsed for approval the Customs Modernization and Tariff Act (CMTA) which aims to modernize the customs administration of the Philippines. Yet to be passed and implemented, the bill will give the Bureau of Customs (BoC) control over all persons and properties within its territory, co-ordinate with other government agencies, including free zones authorities, and customs

28

stakeholders to enhance customs control. The BOC will also be required to adopt an audit-based control and risk management system and a compliance measurement strategy to support risk management. The bill also seeks to apply information and communication technology to enhance customs control and support a cost-effective and efficient customs operations geared towards a paperless environment using internally accepted standards. Many organizations’ in the Philippines have been assured that the reforms in the bill, when implemented, will reduce logistic chain costs and enhance the country’s competitiveness. However, the Professional Customs Brokers Association of the Philippines Inc. has recently warned that provisions in the proposed CTMA could lead to possible “technical smuggling” resulting in underpayment of duties and taxes since the cargo would no longer need to undergo mandatory assessment by a licensed customs broker who also signs the import declaration. If passed, the CTMA would allow any representative of a company importing goods to be the “declarant” of a consignment or shipment and to sign the import and export entry declaration. The Senate is under mounting pressure from a range of organizations, including the Joint Foreign Chambers of the Philippines, to pass the bill. A news article published by The Manila Times entitled “8,000 Customs bureau brokers may lose jobs” which is in relation to the challenges that may be faced by licensed customs brokers. The articles say that thousands of professional Customs brokers are up in arms against a vigorous multinational lobby for passage of a measure in Congress that they claim will render them “extinct.” In an interview with The Manila Times, officials of the Philippine Society of Filipino Customs Brokers Inc.

29

(The Society), which is affiliated with the Chamber of Customs Brokers Inc. (CCBI), assailed specific provisions of House Bill 5525 or the Customs and Tariff Modernization Act (CMTA) that aim to remove them from business. “I was neutral then because that was the position taken by Commissioner Sevilla. But now the official position of the BOC is pro-brokers,” the deputy commissioner, himself a licensed Customs broker, said. (The Manila Times, July 19,2015) Riga, Roberta L. (2016) conducted a research study and published a research article about the Filipino Customs Brokers’ perception on the proposed Customs Modernization and Tariff Act (CMTA) of the Philippines. The study focused on the perception of the Filipino Customs Brokers on the proposed Customs Modernization and Tariff Act (CMTA) of the Philippines. Specifically, it established the profile of the customs brokers in terms of years in practice of the profession, number of clients, estimated annual net income and estimated revenue remitted to the Bureau of Customs (BOC). It then determined the level of knowledge of the customs brokers with regards to definition of declarant, responsibilities of declarant, role of third party and exclusion of ‘customs broker’ under CMTA. It also determined the perception of the customs brokers on the effects of the proposed CMTA to the customs broker profession. Further, it looked into the significant difference on the level of perception of customs brokers on the CMTA when grouped according to their profile variables. The descriptive research design was used in this study utilizing a self-constructed questionnaire as data gathering instrument. Using Slovin’s formula, data were gathered from 153 accredited customs brokers transacting at major ports in the Philippines for at least five years. Respondents were selected through convenience

30

sampling. Statistical tools used were percentage, weighted mean and analysis of variance (ANOVA). Most of the respondents were in practice of the customs broker profession for 5 to 10 years, serve 10 to 20 clients, have an estimated annual income of more than one million to five million pesos and have an estimated revenue remittance to the BOC of more than one million to one billion pesos. Findings showed that the customs brokers have high level of knowledge with regards to the definition of declarant, responsibilities of declarant and the role of ‘third party’ under the proposed CMTA. However, they have low level of knowledge on the exclusion of ‘customs broker’ on the proposed law. The respondents strongly perceive that the effects of the proposed law to the customs broker profession would be unemployment among employees of existing customs brokerage firms, anxiety among students currently enrolled in the BS Customs Administration (BSCA) program, anxiety among colleges or universities offering the BSCA program, inconsistency with present legislation on customs broker profession, irrelevance of the Professional Regulation Commission (PRC) license as customs broker, misunderstanding as to the customs brokers’ roles and functions in trade facilitation with the role of third parties, irrelevance of the accredited professional organization of customs brokers and irrelevance of the Professional Regulatory Board for Customs Brokers (PRBCB). Findings revealed that there are no significant differences on the respondents’ level of perception on the effects of the proposed CMTA to the customs broker profession when respondents are grouped into their years of practice in the profession, number of clients, estimated annual net income and estimated revenue remittance to the BOC.

31

The study focused on the perception of the Filipino Customs Brokers on the proposed Customs Modernization and Tariff Act (CMTA) of the Philippines. Specifically, it established the profile of the customs brokers in terms of years in practice of the profession, number of clients, estimated annual net income and estimated revenue remitted to the Bureau of Customs (BOC). It then determined the level of knowledge of the customs brokers with regards to definition of declarant, responsibilities of declarant, role of third party and exclusion of ‘customs broker’ under CMTA. It also determined the perception of the customs brokers on the effects of the proposed CMTA to the customs broker profession. Further, it looked into the significant difference on the level of perception of customs brokers when grouped according to their profile variables. With the advent of the Revised Kyoto Convention and the Philippine customs modernization program, the CMTA was proposed. Customs modernization is needed to adapt to the fast changing and evolving international trade. The Filipino customs brokers do not oppose customs modernization. It is just that the proposed CMTA do not clearly recognize the role of customs brokers in trade facilitation and customs administration. In apprehension that the role of customs brokers in the Philippines would be irrelevant once the proposed law would be enforced, the researcher decided to conduct this study. In the Philippines, Section 6 of Republic Act 9280 provides that the Customs Broker Profession involves services consisting of consultation, preparation of customs requisite document for imports and exports; declaration of customs duties and taxes; preparation, signing, filing, lodging and processing of import and export entries; representing importers and exporters before any government agency and private

32

entities in cases related to valuation and classification of imported articles; and rendering of other professional services in matters relating to customs and tariff laws its procedures and practices. A customs broker shall also be considered in the practice of the profession if the nature and character of his employment in private enterprises requires professional knowledge in the field of customs and tariff administration. He is also deemed in the practice of customs broker profession if he teaches customs and tariff administration subjects in any university, college or school duly recognized by the Philippine government. (Republic Act 9280 The relationship between a broker and client may begin before the actual importing of goods. A complicated scrutiny of customs duty, tax rates and government trade regulations and quarantine permission may have to be undertaken first. Brokers are trained and licensed to provide consultancy services of the above nature as accuracy is critical to the importer. Due to the brokers’ intimate knowledge of the client’s business activities, their relationship can be difficult to break. When a broker receives the documents for a job they register it in the company system, then to process a customs entry they must: classify goods in accordance with customs regulations; obtain relevant permits; process the customs entry; and pay duties and taxes on behalf of the importer. After the above is completed and clearance from customs has been given a complete dispatch is made. The customer must be sent invoices for disbursement then the cargo can be taken from the bonded warehouse and delivered to the customer’s nominated facility. (C. Milner, et. al., Customs Modernization and Tariff Act Amendments )

33

In the Philippines, the House Committee on Ways and Means has endorsed for plenary approval the proposed Customs Modernization and Tariff Act (CMTA), which seeks to modernize Customs administration. The Committee, which has jurisdiction on all matters directly and principally relating to the fiscal, monetary and financial affairs of the government including tariff, taxation, revenues, borrowing, credit and bonded indebtedness, explained that House Bill 4788 or CMTA “will also set international standards in Customs operations and make import trade transactions faster, predictable, efficient and transparent, among others.” (House Bill 4788, P.S. Romero) Under the bill, there are four provisions in the proposed bill that customs brokers deem detrimental to their profession. These are Section 102 (Definition of Terms), Section 109 (Responsibilities of Declarant), Section 110 (Declarant) and Section 1330 (Supervision and Regulation of Third Parties). (P. S. Romero) On the Definition of Terms in Section 102, what alarms the brokers is not only the provisions mentioned above, but also what has been excluded from the bill. In Section 102, the definition of customs brokers is missing from the list of definition of terms. For the brokers, the exclusion of the definition of their profession in the House Bill signifies that the government fails to recognize the vital role that brokers play in and their significant contributions to effective, efficient, and secure international trade. The brokers fear that ultimately, their profession will not be part of the envisioned modern customs administration in the country. (Approval of Bureau of Customs (BOC) Modernization, Tariff Bill Pushed, Sunstar Bacolod)

34

On the Declarant Provision in Section 110, a declarant is a person who submits a goods declaration to the BOC or in whose name such declaration is made. In practice, the declarant computes the lawful duties and taxes to be imposed on the shipment of cargoes. In the current institutional set-up, cargoes undergo mandatory assessments of licensed customs brokers. Moreover, only customs brokers can sign the import and export entry declarations. However, in the proposed bill, the need for a customs broker is not specified in cases where the declarant is a firm (“juridical person”) since such firm may authorize any responsible officer to make the declaration on its behalf. In the proposed bill, anyone – including importers and exporters – can now declare their goods or can designate a person to declare the cargo on their behalf. The services of a licensed customs broker would now be considered “optional” as the declarant can be anyone that the importer or exporter deemed capable of making the declaration. Customs brokers consider this provision as another manifestation of an adversarial stand of the House Bill against their profession. They feel that this will not only endanger their jobs but will also jeopardize the processes and integrity of transactions in the BOC. The customs brokers stated that they are experts in the Tariff and Customs Code of the Philippines and have technical knowledge of relevant sections of the National Internal Revenue Code. Letting an untrained person handle the declaration of cargo and computation of duties and taxes can cause costly delays and serve as a non-tariff barrier to efficient trade. Moreover, declarants who are not conversant with Philippine tax laws could make mistakes that may lead to lower tax collections. Hence, they claim that the interest of the state is also in danger because of the likely negative impact of the provision on the BOC’s revenue targets. Moreover,

35

they believe that handing over the declaration of goods to unlicensed and unregulated persons could aggravate technical smuggling. On the Third Party Provision in Section 133, third parties refer to the logistics providers, importers, exporters, customs brokers, carriers, airlines, shipping lines, shipping agents, forwarders, consolidators, port and terminal operators and warehouse operators, among others. In the bill, any of those enumerated and considered as third party is entitled to release the shipment as long as they are entrusted with the job and are authorized by the importer. This is again considered as a threat to the customs broker profession because it means that other parties as enumerated by law can work for the release of imported goods. This provision, according to the Customs Brokers, is an infringement of their rights as a “learned profession” that should be protected by an existing law, i.e., RA 9280 (the Customs Brokers Act of 2004). (G. M. Llanto, et. al.,2013)

36

Chapter 3 Methodology This chapter discusses the methodology and instrumentalities that the researchers will use in making the research. This chapter describes subjects and respondents including the sampling methods and techniques, the research method to be used, conceptual framework, operational definition of variables, and the research instruments.

Respondents and Sampling Methods of the study The respondent of the study will be the Bureau of Customs – Manila International Container Port because they are tasked to facilitate trade transactions and accreditations of the stakeholders, they are also the tasked to improve, develop and promulgate implementing rules and regulations, in relation to R.A 11032; and the Customs Brokers, as well as, importers because they are the main stakeholders of the BOC that directly transacts with the Bureau of Customs. The respondents were chosen based on their field of expertise. The Bureau of Customs has access to information on market, suppliers, buyers, and government assistance program use to establish a databank which shall be a source of all information necessary for project monitoring, research and policy studies. The researcher will use a non-probability sampling method. The method is based on a subjective judgment of the researchers rather than selecting randomly.

37

Research Method

The study was designed as a descriptive research for researchers to determine the effectiveness and efficiency of R.A 11032 in trade facilitation of the BOC. The research method used will be helpful to develop hypotheses for further testing and to understand the information obtained in qualitative studies and to better understand the context or meaning of the data. As a descriptive research, the researchers aim to obtain information concerning the ease of trade transactions in the Bureau of Customs. Such approach will help justify the operative implementation of R.A 11032 with regards to the import entries of goods for warehousing in Manila International Container Port (MICP). To guide the design that will be used, an ontological assumption is considered. The researchers assume that the participants have their own thoughts, shared experiences, and possible interpretation (Creswell, 2013). Structured Interviews and direct observation are just ways of investigating the researchers’ assumption to obtain the themes in the presented statements of the participants. The researchers go further by adding their judgement to the phenomena found in the data gathered.

Research Instrument The instrument that will be used on this study will be through the use of questionnaires that consists the domains such as trade facilitation in which will help the researchers to obtain such themes towards the effectiveness of ease of doing business act with regards to the import entries of goods for warehousing in MICP.

38

Each domain includes both an open- and close-ended questions. Questions under each domain are from the discussion proper of this paper’s introduction.

Data Gathering Process The researchers should be able to make a step-by-step process in which the first step is the recruitment process wherein the participants are given an invitation letter asking them to participate in the said study and explaining the nature of the study. After which, the basic profile is considered to be the checklist whether an individual is qualified to participate in the study. As the participants are settled, an informed consent which includes the (a) scope of the research and its purpose, (b) the risks and benefits, and (c) the right to confidentiality and right to withdraw from participation will be given before getting into the study. As the informed consent is given, the researchers will note the contact details of the participants for future references and ask the participant the consent in recording the interview. The participants will be asked a set of questions that he or she needs to answer through a structured interview. Meanwhile, a direct observation of the task and duties inside the MICP will also be conducted to in-depth understand the statements of participants. Before analyzing the data, participants will be contacted to confirm all the data he or she given.

39

Name: _________________________

Date: ___________

Occupation: ___________________________________

We are Customs Administration Students from the Lyceum of the Philippines University conducting research about “The Implementation of Ease of Doing Business Act (R.A 11032) on Trade Facilitation at Manila International Container Port (MICP).” Kindly answer the following questions, rest assured that we will keep your profile with confidentiality. Thank you for your participation. Instruction: Rate the following based on the efficiency and effectiveness of the following Customs procedures of the Bureau of Customs (4) Very efficient and effective (3) Efficient and effective (2) Inefficient and ineffective (1) Very Inefficient and ineffective

For Importers and Customs Brokers

(4) 1. Lodgment of CPRS profile through Value Added Service Provider (VASP) 2.

Validation

of

Customs

Accreditation

Secretariat(CAS)

3. Performance of Secretariat

(CAS)

Customs Accreditation for

necessary

manual

accreditation procedure (e.g., evaluation and

40

(3)

(2)

(1)

validation of submitted documents, conduct of physical inspections and/or validation of the legitimate existence of importer, among others) 4. Available help desks for inquiries 5. Approval for importer’s/ broker’s accreditation for registration to CPRS 6. Registration of entry declaration to ASYCUDA 7. Corresponding action of COOIII associated with the classification/tagging of imported goods and assessment of duties and taxes. 8. Licensing and Clearance System through the use of National Single Window 9. Payment system through E2M Customs System 10. Release of imported goods for consumption

Statistical Treatment For a case study, interpreting findings appears to be more opinion-based than statistical methods. The normal idea is to collate the data gathered in a manageable manner and construct a narrative around it (Zainal, 2007). In analyzing the data, the researchers will be using Thematic Analysis wherein it can explicate the narratives obtain from the structured interview. These explanations can be identified as themes. Using a cluster sampling technique, the researchers select members of the sample by area. Among 40 respondents, the researchers divided the stakeholder’s profile industry equally to determine a non-biased statistical analysis.

Table 1.0

41

Respondents Profile Industry SECTOR

FREQUENCY

PERCENTAGE

Customs Brokers

20

50%

Importers

20

50%

Total

40

100%

Ethical Considerations The instrument is subjected to cultural sensitivity through the content validation of the stated validators to verify if it is culturally sensitive. The participants have the right to participate or not. Under the Republic Act No. 10173 otherwise known as the Data Privacy Act, all information that will be disclosed by the participants will be privately kept within the researchers reach only. Therefore, the data collected and the recording of the interview will be strictly confidential and assured that it is surely for research purposes. The recorded file will be immediately deleted once the manuscript is done. Researchers have the duty of preserving all participants in the study from probably harmful outcomes that may influence them as the result of their cooperation. The researchers will consider the transparency about their personal interest so that there will be no biases as they transcribe the data gathered. The participants and researchers must have an active collaboration since the participants’ responses are highly subjective, therefore the data should be analyzed cautiously.

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References Aisyah, R. (2018). OZ agreement beneficial for RI. The Jakarta Post. Appleyard, D. R., & Alfred J. Field, J. (2017). International Economics. Manila: McGRAW-HILL Education. ASEAN. (2018). The ASEAN free trade agreements. Cabanilla, L. S. (2009). Free Trade Agreement with the US: Implications on Philippine Agricultural Modernization. Makati: Fullbright-Philippine Agriculture Alumni Association. Cororaton, C. B. (2013). Economic Impact Analysis of the Reduction in Sugar Tariffs. Cororaton, C. B. (2018). Potential Effects of the Regional Comprehensive Economic Partnership on the Philippine Economy. Cossar-Gilbert, S. (2018). 5 Hidden Costs of the RCEP to People and Planet. The Diplomat. Csaki, C., & Nash, J. (2012). Lessons for the EU Accession in the Rural Sector - World Bank/ FAO Workshop. DAS, S. B., & THAO, P. T. (2017). How can RCEP benefit Asean? Today. Four reasons why RCEP will be detrimental to Filipino farmers. (2018). Ibon.org. Guzman, R. B. (2000). The WTO Agreement on Agriculture: Final Blow to Philippine Farms? In A. T. Jr., The Impact of the WTO Agreement on Agriculture (pp. 27-64). Manila: Ibon Publishing Inc. Isono, I. (2017). Taking ASEAN+1 FTAs towards the RCEP. Jaramillo, L. F. (1994). New york and Colombia's permanent representative to the United Nations. Josling, T., Tangermann, S., & Twesten, H. (2012). CEFTA, BFTA and Agricultural Trade in the CEEC. In C. Csaki, & J. Nash, Regional and International Trade Policy (pp. 20-25). Jr., A. T. (2009). The Impact of the WTO Agreement on Agriculture. Manila: Ibon Foundation Inc. Jr., T. T., Largoza, G., & Castillo, C. (1995). Issues in Philippine Economic Development. Manila: De La Salle University Press Inc. Katigbak, J. J. (2018). RCEP and the future of Asian Free Trade Agreements: A Philippine Perspective. Khadse, A. (2017). RCEP in India: A creamy deal for transnational dairy corporations, growing resistance from farmers. GRAIN. Kuyek, D., Quijano, D. R., & Zamora, D. O. (n.d.). Intellectual Property Rights: Ultimate control of agricultural R&D in Asia. Love, J. (2017). Three documents leaked from RCEP negotiations, relating to investment, competition and services. Michaelis, K. (2018). HYBRID SEEDS VS. GMOS. Food Renegade. Orden, D., & Cororaton, C. B. (2014). Potential Economic Effects on the Philippines of the Trans-Pacific Partnership (TPP). Petri, Plummer, & Zhai. (2012). The Trans-Pacific Partnership and Asia-Pacific Integration: A quantitative Assessment. Primer on Developments in Tariff and Trade Policy. (2017).

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Punacha, R. K. (2018). Indian Farmers Reject RCEP Trade Agreement, plan major national level agitations. La Via Campesina International Peasant's Movement. Surugiu, M. R., & Camelia, S. (2015). International Trade, Globalization and Economic Interdependence between European Countries: Implications for Businesses and Marketing Framework. Procedia Economics and Finance. (n.d.). The Guardian . Vijayasri, G. (2013). The Importance of International Trade in the world. International Journal of Marketing, Financial Services and Management Research. Yu, P. K. (2016). The RCEP and Trans-Pacific Intellectual Property Norms. Zanotto, R., Randazzo, M., Narintaraku, K., & Bassey, M. (2017). How RCEP affects food and farmers. GRAIN. CEP will be detrimental to Filipino farmers. (2018). Ibon.org. Aisyah, R. (2018). OZ agreement beneficial for RI. The Jakarta Post. Appleyard, D. R., & Alfred J. Field, J. (2017). International Economics. Manila: McGRAW-HILL Education. ASEAN. (2018). The ASEAN free trade agreements. Cabanilla, L. S. (2009). Free Trade Agreement with the US: Implications on Philippine Agricultural Modernization. Makati: Fullbright-Philippine Agriculture Alumni Association. Cororaton, C. B. (2013). Economic Impact Analysis of the Reduction in Sugar Tariffs. Cororaton, C. B. (2018). Potential Effects of the Regional Comprehensive Economic Partnership on the Philippine Economy. Cossar-Gilbert, S. (2018). 5 Hidden Costs of the RCEP to People and Planet. The Diplomat. Csaki, C., & Nash, J. (2012). Lessons for the EU Accession in the Rural Sector - World Bank/ FAO Workshop. DAS, S. B., & THAO, P. T. (2017). How can RCEP benefit Asean? Today. Guzman, R. B. (2000). The WTO Agreement on Agriculture: Final Blow to Philippine Farms? In A. T. Jr., The Impact of the WTO Agreement on Agriculture (pp. 27-64). Manila: Ibon Publishing Inc. Isono, I. (2017). Taking ASEAN+1 FTAs towards the RCEP. Jaramillo, L. F. (1994). New york and Colombia's permanent representative to the United Nations. Josling, T., Tangermann, S., & Twesten, H. (2012). CEFTA, BFTA and Agricultural Trade in the CEEC. In C. Csaki, & J. Nash, Regional and International Trade Policy (pp. 20-25). Jr., A. T. (2009). The Impact of the WTO Agreement on Agriculture. Manila: Ibon Foundation Inc. Jr., T. T., Largoza, G., & Castillo, C. (1995). Issues in Philippine Economic Development. Manila: De La Salle University Press Inc. Katigbak, J. J. (2018). RCEP and the future of Asian Free Trade Agreements: A Philippine Perspective. Khadse, A. (2017). RCEP in India: A creamy deal for transnational dairy corporations, growing resistance from farmers. GRAIN.

44

Kuyek, D., Quijano, D. R., & Zamora, D. O. (n.d.). Intellectual Property Rights: Ultimate control of agricultural R&D in Asia. Love, J. (2017). Three documents leaked from RCEP negotiations, relating to investment, competition and services. Michaelis, K. (2018). HYBRID SEEDS VS. GMOS. Food Renegade. Orden, D., & Cororaton, C. B. (2014). Potential Economic Effects on the Philippines of the Trans-Pacific Partnership (TPP). Petri, Plummer, & Zhai. (2012). The Trans-Pacific Partnership and Asia-Pacific Integration: A quantitative Assessment. Punacha, R. K. (2018). Indian Farmers Reject RCEP Trade Agreement, plan major national level agitations. La Via Campesina International Peasant's Movement. (n.d.). The Guardian . Yu, P. K. (2016). The RCEP and Trans-Pacific Intellectual Property Norms. Zanotto, R., Randazzo, M., Narintaraku, K., & Bassey, M. (2017). How RCEP affects food and farmers. GRAIN. Butterly, T. (2003). Trade facilitation in a global trade environment’, in UNECE (Ed.) Trade facilitation: the challenges for growth and development, United Nations, Geneva. Buyonge, C. & Kireeva, I. (2008). Trade facilitation in Africa: challenges and possible solutions. World Cust. J., 2 (1) (2008), pp. 41-54. Creswell, J.W. (2013). Qualitative Inquiry and Research Design. (3rd ed.). Thousand Oaks, CA: Sage Publications. Go, E. (2018). A contribution and effectiveness of trade facilitation measures: A structured Literature Review. World Bank Group. Independent Evaluation Group. Grainger, A. (2007). Supply Chain Security: Adding to a complex operational and institutional Environment. World Customs Journal, 1(2): 17-29. Grainger, A. (2011). Trade facilitation: A conceptual review. Journal of World Trade, 45(1), 2011: 39-62. Moise, E., Orliac, T. & Minor, P. (2011). Trade facilitation indicators: the impact on trade costs. OECD Trade Policy Working Papers, No. 118. Doi: 10.1787/5kg6nk654hmr-en. Narayanan, B., Sharma, S. & Razzaque, M. (2016). Trade facilitation in the commonwealth: an economic analysis. 10(3) (2016), pp. 305-336, 10.1177/0973801016645218. Portugal-Perez, A. & Wilson, J. (2009). Why trade facilitation matters to Africa. World Trade Rev., 8 (3) (2009), p. 379, 10.1017/S147474560900439x. Sakyi, D., Villaverde, J., Maza, A. & Bonuedi, I. (2018). The effects of trade and trade facilitation on economic growth in Africa. Afr. Dev. Rev., 29 (2) (2017), pp. 350361, 10.1111/14678268.12261. Staples, B. (2002). Chapter 16 – Trade Facilitation: Improving the Invisible Infrastructure. In Development, Trade, and the WTO: A Handbook. Washington: World Bank, 2002, 139– 148. Teo, H-H, Tan, BCY & Wei, K-K 1997, ‘Organizational transformation using electronic data interchange: the case of TradeNet in Singapore’, Journal of Management Information Systems, vol. 13, no. 4, pp. 139-166.

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Chapter 4 PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

In this chapter, the following results are shown from the survey conducted. The results were interpreted and underwent various statistical treatment of data. The researchers have procured answers from the questionnaires provided. Using a cluster sampling technique, the researchers select members of the sample by area. Among 40 respondents, the researchers divided the stakeholder’s profile industry equally to determine a non-biased statistical analysis. In table 2, the respondents are asked to rate the efficiency and effectiveness Lodgment of CPRS profile through Value Added Service Provider (VASP). Majority of the respondents answered that there is inefficiency and ineffectiveness in the procedures related to the goods for consumption entries having an average of 62.5%, while 32.5% answered that lodgment through VASP for accreditation with the Bureau of Customs is effective and efficient. For the reason for their answers, the E2M-VASP Gateway faces technical difficulties due to increased number of stakeholders transacting with the VASP, sometimes the website is down during the peak hours of the day. There is a need to secure approval from the Deputy Commissioner for MISTG, in case the VASP is offline or the website is temporarily out of service.

Table 2 Lodgment of CPRS profile through Value Added Service Provider (VASP) RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

13

32.5%

Ineffective and Inefficient

25

62.5%

Very Ineffective and Inefficient

2

5%

Total

40

100%

46

In table 3, the respondents are asked to answer the surveys about the Validation process of Customs Accreditation Secretariat (CAS). The 25% of the respondents answered that the validation process of Customs Accreditation Secretariat is effective and efficient, in line with the implementation of Ease of Doing Business Act, however 32.5% of the respondents suggested the validation process takes too long for the CAS to respond resulting for ineffective and inefficient validation process of CAS, while the remaining 2% answered it was very ineffective and inefficient.

Table 3 Validation process of Customs Accreditation Secretariat (CAS) RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

25

62.5%

Ineffective and Inefficient

13

32.5%

Very

2

5%

40

100%

Ineffective

and

Inefficient Total

47

In table 4, the respondents are asked to rate the effectiveness and efficiencies on the availability of help desks for customs inquiries. The 50% of the respondents answered that it was ineffective and inefficient, however 37.5% of the respondents answered that there are available help desks at the MICP offering services on customs inquiries, while the remaining 12.5% answered it was very ineffective and inefficient.

Table 4 Availability of help desks for customs inquiries RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

15

37.5%

Ineffective and Inefficient

20

50%

Very

5

12.5%

40

100%

Ineffective

and

Inefficient Total

48

In table 5, the respondents are asked to rate the effectiveness and efficiencies about the approval procedures for importer’s/broker’s accreditation for registration to CPRS. The 75% of the respondents answered that it was ineffective and inefficient, however 12.5% of the respondents answered that there is fast transaction resulting to effective and efficient approval accreditation process for registration to CPRS, while the remaining 12.5% answered it was very ineffective and inefficient Table 5 Approval for importer’s/broker’s accreditation for registration to CPRS RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

5

12.5%

Ineffective and Inefficient

30

75%

Very

5

12.5%

40

100%

Ineffective

and

Inefficient Total

49

In table 6, the respondents are asked to rate the effectiveness and efficiencies of the entry registration to the Automated System for Customs Data (ASYCUDA). The 75% of the respondents answered that it was effective and efficient, however 12.5% of the respondents rated the entry registration was ineffective and inefficient, while the remaining 12.5% answered it was very ineffective and inefficient.

Table 6 Registration of entry declaration to ASYCUDA RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

30

75%

Ineffective and Inefficient

5

12.5%

Very

5

12.5%

40

100%

Ineffective

and

Inefficient Total

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In table 7, the respondents are asked to rate the effectiveness and efficiencies of the corresponding action of Customs Operations Officer III (COOIII) associated with the classification/tagging of imported goods and assessment of duties and taxes. The 75% of the respondents answered that it was ineffective and inefficient, however 12.5% of the respondents rated the classification/tagging of imported goods by the COOIII was effective and efficient, while the remaining 12.5% answered it was very ineffective and inefficient.

Table 7 Corresponding action of COOIII associated with the classification/tagging of imported goods and assessment of duties and taxes. RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

5

12.5%

Ineffective and Inefficient

30

75%

Very

5

12.5%

40

100%

Ineffective

and

Inefficient Total

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In table 8, the respondents are asked to rate the effectiveness and efficiencies of the Licensing and Clearance System through the use of National Single Window. The 87.5% of the respondents answered that it was ineffective and inefficient, however 5% of the respondents rated the Licensing and Clearance System through the use of National Single Window was effective and efficient, while the remaining 7.5% answered it was very ineffective and inefficient.

Table 8 Licensing and Clearance System through the use of National Single Window RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

2

5%

Ineffective and Inefficient

35

87.5%

Very

3

7.5%

40

100%

Ineffective

and

Inefficient Total

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In table 9, the respondents are asked to rate the effectiveness and efficiencies of the payment system through Electronic to mobile (E2M Customs System). Majority of the respondents answered that it was effective and efficient, however 30% of the respondents rated the payment system was ineffective and inefficient.

Table 9 Payment system through E2M Customs System RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

28

70%

Ineffective and Inefficient

12

30%

Very

0

0%

40

100%

Ineffective

and

Inefficient Total

In table 10, the respondents are asked to rate the effectiveness and efficiencies of the release of imported goods for consumption. Majority of the respondents answered that it was very ineffective and inefficient, however 30% of the respondents rated the release procedure for consumption entries in the BOC was ineffective and inefficient.

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Table 10 Release of imported goods for consumption RATE

FREQUENCY

PERCENTAGE

Very Effective and Efficient

0

0%

Effective and Efficient

0

0%

Ineffective and Inefficient

12

30%

Very

28

70%

40

100%

Ineffective

and

Inefficient Total

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Chapter 5 Findings, Conclusion, and Recommendation

Findings 1. Implementation of Ease of Doing Business Act (R.A 11032) at Manila International Container Port (MICP) 1.1.

Accreditation of Importers and Customs Brokers

All applications for accreditation filed shall be submitted to AMO duly concurred by Dep. Comm. IG, for approval or disapproval of the Commissioner. All applications shall be processed within seven (7) working days from receipt of said application pursuant to RA 11032 or Ease of doing Business and Efficient Government Service Delivery Act of 2018. (CMO 28-2018). Under the Client Profile Registration System (CPRS), all Importers and Customs brokers are required to apply for registration under the CPRS. After the application is “STORED” in the system, the applicant shall then print the CPRS Profile which shall form part of the application. The general documentary requirements are: (1) Application Form (Notarized and completely filled out); (2) Bureau of Official Receipt (BCOR) evidencing payment of processing fee Php 1,000); (3) Printed CPRS Record and updated “STORED” CPRS notification of CPRS; (4) BIR Registration (BIR Form 2303); (5) Latest ITR duly received by the BIR; and (6) Original Copy NBI Clearance w/i last 3 months. In the case of importers, the special documentary requirements are the following: (1) Corporate Secretary Certificate / Affidavit (Sole Proprietorship) /

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Partnership Resolution (Partnership) / Board of Directors (BOD) (Coop) designating its authorized signatories in the import entries; (2) Two (2) Valid Government IDs; (3) General Information Sheet / DTI / Articles of Partnership / Cooperative Development Authority (for corporation/ sole / partnerships/ cooperatives); (4) Personal Profile of the applicant and responsible officers (with 2x2 id picture); (5) Company Profile with pictures of office w/ proper and permanent signage; (6) Address of warehouse owned or leased by the importer where the imported goods are intended to be stored; (7) Proof of lawful occupancy of office address and warehouse; (8) List of importables; (9) Indorsement from the collector, if applicable; (10) Valid Mayor’s Permit. In the case of Customs Brokers, the special documentary requirements are the following: (1) Valid PRC ID; (2) List of clients with complete address and contact details; (3) List of representatives with personal details, photos and specimen signature; (4) Certificate of Good Standing issued by a PRC Accredited National Organization of Customs Brokers (CCBI); 1.2.

Goods for consumption entries

With the implementation of the E2M Customs System, relative to R.A 11032, faster transactions regarding the importation of goods for consumption were implemented. In relation to this, the 1 – Assessment System were implemented by the Bureau of Customs to establish zero contact policy and prevent red tapes. The 1 – Assessment System shall be applied only to the importation of goods for consumption entries. The 1 – Assessment system’s objectives are to: (1) prevent corruption by institutionalizing the “Zero Contact Policy” (Sec. 7, RA

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11032) and suppress the “suki system” in the cargo clearance process through the random assignment of examiners and appraisers to a given goods declaration; (2) To enable brokers and importers to obtain real time information on the status of their goods declaration lodged with the Bureau of Customs; and (3) To define the liability and strengthen the accountability of licensed customs brokers and customs personnel involved in the cargo clearance process. The procedure for consumption entries are as follows: At the Entry Processing Unit (EPU), (1) Customs Personnel logs-in to 1-Assessment with username and password; (2) Checks completeness of documents submitted by broker; And (3) Encodes Import Entry Number and assigned color. Then at the Formal Entry Division, the Examiner and appraiser logs in to the system daily with cut-off until 9am to determine entry assigned to them and performs work and update status of entry through system. While the Customs Broker checks updates and status of entries at the display monitors and kiosks deployed at the port premises. In case of additional documents are required, Customs Broker must submit to help desk who will forward the same to the concerned examiner/appraiser. 2. Efficiency and effectiveness of the implementation of RA 11032 at MICP in terms of: 2.1.

Accreditation of Importers and Customs Brokers

Based on the given data from the survey conducted, majority of the stakeholders answered that the implementation of RA 11032 at MICP for the accreditation of customs brokers and importers. However, most of the stakeholders answered that there was inefficiency and ineffectiveness when it

57

comes to the technical aspects upon registering to the E2M Customs System due to internet, computer and technical problems. 2.2.

Customs Procedures for goods declaration through consumption

entry. The stakeholders answered that there was ineffectiveness and inefficiency with regards to the procedures of the BOC in the implementation of RA 11032, relative to 1 – Assessment System and RA 10863. However, majority of the stakeholders rated that there is faster transaction, efficient and effective implementation to the E2M Payment System, in coordination with the Authorized Agent Banks (AAB) coursed through the Philippine Clearing House Center (PCHC)

Conclusion 1. Accreditation of Customs Brokers and Importers: The implementation of RA 10863, relative to the use of E2M Customs system is in line with the Internationally based standards of the revised Kyoto Convention. The use of technology for queue less, cashless and paperless environment is implemented throughout the Philippine Customs System. However, there are glitches, technical problems and down systems that happens reason why the stakeholders rated the implementation as ineffective and inefficient. 2. Goods for consumption entries: The implementation of 1 – Assessment System, relative to RA 11032 which prevents red tapes and smuggling through the “Zero Contact Policy” is not effective and efficient, based on the survey conducted with the stakeholders. The stakeholders claimed that, the “Zero

58

Contact Policy” is not fully implemented entirely within the Philippine Customs System since sometimes there are internal problems with the E2M Customs System, technical matters are a huge problem reason why most stakeholders cannot track their shipments.

Recommendations: 1. The researchers suggest that the Bureau of Customs should conduct researches and study with regards to the Intelligence Technology and invite more Value Added Service Providers (VASPs) that will make another website program in order to handle a huge amount of shipments and data for the accreditation of the importers and customs brokers. The Quality Assurance Team (QAT) should conduct efficiency and effectiveness checks every month in order to track the cause of internal technical problems. 2. The researchers suggest that the Bureau of Customs should strengthen the implementation of 1 Assessment System or Zero Contact Policy, through the use of technology, in coordination with the Quality Assurance Team (QAT) of the Management Information System and Technology Group (MISTG). In this way, the importers may track their records without having personal contact with the assigned customs examiner.

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