Bureau of Customs: A few good men

Natashya Gutierrez
Bureau of Customs: A few good men
Stronger participatory governance in the Bureau of Customs could be the best safeguard for sustaining reforms beyond 2016

The Bureau of Customs (BOC) is the only Philippine government agency that the Social Weather Station (SWS) has continually ranked as either “Very Bad” or “Execrable” (the bottom of the rankings) for the past decade. Its history of numerous corruption cases is compounded by capacity deficits.

Only 8% of about 4,500 containers entering the country each day are X-rayed or examined by the BOC. Of this, only one out of every 10 is “clean,” while the rest either has underpaid their dues or must be seized.

Tasked to detect and intercept smuggling, the BOC’s Intelligence Group is comprised of only about 175 staff, spread throughout the country. At one point, this unit had only 4 vehicles to carry out its extensive task. (Customs insiders share with us that often, they even have to pay for their own gasoline.)

It is likely that the degree of underinvestment over the years is actually part and parcel of why the agency has become a hive for corruption. The logic is simple. Poor public services (such as slow import processing) prompt importers to pay the extra grease money to facilitate their importation. It follows that the corrupt may have very little incentive to try to improve their services.

To break this impasse and turn the agency around, sweeping reforms are being rolled out by Commissioner Sunny Sevilla, who is leading a small group of reformists to dramatically upgrade the capabilities of the agency, along with its accountability mechanisms. These reformists are pursuing an overhaul of the entire system that would see Customs minimize human contact; dramatically scale up and improve computerization, information management, and operations transparency; and increase the standard of service.

Nevertheless, much of this has been done before. In fact, they are merely bringing back many of the reforms introduced by other reformists in the 1990s – reforms that fell on the wayside in much of the 2000s. What is perhaps the most novel reform pursued by Commissioner Sunny – one that is different from anything tried in the past – is the creation of the BOC dashboard on the National Open Data Portal. Dubbed “Customs ng Bayan,” this website makes key information on customs operations open and accessible to the public for the first time in the history of the BOC.

Why is such openness a critical ingredient for customs reform, and why might this reform effort prove different, and perhaps more effective, than past attempts?

By releasing some of the practical data on its operations (and with sufficient anonymity in the dataset in order to protect legitimate businesses) and by engaging the public, the BOC is essentially “crowd-sourcing” additional data gathering and fact checking, as well as analytical inputs and support. It opens the door for civil society, academia, and the private sector to form a “third party monitor” for the Bureau of Customs, thus creating the “demand” for protecting and sustaining the reform effort beyond 2016.

Improving valuation

Beginning in December 2013, the BOC released extensive information on the details of imported goods on a monthly basis. The still-growing dataset includes information on about 90,000 import entries spanning the product type, country of origin, duties and taxes collected, among other key pieces of information.

The data release was accompanied by a call for the public to help with the BOC reforms by analyzing and helping fact-check the dataset. With the challenge of ensuring correct valuation of goods imported into the country (on which duties are then based), the goal is to secure the help of the public in correcting any undervaluation that might be taking place.

For illustrative purposes, the charts below are drawn from the recently released BOC importation dataset and reflect the different valuations per kilogram of several products imported into the Philippines. The height of each bar indicates the number of import instances in a particular cluster of valuations. (Think of each import instance whereby a product enters the country and is associated with a specific valuation, on which customs duties are then based.)

With the spread of the bars indicating variation (i.e. bigger distances signal more differences in the valuations), it can be easily seen that there has been a change in the spread of valuations since the release of the data in December 2013. As expected, outliers at the bottom (those who report valuations below the mean) appear to have begun to cluster toward the mean valuation (presumably in order to head off investigation of why their valuations are low).

For example, for plastic resins such as “polymers of propylene” and “polymers of ethylene,” the frequency of valuations displayed a much lower spread in April 2014 compared to December 2013. Likewise, in the 4 months since the data was released, valuations below the cluster for garlic have all but disappeared.

What does this mean for the BOC?

If this trend continues, then it could lead to higher revenues for the agency. Importers will benefit through a clearer and more predictable (and less discretionary) valuation of the products they bring into the country.

Although not all products have clustered to their respective means as clearly as others, reform managers could direct their attention toward products with higher variation in their valuation. The public and other customs reform stakeholders could also report any discrepancy observed in terms of valuation (as they will be able to tell market prices). In fact, at least one industry group has already engaged the BOC to help it arrive at more precise valuations. More are expected to support the new reforms. The combination of all these activities—including the mere threat of further investigation and exposure—could curb corruption behavior over time. This is the power of a transparent system.

Open data as a force for sustained reforms

In a previous opinion piece, we noted how citizens’ groups and independent anti-corruption commissions are already playing a key role in strengthening institutions for good governance, often in partnership with reform-minded leaders in government. These efforts are often underpinned by greater government openness, both through participatory and consultative decision making processes and greater access to information and data.

Yet, international experience suggests that open data initiatives are necessary but not sufficient in engaging citizens – the latter need to be capacitated in order for them to effectively “demand” good governance. Reform coalitions including academia, civil society and the private sector could play a key role in building this demand over time.

In the final analysis, we don’t need to settle for just “a few good men” running this agency. And yes, the public CAN handle the truth – with better access to data and a deeper understanding of reformists’ challenges, reform stakeholders can also help.

Stronger participatory governance in Customs could be the best safeguard for sustaining reforms beyond 2016. – Rappler.com

Ron Mendoza is Executive Director of the AIM Policy Center; Fr Bert Alejo is the Convenor of the Ehem! anti-corruption initiative; and Jess Lorenzo is a core group member of Kaya Natin. The ones in photo above are Mendoza and Fr Alejo.

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