The World Bank (WB) announced last week its approval of a $300 million loan to the Philippine government intended for the restructuring and improvement of the Bureau of Customs. The announcement came close on the heels of the recent foiled attempt to smuggle P6.4 billion worth the illegal drug known locally as shabu.
Applications for WB financing originate either from the governments of developing countries or from the Bank’s staff on the basis of perceptions of financial need developed in the course of the periodic WB missions to its developing-country members. My surmise is that the just-announced loan for the Bureau of Customs (BOC) was a joint initiative of the Philippine government – more specifically the Department of Finance, which has supervisory authority over the Bureau of Customs – and the Washington-based international financial institution.
The BOC has long been the weak link in the Philippine government’s fiscal chain, whose other links are the Bureau of Internal Revenue, the Bureau of the Treasury and the Insurance Commission. The BOC started off fairly well after Independence, but things appear to have begun to move in a downward direction in the 1960s. By the 1980s the BOC had fallen into a state of disrepute. Every survey of opinion about the departments and agencies has found BOC to be the most corrupt, or one of the most corrupt, instrumentalities of the government.
Over the years there has been so much ranting and raving about the BOC’s shortcomings – perhaps the grossest example of which was the total disappearance from Manila’s container port of 2,000, repeat 2,000, container vans – but there has been no display of serious and sustained interest in making the BOC a corruption-free and efficient government agency.
On the contrary, during the last few decades appointments to the key BOC position of Commissioner have largely been made on the basis of political or personal considerations on the part of the President of the Philippines. The appointment of former Representative Rufino Biazon by former President Aquino and of former soldier Nicanor Faeldon by President Duterte were greeted with skepticism by the business community, which has the greatest stake in an efficient customs service. “What does he know about the practices and culture of the customs services” was the question asked of the Aquino and Duterte appointees and their predecessors by BOC-watchers.
In the face of the recent attempt to smuggle P6.4 billion worth of shabu, the suggestion has been made that BOC be abolished entirely. That is, of course, an asinine idea; one can no more abolish a country’s custom service than one can abolish its entire foreign trade.
Now here comes a $300 million WB loan intended to improve and restructure the BOC.
As a Filipino, I am deeply grateful for the financial assistance that the WB has extended to the Philippines over the decades, and I fervently share the Filipino people’s desire to have a customs service that is corruption-free and efficient. But in the case of the just-approved BOC loan, I find myself questioning, for the first time, the wisdom of a WB loan.
There is, in my view, no need for the WB loan. The weak spots in the BOC structure are by now well-known; many of these were addressed in the Customs and Tariff Modernization Act of 2015. The “tara” system, the misuse of the so-called green lane and other corrupt practices of rogue BOC personnel were well-described in the recent Senate hearings, and rocket science need not be called in to correct these operational and systemic flaws. There is little that the WB experts and consultants can suggest that this country’s customs experts and practitioners don’t already know. Trying to straighten out the BOC is by now a well-traveled road.
Instead of a WB loan, what the Philippine government needs is a display of political will, and that display begins with the appointment, not of a Biazon or a Faeldon, but of an individual who has a track record of honesty, is both competent and street-smart, is no-nonsense when it comes to discipline and is industrious about imbibing the culture and operational practices of BOC personnel. Such an individual can be found.
There are numerous areas of the Philippine economy that urgently need WB assistance. The government and the WB should direct the $300 million to those areas.