BOC stakeholders should consider ‘RM-FMV’ concept

FOR SO LONG now, the most contentious issue between the Bureau of Customs and its stakeholders has been the issue of “correct” valuation.

The dispute got worse during the time of Pres. Fidel Ramos when the government acceded to the country joining the World Trade Organization (WTO) in 1994 that also resulted to the scrapping of the “home consumption value” (HCV) system and the adoption of the “Transaction Value” system.

Before 1994, the BOC is using the HCV as the basis for customs valuation and import duty assessment whereby imported goods are levied based on the actual (home consumption) selling price in the domestic market of the country of origin.

On the other hand, the transaction price is the price the importer purportedly paid his supplier abroad as reflected in the commercial invoice.

Such change of course, is to the gross disadvantage of third world countries like the Philippines, in terms of revenue collection because coupled with the import liberalization policy of the first Aquino administration (read: progressive reduction of tariff rates), they resulted in the BOC being unable to meet its yearly collection target.
One of the solutions proposed back then was the hiring of a “pre-shipment inspection” (PSI) company, the SGS with FVR officials, of whom the most notorious, err, most passionate proponent is his customs commissioner, Guillermo Parayno.

Let me just conclude this sad experience of the BOC under the SGS by saying that PSI failed to control both smuggling and undervaluation. For all along, it was just a racket where a lot of congressmen, senators even, gobbled up a lot of money. Added to the largesse of course were those in Malacañang, the BOC and some members of the press.

In short, the one great failing of former district collector and subsequently, deputy commissioner, Emma Rosqueta, was in going after the SGS as all her effort, against official indifference, was in vain.


Now, under the TV era, the problem of undervaluation— one of the most common forms of technical smuggling—got worse.

Simply because of the proliferation of fake commercial invoices and the BOC’s inability to compile a database of “acceptable” transaction values.

Also, even if the invoices are “genuine,” one of the things not reflected there is the “subsidy” given by other governments to promote their own products and which therefore gives a “distorted” presentation of the actual purchase price.

The problem of fake invoices is most pervasive for shipments coming in from China, incidentally our biggest trading partner in terms of the volume of imports arriving at our customs ports.

And of course, there still remains in the ranks of the BOC stakeholders, importers and their confederates in the customs brokers’ sector who are both determined to cheat the government of its rightful taxes by continuously undervaluing their shipments.

In other words, as in all professions and businesses, there are always the crooks among them.


Probably believing that active partnership based on trust and confidence are among the keys needed for the BOC and its stakeholders to have a more beneficial relationship, yours truly was informed that a new “concept,” the ‘Role Model of Importers for Fair Market Value’ (RM-FMV). 

This “idea” yours truly believed, should be seriously considered by all waterfront stakeholders, the consignees and the brokers in particular.

Under this concept, top customs officials in a concerned collection district and the port’s biggest importers would come together to agree to an “interim” fair market valuation of the commodities they usually import.

The agreed values, subject to periodic review, shall then be adopted by the port in assessing the shipments of the participating importers.

And as everybody is in agreement, unnecessary delays in the release of shipment mostly due to the issue of valuation would then be eliminated.

And should this succeed, what other contentious issues between the stakeholders and the BOC could not be discussed and resolved thru dialogues and cooperation, right, dear readers?

Of course, this is a noble, “off-the-book” idea, which may need further study. 

And unless all sides agree to first sit down together to consider it, its full merits and potentials will end up just like the lyrics of Nat King Cole’s famous song, ‘Monaliza’— “They just lie there and they die there…”

Still, nothing would be lost should the RM-FMV concept be given a try.