he Federation of Philippine Industries (FPI) presented itsrecommendations to the Senate Ways and Means Committee

for possible incorporation on the proposed Anti-Smuggling andFiscal Incentives Bills. Senator Ralph Recto, with Senators JuanPonce Enrile and Juan Flavier as members tackling the twoessential bills, chairs the Senate Committee on Ways and Meansduring a well-attended public hearing held recently at thePhilippine Senate.

FPI Recommendations on the Anti-Smuggling Bill:

FPI, through its President, Mr. Jesus L. Arranza, recommendedthe following for possible incorporation on the proposed Anti-Smuggling Bill:

• All Inward Foreign Manifests (IFMs) should be published inthe Bureau of Customs and/or in the Department of Tradeand Industry’s web sites.

• All Import Declarations should follow the Harmonized Systemof 8-digit heading to prevent misclassification.

• Every classification by Tariff Heading should have value rangeand date, which should be published in the BOC and/or DTIwebsites and periodically updated.

• The Department of Finance (DOF) should do all encoding ofimport documents.

• All import documents should be microfilmed.• Private lawyers should be allowed to prosecute customs and

smuggling related cases under the control and supervisionof the Bureau of Customs.

continue on page 4...

T

President Gloria Macapagal-Arroyowelcomed the assistance of theFederation of Philippine Industries(FPI) to help the Bureau ofCustoms (BOC) prosecutesmugglers. In the round tablediscussion which was shown livein NBN-Channel 4, Mr. Jesus L.Arranza, FPI President, reported toPresident Arroyo that the

continue on page 2...

FPI President Jesus L. Arranza joined the round table discussionswith President Gloria Macapagal-Arroyo on various issues ofnational concerns, which was aired, live via NBN Channel 4.

FPI Legal Team to assist BOCPresident Gloria Macapagal-Arroyo approved in principle theissuance of an Executive Order,requiring all governmentagencies and governmentowned or controlled cor-porations including barangayunits to procure locally-madeproducts, during the roundtablediscussion which was recentlyaired live in NBN-Channel 4. Ifthis E.O. is finally issued, it will

continue on page 2...

Senator Ralph Recto as Chairperson of the Senate Committee onWays and Means with Senator Juan Ponce Enrile, held recently apublic hearing on the proposed Fiscal Incentives Bill and the Anti-Smuggling Bill, which FPI has been vigorously supporting.

FPI on Anti-Smugglingand Fiscal Incentives Bills

FPI to conduct symposium on bestindustry practices on productivity

base pay at the enterprise levelIn the expanding global economy, it is critical to improve the competitivenessof the labour-management partnership to keep business growing.

In this light, the FPI Labour and Productivity Committee will conduct aSymposium on Best Industry Practices on Productivity Base Pay at theEnterprise Level with the theme Achieving Enterprise Growth, Expansionand Profitability Through Labor and Management Social Partnering, whichwill be held on the third week of July 2006.

The objective of this event is for selected companies to present theproductivity based pay and other incentive schemes that have been proveneffective in their enterprise and in their respective industries. This will beorganized to show how that CEOs and HRs with labour involvement workedto develop and apply the said different productivity and incentives schemes.With this in mind, the Federation will invite enterprises which adoptproductivity based pay scheme, which belongs to labour intensive industriesand ideally from the glass, garments and textiles, ceramic tiles, chemicalssteel, food and beverages, home appliances, semiconductors andelectronics and other sectors like furniture making.

The format of the presentations should answer the following questions,namely:

1. What are the parameters measured?2. How are they measured?3. When are they measured?4. Who conducts the measurement?5. What are the quantifiable results and how these translated into

the monetary or peso value? Or their comparative percentageincreases if the information are confidential.

6. How was it sustained?

Invitees in this event are the CEOs, HR practitioners, labour grouprepresentatives, and other stakeholders such as members of academe(faculty and students) and LGU social covenant signatories representativesfrom Davao, Benguet, Negros and Cavite.

To make the discussions more meaningful, the Federation will invite expertsfrom the International Labor Organization (ILO), United NationsDevelopment Programme (UNDP), Freiderich Erbert Stiftung (FES), theDepartment of Labor and Employment-Institute of Labour Studies (DOLE-ILS), and the U.P. School of Labor Relations (UPSOLAIR) as resourcepersons.

FPI calls for immediate passageof Ethanol and CME Bills

The Federation strongly supports the immediate enactmentof the House proposed Cocodiesel Act of 2005 which mandatesCocoMethyl Ester (CME) blending in diesel fuel, and the SenateBiofuel Act of 2005 for the mandatory blending of both BioEthanoland CME in gasoline and diesel, respectively, under one bill. TheHouse of Representatives already passed on its third and finalreading Substitute House Bill 4629 on ethanol blending in gasoline.

Ethanol and CME fuels are indigenous, renewable,biodegradable and it is safe to store. In general, they serve assubstitute, additives and alternative fuel resources. Both fuels areenergy efficient. They can be blended in any ratio up to 100%and increases engine efficiency due to their superior detergency,lubricity and solvency properties. It is reported that a 1-% CMEblend can increase engine mileage by as much as 17% or more.

More significantly, both biofuels are environmental friendly andtherefore non-polluting. They do not contain any toxic substances,hence, their burning do not produce any harmful emissions nor greenhouse gases. Furthermore, they promote fuel security as well asaccelerate countryside growth with the use of sugar cane for bioethanoland coconut for CME production.

FPI President Jesus Arranza said “Never have we seen suchPhilippine made products that offers a win-win solution to our people,to our environment, to our motorists, to our farmers and to our biofuelproducers and distributors”.

Meanwhile, Senate Bill No. 2226 otherwise known as the BiofuelsBill has been endorsed by the Senate Joint Committee headed by theCommittee on Energy chaired by Sen. Miriam Santiago.

The proposed measure was also endorsed by twenty Senators,which if approved, shall implement the mandatory blending of ethanolon gasoline and biodiesel on diesel as enhanced motor fuels. Presently,the bill is subject for floor deliberations.

Federation has formed a legal teamthat wil l assist the BOC in thepreparation and prosecution ofsmugglers and other violators of theTariff and Customs Code of thePhilippines.

Mr. Arranza said that the receptionof President Arroyo on the matterwill further encourage the FPI LegalTeam to push through with itsassistance to BOC and help thelatter prosecute the smugglers untilconviction.

President Arroyo said that whilethere are so many cases filed incourt, the ultimate objective is toobtain final conviction.

Volunteer lawyers from FPI industrymembers as well as concernedlawyers coming from different lawoffices have come forward to helpassist the national economy bypreventing the unlawful deprivationof the Government of much-needed revenues and protect theinterest of the various industries andbusinesses in the Philippines. Thecampaign will help prevent smuggledimported goods from unfairlycompeting with legit imatebusinesses in the Philippines andinsure national security via theprevention of prohibited articles fromentering the country.

Meanwhile, this project is sti l lpending with the BOC as their initialreaction is that only customs lawyercan handle these cases. However,FPI believes otherwise.

continued from page 1...

FPI Legal Team...continued from page 1...

PGMA endorses...

boost the local industry, preserveand increase local employment andsave our country’s dollar reserves.

Mr. Jesus L. Arranza, President ofthe Federation of PhilippineIndustries (FPI), who suggestedthe subject to President Arroyo,said that the issuance of the E.O.would be very timely, because thePhilippines is not yet a signatoryon Government Procurementunder the WTO. President Arroyoinstructed Mr. Arranza toimmediately draft the E.O. so thatit can be reviewed by governmentlawyers to determine if it willviolate any existing internationalagreement.

The support by Pres. Arroyo to therecommendation of FPI is wellappreciated by both local industryand labor.

The E.O. will require governmentagencies to procure locallyproduced products, materials andsupplies, provided, it is adequatelyavailable, the price is competitiveand within standards required bythe users.

Hence, the issuance of this E.O.wil l not motu proprio banimportations.

Turn your job into a P.E.A.R.L.

There are a lot of people who would go through anything to get ajob or a promotion they wanted and once they get it, they blotchup the whole thing. I have a simple reminder to everyone tokeep the luster of their jobs just like a shiny and valuable pearl.For this to happen, just remember that PEARL stands for Purpose,Energy, Attitude, Respect and Learning.

First of all, your job must have a purpose, and more importantly,you must understand what that purpose is. If what you do in theorganization has no importance or relevance, then it is as if youdo not exist and no matter what you do, you will not be able tofind fulfillment in your work. On the other hand, if you appreciatewhat your role is and the value of your work, no matter howsmall it is, then you should do your job well. Remember, a spaceshuttle blew up because of a defective O ring.

Put a lot of energy into your job. For you to do your job effectivelyyour mind and body must be in great shape to take in the physicaland mental demands to ensure that you are able to effectivelyexecute what is expected and when it is required. High rates oftardiness and absenteeism brought about by such excuses asbeing sick, not feeling well, having a headache and so on indicateat best someone who is not up to the task at hand and at worstsomeone that cannot be trusted and relied upon. To ensure youroptimal energy level you must have the proper diet, exercise andprudent work habits. It does not make sense to work until thewee hours of the morning and be absent the following day, unlessof course there was a compelling reason to do so. A balancedlifestyle should also be a guiding principle.

A positive attitude on the job goes a long way in making you anasset to the organization. Having a “can do” attitude makes youa magnet for more challenges and responsibility which willultimately lead to further advancement in your career or successin your business. Having the right attitude makes you moreapproachable and will result in creating a friendlier atmospherearound you and foster more goodwill. This makes working as ateam possible. Having a sincere attitude in helping others alsoallows you to make constructive criticism towards others that willbe well taken and hopefully result in improvement in theorganization.

Respect for others regardless of age, sex or rank is not onlydesirable but is a necessary ingredient in professionalism at work.Respect for the institution and its rules and regulations is essentialfor you to be able to do a good job, otherwise you end up justdeceiving yourself and being unfair to the organization. Whileyou are not expected to agree to everything going around you,the proper channels to voice your opinion must be followed. Tosay one thing and do another is a sign of total disrespect. Avoidcriticizing people behind their backs, the best approach is to beupfront about your feelings or just keep your mouth shut. Give

BUSINESS OPTIONby FPI Director George S. Chua

BUSINESS OPTION

people a chance to explain their actions before jumping toconclusions and taking action without the benefit of hearing bothsides.Your job is a constant learning experience. Adapting to newtechnologies, changes in market conditions, having morecompetition, the introduction of additional rules and regulations,increasing costs and other challenges will always be present.The only way you can keep up is if you are willing to adapt.Those who are willing and eager to keep on learning, trainingand expanding their level of knowledge are the only ones that willdo well in this globalized economy. As you learn, you should alsoimpart and teach what you have learned to others for the benefitof the entire organization, this will also be to your own advantage.After all, if the organization is stronger then you will ultimatelybenefit from working in a progressive company.

To those of who are just starting your own careers, get startedon the right path. If you treat your job like a PEARL then it willtake good care of you too. (Comments may be sent togeorgechuaph@yahoo.com)

FPI recommendations on the FiscalIncentives Bill:

To level the playing field both for thedomestic and global competition, FPIrecommended the following provisions tobe incorporated in the bill:

• Harmonize and coordinate all taxincentives even when these areapplied by several governmentagencies (BOI, PEZA and EPZA/SEZs).

• Provide export tax incentives to allexport-oriented industries and exportprocessing zones to provide a levelplaying field against foreigncompetitors who normally enjoy suchprivileges.

• Special Court should be created/established/designated to trycustoms and smuggling relatedcases.

• Free Ports should not be usedas ports of entry for productsdestined for domestic market.

• All PEZA locators should submitmonthly report to the DOF.

• All PEZA locators should paytaxes upon importation ofproducts and to be immediatelyreimbursed upon the exportationof products.

• All Customs Bonded Warehousesshould only be for manufacturingand for export.

• COA and the Private AuditingFirm should be allowed to conductALL kinds of Audit following theestablished guidelines in theBureau of Customs. In theevent the audit is conducted bya private auditing firm, the lattershall only be paid ifa deficiency isdiscovered and thatthe professional feeshall in no case bemore than 30% ofwhatever deficiencythey may discover,payable upon thefinality of the auditand collection.

• Formulae ofManufacture shouldbe done inconsultation withthe concernedI n d u s t r yAssociations andpreferably on actualproduction.

• There must bestricter rules onaccrediting bondingcompanies, importers andbrokers, preferably done jointlyby BOC and DOF representatives.

• Reward system. The BOC shouldbe allowed to receive grants fromthe private sector.

• Provide incentives in proportionto the extent that each companyexports to encourage industriesexpand gradually into the globalmarkets.

• Simplify incentives calculation e.g.by gross income tax.

• No income tax holiday (ITH)/taxexemptions be granted to newinvestors serving the domesticmarket which is already beingsubstantially served by localindustries.

• Grant ITH to new players in aparticular industry if the existingplayers are enjoying the sameprivilege for the sake ofgenerating a level playing field,provided the incentives are co-terminus with the first incentivegranted.

• Consider Net Operating LossCarry Over (NOLCO) andAccelerated Depreciation as

regular (not special)incentives for businessesthat suffer financialdifficulties in their initialyear/s of commercialoperation.• Eliminate the MinimumCorporate Income Tax(MCIT) to newlyregistered enterprise as itburdens the start-up ofthe business operation.

• FPI, however, havesome reservations onthe granting of ITHlonger than four years forthe following reasons:• The fiscal incentivesgranted last year hasamounted to P229.4billion- which is enough tocover the P199.9 billion

budget deficit. Such deficit haveresulted to the raising of the VATand the corporate income tax to35%, which reduced ourmarkets and costcompetitiveness.

• System of liquidation of importsthrough bonded warehouses shouldpass through the IndustryCommodity Experts (ICE).

• Smuggling should be categorized aseconomic sabotage, and,

• While the law on plunder covers thevalue amounting to P50,000,000.00,for purposes of smuggling the valueshould be cumulative. Hence, if thetotality of value involved will amountto P50,000,000.00, it shall be coveredby the law on plunder.

continued from page 1...

FPI on Anti-Smuggling...

continue on page 5...

FPI Chairman Meneleo J. Carlos, Jr., and President Jesus L. Arranza, 3rdL-R, attended the public hearing on Anti-Smuggling and Fiscal IncentivesBills. In the background, far left, is FPI Executive Vice-President, EdisonCo Seteng.

FPI, Insurance Commission tackleCustoms bonding irregularities

The Federation of Philippine Industries (FPI) met with theCommissioner Evangeline Escobillo of the InsuranceCommission and discussed the various problems besettingthe bonding system in the Bureau of Customs (BOC) and thetremendous amount of liabilities owed by bonding companiesto the government. FPI Chairman Meneleo J. Carlos, Jr., saidthis situation affects industry because of rampant smuggling inthe forms of undervaluation, misdeclaration, misclassificationamong others.

• Client reporting which is necessary to ferretout over-transaction or suspicious transactionsentered into by bonding companies. TheInsurance Commission will ensure that thisobjective is achieved.

• All industry players shall be listed in the website of the Insurance Commission, giving outfull information about them.

• A circular is to be issued out by the InsuranceCommissioner to require insurers to settle alltheir obligations to the BOC.

• A closer coordination is needed between theInsurance Commission and the Bureau ofCustoms and possibly with representations fromFPI.

• Any bonding company, which will issue bondsamounting to over PhP500, 000, or anytransactions entered into and found out to besuspicious should be reported to the Office ofthe Insurance Commissioner.

Other members of the FPI delegations who met withthe Insurance Commissioner were Directors LunaGo and Ernesto Ordoñez, Mr. Mario Jose Sereno,Executive Director of the APMP; Mr. Vicente Castro,Assistant Director of the PSMA; Atty. Rufino M.Margate, Jr., FPI Secretary General and Mr. MauR. Arce, FPI Secretariat.(FPI News-MRA)

The Federation is continuously monitoringdevelopments especially on how the BOChandles the problem on the issuance of suretybonds particularly to raw material importerspassing through bonded warehouses for usein the manufacture of finished goods for re-exportbut later on find their way into the domesticmarket. The enormous amount of unpaidliabilities to the government is an outstandingissue in the BOC as this remained uncheckedand unsettled.

Commissioner Escobillo said that she had heldregular dialogues with Customs to ferret outproblem of this type. In one of her meetings withthe former Customs OIC, Alexander Arevalo,she said that she had an exchange of ideaswith him as to how they can enhance Customs’bonding system particularly, those suretycompanies who were unable to liquidate theirbalances with the government.

In view of all these mounting problems, the FPIand the Insurance Commission agreed to holdregular meetings to continuously monitordevelopments and address all problems relativeto bonding system in the BOC. To address theproblems brought up to her attention by theFPI, Commissioner Escobillo, cited the followingitems that the Insurance Commission willundertake:

• The grant of longer taxexemptions will further delay therecovery of our markets (reducedpurchasing power by VAT) andcost competitiveness (highercorporate income tax), whicheventually make us less attractivefor investments, while favoring afew. This is tantamount to classlegislation where tax benefitsfavor a few but burdened themany. Hence, before moreextensive ITH are granted,government should first removethe added tax burden.

• Before we attract investments,we need first to improve ourinfrastructures, which will bring inmore economic benefits to ourpeople and existing industries.

• Unless we can collect more taxesto develop our infrastructures,educational system and industrycompetitiveness, we progressivelybecome less attractive.

• It should be noted from the foreignchambers, that market and costcompetitiveness are critical factorsfor choosing an investment site.

• Countries like Hongkong andIreland attract investments evenwithout granting tax holidays simplybecause of their low costs includingthe tax levels they impose. Hence,we should set our goals in thisdirection.

continued from page 4...

FPI airs views on Anti- Smuggling...

Those who attended the Senatehearing from the FPI wereChairman Meneleo J. Carlos, Jr.,President Jesus L. Arranza,Executive Vice-President Edison CoSeteng, Secretary General Atty.Rufino M. Margate, Jr. Other FPIindustry members who attendedthe hearing included: Mr. ChrisNelson, Country Manager of PhilipMorris (Philippines) InternationalManufacturing Corporation; Mr.Mario Jose Sereno, ExecutiveDirector of the Association ofPetrochemical Manufacturers of thePhilippines, Mr. Vicente Castro,Asst. Director of the PhilippineSugar Millers Association, amongothers.

FPI Chairman Meneleo J. Carlos, Jr., seated 4th, L-R, isseen in this photo explaining the purpose of FPI’s meetingwith the Insurance Commissioner Evangeline Escobillo,seated in the center. Other FPI members in the photo are,L-R, Mr. Vicente Castro of the Philippine Sugar MillersAssociation; Mr. Luna Go of the Textile ProducersAssociation of the Philippines, Atty. Rufino M. Margate,Jr., FPI Secretary General.

Customs IssuancesCustoms IssuancesCustoms IssuancesCustoms IssuancesCustoms IssuancesCustoms Issuances

CMO 1-2006: This Order suspends thedelegated authority on personnelmovements in the Bureau by theCommissioner by virtue of the powersvested under Section 608 of the TCCP. Theprovisions of Customs Memorandum OrderNo. 25-2001 dated 28 September 2001 andall other rules and regulations that areinconsistent with the said issuance islikewise deemed suspended.

CMO 2-2006: This Order repealsCustoms Memorandum Order No. 23-2004and reverting the operational control andsupervision of the Vehicle ImportationCompliance Monitoring Unit from theIntelligence and Enforcement Group to theOffice of the Commissioner.

CMO 3-2006: This Order refers to theprovisional renewal of lapsed designationsin the Bureau of Customs for all positionsin Acting Capacity.

CMO 4-2006: This Order provides foradditional guidelines in the application ofWharfage and Arrastre Charges forAssessment Purposes.

CMO 5-2006: This Order amends CMONo. 6-2003 dated 2 April 2003 (Certificateof Origin for products covered bySafeguard Duty or Anti-Dumping Dutyregardless of ports of exportation).

CMO 6-2006: This Order prescribes forthe “rules and regulations governing theaccreditation of Customs Brokerstransacting with the Bureau of Customsand for other purposes”.

CMO 7-2006: This Order establishes theCentral Valuation Classification Reviewand Ruling Committee in order to expeditethe resolution of cases in all ports whichremained pending for a considerableperiod of time, to provide a mechanismfor the review of VCRC resolutions whichare adverse to the government, to ensureuniformity and consistency in theapplication of the principles and rules of

the Transaction Value System and theHarmonized System and to facilitate tradethrough prompt settlement of valuation andclassification disputes.

CMO 8-2006: This Order refers to the“Certification and Authentication of Certificateof Origin by the Philippines Commercial Attachéin Country of Export for Products covered bySafeguard or Anti-Dumping Duty”.

CMO 9-2006: This Order mandates that noimported plastic raw material, such as but notlimited to “resins”, shall be processed/releasedwithout securing clearance from the Office ofthe Commissioner, to the attention of the VRIS/OCOM.

CMO 10-2006: This Order provides for“Special rules prescribing the exercise andconduct of examination, searches and seizurespursuant to the provisions of Section 2536 ofthe TCCP, as well as the custody of andresponsibility over the articles or goods seizedas incident thereto”.

CMO 11-2006: This Order provides for“Definitive General Safeguard Duty onimportations of Clear Float Glass from Taiwanand Pakistan”.

CMO 12-2006: This Order provides guidelinesin the “Disposition of seized, confiscated andabandoned motor vehicles that are alreadydeemed properties of the Government”.

CMO 13-2006: Amending CMO 9-2006regarding the securing of clearance from theOffice of the Commissioner prior to the releaseof any shipment of plastic raw materials, thisOrder provides exemptions to all shipments ofplastic raw materials or resins entered underthe Warehousing System to secure clearancefrom the Office of the Commissioner asstipulated under CMO 9-2006. In lieu thereof:(a) the concerned Operating WarehousingDivision or its equivalent unit shall submit tothe VRIS/OCOM through the WDRD a daily listof plastic raw materials imported or resinstogether with copies of the SAD processedunder the warehousing system; (b) the VRIS/

OCOM to evaluate the warehousing entry(SAD) to determine if there is anydiscrepancy; and (c) the Bonds Division tomake the corresponding adjustment on thecovering bonds on warehousing entriesfound with discrepancies.

CMO 14-2006: This Order provides rulesin the payment of duties and taxes toauthorized agent banks in order to ensureproper collection of cash payments andforestall irregularities in the paymentsystem.

CMO 15-2006: This Order requires “themandatory submission of written clearancefrom the resident Collector of Customsassigned at PEZA/FREEPORT Zoneconcerned as Port of Destination fortransshipment cargoes and/or for bondedarticles subject of a constructiveexportations and bond liquidation”.

CMO 16-2006: This Order “protects thesalary of BOC employees as per thePresidential Anti-Graft Commission, inaccordance with the Integrity DevelopmentPlan which requires government agenciesto protect the salaries of employees bystrict implementation of Section 36 of theGeneral Appropriation Act”.

CMO 17-2006: This Order pertains to the“re-implementation of CustomsMemorandum Order No. 25-2001 dated 28September 2001 with certainmodifications aimed at streamliningpersonnel movement” at the BOC.

CMO 18-2006: This Order provides for“Effective MFN rates of crude and refinedpetroleum products based on certifiedtrigger prices by the Department ofEnergy”.

Any FPI member who is interested tosecure a copy of any of the aboveissuances, please call FPI Secretariat, c/oMr. Mau R. Arce at telephone nos. 817-0581 and 844-0324.

PHILIPPINE SUGAR MILLERS ASSOCIATION

Mr. Jesus L. ArranzaPresidentFederation of PhilippineIndustries, Inc.#308 Senator Gil Puyat AvenueMakati City

Dear Jess,

The Philippine Sugar Millers Association (PSMA) values its membership in the Federation of PhilippineIndustries, Inc. (FPI) and would definitely support FPI in all its endeavors to have a stronger voice representingPhilippine Industries. We initially joined it over a decade ago because the other organization was just behaving as apolitical support group. The FPI was willing to voice out the problems of indigenous Filipino industries which did notfavor accelerated import tariff reduction schemes nor overly expensive and unreasonably stringent pollution legislation.To our chagrin, tariff reduction and stringent pollution legislation was welcomed by multinationals at the time as theywere the importers and had the capital to spend in any kind of global compliance standard as it only matched theirown company’s rising costs in their home country.

We have shown our support for FPI and appreciation for being heard by active involvement in Committeesand providing the Association with the valuable time of our officers, notably Mr. V. Francisco Varua and myself,among others.

We have therefore reviewed out commitment and agree to consider a continuation of our Grant for theInternational Trade Committee for 2006 subject to the same conditions. In addition, the PSMA shall make a donationto be a Patron of your new office in recognition of the valuable work FPI has done to benefit our industry.

Lastly, we are agreeable to join your Website Ad and Link invitation and expect that our continued subscriptionto your publications shall be free or deemed paid.

Kindly indicate if you are agreeable with the above arrangements so we may include same in ourbudget and advise our staff accordingly.

Very truly yours,

JOSE MARIA T. ZABALETAExecutive Director

cc: Mr. Francisco Varua, President, PSMA

1402 Security Bank Centre, 6776 Ayala Avenue, Makati City 1226 PhilippinesTel. (632) 891-1202 ● Fax (632) 891-114 ● Email: psma@psma.com.ph ● Website: www.psma.com.ph

Misdeclaredshipment of steelbars discovered

The cooperation between the Bureau of Customsand the Federation of Philippine Industries in thefight to stamp outright and technical smuggling ispaying off. The BoC-FPI teamwork resulted in thediscovery of a shipment of 3,000 metric tons (MT)Steel bars declared as “other bars and rods”.

After an informant tipped off the Philippine Ironand Steel Institute (PISI) about the “hot cargo”FPl alerted the BoC through Jake Paguntalan,Director of the Customs Intelligence andInvestigation Service (CIIS), on the shipment.

BoC records show that of 2,406 bundles of steelbars declared as “other bars and rods” weighing3,009 MT, 1,141 bundles had already been spiritedout of the Customs zone. FPl President JesusArranza said that an investigation disclosed that 34trucks were involved in the hauling of “other barsand rods” which were actually deformed steel bars.Mr. Arranza said the FPl anti-smuggling committeebelieves that technical smuggling throughundervaluation and misclassification is evident.

Declared as “other bars and rods” the shipmentis subject to an import duty of one percent (1%),while the duty on deformed bar is seven percent(7%).

The international price of scrap metal is currentlyplaced at about $280 per MT, and the price ofsteel billets coming from China is $450.

A PISI officer asked, “How can the price of bars beat this ridiculous price of $260 CNF when steel barsare produced from steel billets?” Based on thedeclared value and weight, the consignee paidP5,794,304.

If the price of the bars is the same as that ofbillets at $450 per MT, the total duties and VATpayment due the government should bePI5,197,498.”

The local price of steel bars in northern China,where Tianjin (where the goods originated) islocated, is also in the range of $400 (or FOBequivalent). With inland and ocean freight, theCNF price should not be far from $450 per MT,Arranza Said.

The BoC is investigating the case to identify thepeople responsible for allowing the release ofthe goods.

The private and government sectors have banded together to launchan aggressive education campaign on mandatory product standards.FPI President Jesus L. Arranza announced during the 2nd Joint Meetingheld recently in Makati City in order to tap the vast manpower resourcesof the local government units, educate, and enlist them, to augmentthe meager resources of the Bureau of Product Standards.

The idea of tapping the Municipal and City building permit officialswas conceived by Mr. Jesus L. Arranza and this was presented to

Director Jesus L. Motoomull, who readily agreed that this willenhance the capabilities of government in monitoring substandard,more specifically construction materials, without added cost tothe government for its manpower requirements.

In the event this materializes, the government would now bearmed with countless personnel who would be tasked in monitoringall products covered by the mandatory product standardnationwide.

This move is also in preparation on the issuance of an E.O. requiringall government offices to procure locally-made products, whichPresident Arroyo approved in principle.

The private sector is represented by Mr. Meneleo J. Carlos Jr., andMr. Jesus L. Arranza, Chairman and President of the Federation ofPhilippine Industries (FPI), respectively; together with Mr. EdisonCo Seteng, Ceramic Tile Manufacturers Association (CTMA); Mr.Salvio Perez, Puyat Steel; Mr. Raymundo Joven, Philippine ElectricWiring Manufacturers Association (PEWMA); Wellington Tong,Philippine Steel Rolling Mills Association (PSRMA); and Ms. VictoriaPadilla-Unson, Philippine Product Standards Quality Foundation(PPSQF).

Dir. Jesus L. Motoomull, Bureau of Product Standards (DTI-BPS),Ms. Sonia T. Valdeavilla, Construction Industry Authority of thePhilippines (DTI-CIAP), Col. Carlito Romeo and Engr. Mariano Joseph,Bureau of Fire Protection (DILG-BFP), represented thegovernment.

FPI, PPSQF, DTI-BPS, DTI-CIAP, DILG and BFP to launch nationwide informationcampaign on Mandatory Product Standards

(L-R) DTI Dir. Jesus L. Motoomull; FPI Pres. Jesus L. Arranza; FPI-EVPEdison T. Co Seteng; FPI Chairman Meneleo J. Carlos, Jr.; Atty. Rufino M.Margate, Jr.; FPI Secretary General and Atty. Danton Lucenario, of the PSRMAduring the launching of info-campaign of product standards

Top photo: Custom Commissioner Napoleon L. Moralesis seen conferring with FPI President Jesus L. Arranzaon the seized steel bars. Far right, Atty. Danton Lucenarioand FPI Secretary General, Atty. Rufino M. Margate,Jr.; Photo below is DTI-BPS Director Jesus L. Motoomullwith the seized steel bars from a warehouse in Valenzuela City.