THE Department of Finance (DOF) has ordered the Bureau of Customs (BOC) to sniff out sugar smuggling following reports that certain traders are exceeding their allowed import volume under the export replenishment program of the Sugar Regulatory Administration (SRA).
Customs Commissioner Rey Leonardo B. Guerrero was informed the DOF has received reports from officials of the Bureau of Internal Revenue (BIR) in Cebu that a company authorized to export sugar has been “shrewdly” replenishing the shipments of sugar it sent overseas by importing more than the volume it had exported.
“Please keep an eye on those gaps,” Finance Secretary Carlos G. Dominguez III told Guerrero during a recent DOF Executive Committee meeting.
Dominguez, who was a former agriculture secretary under the administration of former President Corazon Aquino, said during the meeting that the sugar price domestically is much higher than the world market price.
“So there is going to be an incentive for people to smuggle in sugar,” he said.
For his part, BIR Deputy Commissioner Arnel SD Guballa said during the meeting that he has long been coordinating with the SRA to ensure that traders secure prior clearance from the Bureau to be able to import sugar, in compliance with Dominguez’s earlier directive.
The program
UNDER the export replenishment program of the SRA, exporters of “A” sugar/quedans, which is for sale to the United States at a preferential rate, may import the commodity in raw or refined form to replace the volume they sold overseas. This replenishment scheme ensures that the supply of sugar remains stable in the domestic market.
The importation is allowed provided that the volume of sugar that an exporter may import shall not exceed the volume of “A” sugar/quedans it exported. The SRA classifies sugar into “A” for sugar for export to the US, “B” for domestic consumption, “C” for reserves, “D” for export to countries other than the US and “E” for food local processors.
The Philippines is one of the select countries given an annual allocation of sugar exports to the US market.
Customs Assistant Commissioner and spokesman Vincent Philip C. Maronilla told the BusinessMirror that Guerrero has already instructed the bureau’s Intelligence Group to investigate.
“As soon as the directive was given, a corresponding instruction to investigate was given by the Commissioner,” Maronilla said in a message.
While he said they cannot disclose anything yet regarding the investigation, Maronilla said these traders “maybe held liable for fraudulent practices and/or illegal importation” if found in violation of existing laws.
Sought for comment by BusinessMirror, Guballa also refused to identify the company that has been reported to have been engaged in this practice, citing the data privacy act.
However, he said they are currently looking into the impact of this practice to the government’s revenue collections.
Meanwhile, the Philippine Sugar Millers Association (PSMA) welcomed Dominguez’s statement, noting that the latter’s directive would ensure that sugar imports will be consistent with the government’s rules on the ongoing replenishment program.
“The directive will ensure that the imports that come in as replenishment will be consistent with the program of SRA under Sugar Order #3 series of 2020-21, that exporters of the A sugar/quedans are allowed to bring in the sugar and corresponding to the volume that they exported to the US quota,” PSMA Executive Director Jesus L. Barrera told the BusinessMirror via SMS.
The sugar replenishment program officially started last July 1 and shipments under the program must arrive no later than October 31. Imports under the replenishment program would be initially classified as “C” or reserve until the importer requests for reclassification of the concerned shipments.
Reclassification of “C” sugar requires a formal written request to the SRA board, which has the authority to approve such matter based on existing rules and regulations. Sources told the BusinessMirror that nobody has applied to date for reclassification of “C” sugar to “B” sugar.