Philippines

The period 1992-98 was one of golden opportunity for reform and modernization in the Philippine customs service. The country had just conducted a national election that had brought into power a government whose priorities included matters directly relating to the efficiency of the customs service. In his first state of the nation address, President Fidel V. Ramos noted his intent to strengthen tax and customs collections.

Background

Responding to Ramos's policy direction and to the president's earlier instructions to the Bureau of Customs (BOC) commissioner to "clean up customs," the BOC prepared the Blueprint for Customs Development Towards the Year 2000. The previous administration under President Corazon Aquino (1986-92) must also be given credit for sowing many of the seeds of change. Loan negotiations with the World Bank; preparatory work with the International Monetary Fund (IMF) on the Philippine Tax Computerization Project (PTCP); and two important and reform-minded laws, the Republic Act Number 7650 and the Republic Act Number 7651, were initiated under Aquino's administration. Even the main underlying philosophy that guided the massive reengineering of the customs environment and the methods of work were based on the philosophy of the Public Ethics and Accountability Program, which was crafted and implemented early in 1987.

However, other factors also created an opportunity for reform. An experienced staff, whose uninterrupted tenure enabled it to introduce projects with long gestation periods, led the reform. The staff had the full trust and confidence of the president and his cabinet and was also supported by the business community. With the economy performing well from 1992 until mid-1997, many of the development funds required to provide impetus to the reform became readily available. In addition, the private sector contributed as part of a genuine collaborative effort with the government. This collaboration was a major factor behind the 1992-98 Customs Reform and Modernization Program.

The program was basically successful, and it was recognized in the national business community, the country, and internationally for its significant outcomes. However, the reform was not fully sustained, as progress was reversed under the administration of President Joseph Ejercito Estrada (1998-2001).

An investment climate study (Pernia and Gupta forthcoming) points out that customs and trade regulations ranked seventh out of 18 specific constraints evaluated by firms. Exporters and foreign firms ranked customs as the major constraint on business operations. The survey also noted that bribery is typically used to speed up the process of getting government authorization or permits, thus encouraging public officials to slow down the process.

Efforts are under way to revitalize the reforms and recover lost ground. As before, the key is to harness private sector support for the program, obtain full political commitment to the reform, fully implement the measures identified earlier, and work on removing all the constraints that hinder the achievement of those objectives. Issues that should be addressed include adequate personnel compensation, staff retention, and continuity of direction and management even when the political leadership changes.

Focus of the Study

The BOC observed its 100th anni...

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