Not easy to deal with

A British businessman offering advice on government efficiency complained that he has been ignored for three months by a government official who is part of the team implementing the rules on the ease of doing business in the Philippines.

The foreigner said he felt “hopeless” after the government official still had not responded to his request for a meeting which he conveyed several months ago.

The business consultant, who has resided in the country for nine years, said he has tried to offer his services to the government agency to help the Philippines attain substantial progress.

He said he is highly concerned about the lack of effective accountability measures for government officials and their staff, despite the upbeat remarks on the local investment environment by the elusive government official during gatherings with foreign businessmen.

Smugglers’ market

Conditions have intersected to make the smuggling of high-end cars a lucrative trade, a veteran car trader revealed to Scuttlebutt.

Slipping swanky vehicles into the country has been prevalent lately. Glitzy brands such as Porsche, Lamborghini and Bugatti carry hefty price tags and the pertinent taxes can significantly inflate costs.

The Bureau of Customs’ (BoC) February 2025 raids that uncovered P900-million worth of smuggled luxury cars in Taguig City and the earlier seizures of Bugatti Chirons illustrate the scale of the problem.

These incidents, combined with Congress’ inquiries into “revenue leaks” from smuggling, suggest that the issue has escalated, prompting heightened government scrutiny. However, the persistence of this trade indicates that economic incentives and systemic vulnerabilities outweigh deterrents.

A dealer said that by bypassing these fees, smugglers can sell the cars at a huge markup in the black market, yielding large profits. The persistent raids by the BoC underscore the financial incentive driving this racket.

The Philippines has a growing affluent population with a taste for luxury goods, including high-end cars. This demand creates a lucrative market for smuggled vehicles, which are often priced lower than those sold by legitimate dealerships, due to the evasion of taxes and lower import costs, though a car dealer said some of the more expensive brands in legit stores should be checked.

Wealthy enthusiasts and collectors also may knowingly or unknowingly be fueling this trade by purchasing vehicles of questionable origin, as seen in cases where smuggled cars were found in private warehouses and showrooms.

Loopholes in customs processes and corruption within the system facilitate the smuggling. Historically, there have been instances where smuggled cars were re-acquired by the original importers through questionable auction practices, suggesting insider collusion.

Although the government has shifted to destroying seized vehicles under Presidential Directive 2017-447 to deter such practices, the continued influx of smuggled cars indicates enforcement challenges persist.

Smugglers often exploit areas like free ports and special economic zones where regulations may be less stringent. These zones have been used to bring in used and luxury vehicles under false declarations — such as labeling cars as “furniture” or “car accessories” — to evade scrutiny. The discrepancy between registered vehicles and official sales data, as noted in past studies, highlights how these zones can serve as entry points.

Smugglers often exploit areas like free ports and special economic zones where regulations may be less stringent.

The Philippines’ proximity to countries like Japan, a major source of smuggled vehicles, simplifies the logistics of smuggling. International shipping containers provide a convenient means to conceal luxury cars, often misdeclared to avoid detection. The sophistication of smuggling networks, capable of moving high-value goods across borders, has grown, adapting to enforcement measures and capitalizing on global trade routes.

While laws like Executive Order 156 ban the importation of used vehicles (with exceptions for diplomats and returning residents), enforcement inconsistencies and legal challenges have weakened their impact. The profitability of smuggling, coupled with gaps in policy implementation, has emboldened syndicates to continue their operations despite the risks.