Strategic reforms at the Bureau of Customs (BoC) are aimed at fully digitizing operations before President Ferdinand Marcos Jr. steps down in 2028 — an essential step toward restoring the agency’s integrity and regaining public trust.

Customs Commissioner Ariel Nepomuceno, in an exclusive interview on Daily Tribune’s Straight Talk, said that when he took the BoC’s helm, no budget for digitization had been allotted since the National Expenditure Program for next year was already crafted.

Nepomuceno, who took his oath on 1 July this year, said that digitizing Customs operations nationwide and improving collection efficiency are his primary goals.

“Digitalization is the only solution to pursue good governance. Even if we continue giving sermons about integrity, honesty, and services being done well, we still need a digital infrastructure to compel everyone, whether they like it or not, [to follow] the process,” he said.

“BoC’s problems were created over the years. That’s not the fault of the previous commissioners, and we just inherited that. But all these problems we face in the BoC can be solved by means of the full digitalization of the processes, and that’s one of our priority missions, aside from surpassing our collection targets,” he said.

He said the goal is to minimize human intervention within the BoC, similar to withdrawing money from a bank using automated teller machines.

“By the time that (clients) submit their import documents, assessments, payments, and releases, they should not be talking to BoC personnel, just like in other countries. Technologies are already here; we just have to adapt, acquire, and train our people. A periodic check and balance should also happen to prevent override. Discretion of personnel should also be diminished, as that’s where the temptation comes in,” Nepomuceno explained, adding that artificial intelligence, even blockchain technology, can be applied to the process.

He said that currently, the Philippines’ problems remain a third-world issue, stating that the challenges include the trio of those who pay bribes, the corrupt officials, and the brokers.

“The good news is that I have the full support of President Ferdinand Marcos Jr. as he is very updated on technology. He is excited. That’s a big factor why this would proceed. The private sector should also support this,” he said.

“Those opposed to the project are mostly those who are deep into irregularities. That’s expected,” he added.

PPP approach

The preferred path towards modernization is private-public partnerships (PPP), according to Nepomuceno, which would make the digitalization dream a reality in the next two years.

“The actual cost of the technology, if we quantify it, namely, the technology itself, its application, and rollout, is roughly P5 billion. However, for the PPP, only importers will eventually pay a minimum of P350 per transaction,” according to the initial offer of the PPP proponent.

“We can save the billions lost to revenue leakage in smuggling. Again, it’s for the private sector to shoulder, and not the government,” he said.

Nepomuceno was pertaining to the Customs Processing System, which is being developed to simplify import and export procedures, reduce costs, and limit manual handling.

Nepomuceno earlier said that the push for complete digitalization goes beyond improving revenue collection. The main goal is not only to ensure that the proper revenues are collected, as smuggling goes further.

He said that addressing smuggling will have a domino effect, improve investor confidence, and promote fair competition by preventing smugglers from exploiting gaps in the system.

He noted, “Collections will increase, then these processes will be efficient, but most important will be the macroeconomic impact of being able to control smuggling.”

TOP-CRMS

A similar digitization project was introduced by the Philippine Ports Authority (PPA) to ease the burden on all port stakeholders in 2024. It was, however, shot down by then Transportation Secretary Jaime Bautista, who was also chairman of the PPA Board, which consisted of other agencies.

This was despite a direct order from President Marcos to install automated systems as soon as possible that year. Sadly, most of the digitalization programs were not implemented.

The PPA’s Trusted Operator Program-Container Registry and Monitoring System (TOP-CRMS) was shoved under the rug. It would have automated cargo handling procedures, speeded up turnaround time, and eased traffic congestion at the ports.

The Anti-Red Tape Authority (ARTA), the enforcer of the ease-of-doing-business in the country, placed the final nail in the coffin of the TOP-CRMS when it issued a ruling that provided a cover for the DoTr, whose officials and top PPA executives clashed over its implementation.

PPA Administrative Order 04-2021 provided for the implementation of the digitalization program. Initially, ARTA issued a Good Practice RIS with a 36/40 rating for the TOP-CRMS program.

NPO attempt at digitization failed too

Meanwhile, a source said that even the National Printing Office had initiated digital reforms — the e-receipts.

The measure was introduced to other government agencies for a whole-of-nation approach.

“In our first meeting, we were supported by other agencies. However, in the next meetings, we lost them. Meaning, they were not in favor of digitizing payments because the corruption would be resolved,” the source said.

Improved collections

“My mission is very clear: to enable the BoC to truly collect the target revenues. Without such action, the agency will exacerbate or worsen the deficit, which will compel the country to borrow more. And then presumably, if that happens, the credit rating will go down, creating a domino effect,” Nepomuceno said.

Since taking over in July, Nepomuceno noted significant increases in collections, even surpassing monthly targets.

“We were happy to report that the July collection of the BoC, on record, was the highest in the last two years. We surpassed it by P1.4 billion. We are under pressure to collect every day between four to six billion pesos,” he revealed.

He explained that such numbers were achieved despite the low volume of imports from July to September, thanks to their attention to technical details.

“If what used to be paid before was only, let’s say, P90,000, I made sure it’s no longer like that if it was wrong. There were items that used to cost P90,000, but when we reviewed them, they’re now being paid almost P200,000.”

Nepomuceno said the issue was inherited, “That’s not the fault of the previous commissioner. We all just inherited it.”

Low-lying fruits

For importers, brokers, and consignees, accreditation will now be valid for three years to avoid annual issues and exposure to potential abuse.

For BoC personnel, “it’s definitely forbidden for you to become a broker yourself. I will dismiss people and file cases,” he said.

Nepomuceno said that 100 percent of the agency’s personnel have received certifications, while 138 out of 5,000 confessed to having brokerage connections.

“We have an automated risk management system that allows us to see whether brokerage firms or importers are getting discounts or paying less. We can monitor that. Those who do not declare it are committing fraud,” he said.