By Kevin Stoda, in the Philippines

I was perusing national newspapers this past weekand came across a section called the “Business Circuit” in the THE MALAYA BUSINESS INSIGHT.  In four short vignettes or stories the author, unnamed (but using the email address of ) detailed the status of political-economic development in the Philippines, nearly 25 years after the last dictator of the Philippines, Ferdinand Marcos had been kicked out of office.

The political context of the set of four vignettes—i.e. for modern Philippines neophytes–is that the newly-elected president of the country, “Noynoy” Aquino is the son of the woman who helped oust Ferdinand Marcos and his cronies from office in 1986, the late Corazon Aquino.  (Noynoy’s father had been assassinated by Marcos less than three years earlier.) Noynoy has promised not to raise taxes this year. Instead, Aquino promises to pay down Philippine’s recent debt through hitting down hard on corruption and tax-dodgers.

Under the last two presidents in the Philippines, the murder rate on reporters and journalists has gone up drastically and a great majority of the population of the country has grown to have next-to-know faith in political promises, i.e. as whistle-blowers have seldom been supported in government.

Will Noynoy be any different?


The first mini-article in THE MALAYA BUSINESS INSIGHT begins, “ IT is common knowledge in customs that a powerful man demands—and gets-P25,000 per container coming into the piers.  At the rate of 500 containers a day, that is easily P12.5 million per day.” (P= Filipino Pesos, which are trading at about 46.5 to the dollar)

Naturally, I assume that many know the names of the largest smugglers working for the Filipino customs union.  However, with the many disappearances and murders of journalist, the author hesitates to name names.

The author continues, “Another P10,000 per container goes to somebody whose job is to stamp out smuggling.  That’s P5million a day. No Sweat.”

“What do the importers get in return? A fatter sum, of course!  Their imports, which are misdeclared as raw materials but are actually consumption goods, are documented as being kept in customs bonded warehouses,” the author continued.

What is the truth? According to Mr. , “[G]oods are delivered to the compounds of the importers straight from the ship. No taxes are paid.”

The author explains, “There is supposed to be a bond that secures the raw materials in the event they are withdrawn without authority.”

“But the bonds are spurious,” the writer concludes, “It is beyond my little knowledge of arithmetic to make a good guess of how much money is lost to the government.  But they ran into the billions.  Yet, sometimes customs announces it exceeds the collection target.  Maybe the target is too small.”


Several important details were left out of this article. First, the centralized government of the Philippines does make it hard on importers working and employing folks on a majority of the 7000 Philippine islands.  The government creates this hardship by demanding that most every import comes through Manila ports.  Therefore, the incentive to steer around legalities is high on almost every other island. (By the way, the Philippines, with more islands than neighboring Indonesia, should be a federal state and open up its direct trade to all regions.)

Second, in the same newspaper, there was an article entitled, “Gov’t to auction rights to import 150,000 tons sugar.”

The increase in the regulated import of a basic good, like sugar, would appear to be a likely scam, similar to the one noted above—as the Philippines has not yet even had its sugar harvest, which should occur no later than September or October.  The predicted need for sugar is based on the El Nino effect this time.  Yet shipments from Brazil or elsewhere will take at the very least 45 days—if not much longer.

What will be the next excuse for creating loopholes for import expansions?


Another vignette under the “Business Circuit” section in the newspaper THE MALAYA BUSINESS INSIGHT last week was on the failure of the nations Insurance Commission to even try and have warehouses cover their bonds.

For example, the author notes, “A CUSTOMS broker told me that an estimated P27 billion in bonds covering customs bonded warehouses remains unliquidated.”  The writer complains, “The Insurance Commission does not seem to care. Or it knows what is going on but does not really care for reasons nobody except them really know.”

This is more than startling as “[t]e first job of the Insurance Commission is to check the capability of the insurance firms or bonding companies to issue bonds.”

NOTE: It appears that the same government types running the Filipino Insurance Commission today are the same sort of ones in America who brought the whole world the largest economic collapse in 70 years (in 2008).-KAS

The vignette concluded, “The big fat [insurance] racket has been going on for years but nobody, not the Presidential anti-Smuggling Group, least of all customs officials, are doing anything about it.”


Mr. wrote in the third vignette: “DAYS before the 2004 national elections, 3,000 import entries were filed by importers with the customs bureaus in just one day.  Some smugglers struck a deal with powerful people to import big volumes of consumption goods.”

As usual, “[v]ery few people know what goods came in.  But on record, they were kept in the bonded warehouses as raw materials.” (“Like in the rest of the cases, the consumption goods went straight to the warehouses of the owners from the ship.”)

Mr. then connected the dots for us readers. First, “Hundreds of millions of pesos allegedly went into the pockets of powerful people.  These people needed big money for the campaign.”  Next, “Gloria Arroyo won by cheating as she tacitly admitted.  There was no more need for campaign funds.”

This open-door on smuggling back in 2004 kicked off further expansions and greed for smuggling over the past 6 years.  (Ex-President Gloria Arroyo should be in jail by now, so many people are willing to bring out evidence—but she had herself elected to congress so as to obtain immunity for her and her cronies.)

The author of this piece demanded, “ President P-Noy must make good his promise to stamp out corruption.  There are witnesses who are willing to testify to prove the fraud.” The author believes more money is lost to smuggling than to tax-evasion annually.

“More importantly, smuggling continues to kill local manufacturing.  Nearly all of the smuggled consumption goods can be produced here.”

NOTE:  One problem—not mentioned for having a low level of production in the Philippines over recent years is due to the corruption level by officials in many other departments (besides the insurance and customs officials,) i.e. across the over-centralized land.   Many more foreigners living in this country would invest in the Philippines if the government cracked down permanently on the graft (and ended the over-centralization of goods, profits and money—i.e. almost everything  ends up in Manila  instead of in the poorest regions that offer  the greatest human- and natural resources.

When I asked a local person on the island of Palawan, where I live,  why the relatively powerful leaders of the island did not demand and receive more profit from resources on the island from the Philippine government in far-off Manila, Luzon, I was told that the assassination of those leaders would be the result if they pressed for their people’s rights to access for resource profits. (Palawan, for example is the only major oil producing island.)


Above, I noted that shipments of sugar were asked for and now expected—probably from Brazil—due to the anticipate overall El Nino damages to sugar crops earlier this year.  Now, it has been discovered that rice and sugar have already suddenly arrived  in the Philippines from Malaysia and elsewhere.   No taxes were paid on these new arrivals and they are supposedly located at so-called bonded warehouses.

Worse still, Mr. concludes his 4 mini-articles in the “Business Circuit” section of last Wednesday’s  MALAYA business paper by writing, “Big volumes of rice also arrived from Vietnam and Thailand. . . . They [the importers] used the same modus operandi—making it appear that the goods are kept in the bonded warehouse  because they are declared as raw materials.”


The summary of the articles is concerned with the current state of affairs in the the country of the Philippines.  The author notes, “the country is poor by choice. Its leaders choose to be corrupt. They sink the economy but they make themselves rich.”

The punch line is “Is President P-Noy a ray of hope? Let’s give him time. We hope he is.”

I think that the clock is already ticking for the new president.  Arroyo needs to be charged with crimes, for example, if the evidence is already there.  Alas, some people will always fear assassination, right Mr. P-Noy?.

About eslkevin

I am a peace educator who has taken time to teach and work in countries such as the USA, Germany, Japan, Nicaragua, Mexico, the UAE, Kuwait, Oman over the past 4 decades.
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