MANILA: Technical smuggling in the cement industry is on the rise and the Cement Manufacturers Association of the Philippines (CeMAP) warned this could easily escalate into something more dangerous if not addressed immediately.
CeMAP president Ernesto Ordoñez estimates about 75 percent of the 161,000 metric tons (MT) of imported cement that entered the country in the first quarter of the year were technically smuggled.
“Some of that were good, but 75 percent cheated on freight,” Ordoñez said in a press briefing yesterday.
“Smuggling in the cement industry has been quiet since a few months ago. Smuggling of cement is very recent. Now, it is only in freight but if not addressed, that may worsen to the point that they would start cheating on the quality of the product,” he added.
Ordoñez said smugglers are taking advantage of the recent spike in the country’s cement imports which was brought about by the increasing construction activities nationwide.
The country’s cement imports last year rose to 314,000 MT from only 4,000 MT the previous year, according to the CeMAP official.
This year, shipments are expected to pick up further to 640,000 MT as first quarter imports already reached 161,000 MT.
Of the first quarter cement imports, CeMAP discovered that nine undervalued freight shipments of cement from Vietnam and China went almost undetected at $10 per MT and as low as $3 per MT, significantly lower than the $19 per MT average freight cost for the two countries.
Ordoñez said these products came in from the ports of Puerto Princesa, Davao, La Union and Iloilo.
Considering a conservative freight rate of $19 per MT, the estimated value added tax left unpaid due to these undervaluation amount to P8 million, Ordoñez said.
“If freight undervaluation goes unidentified and unpunished, this may lead not only to more such cases, but also to more serious violations such as cement misclassification and substandard cement. These pose imminent danger to safety and lives,” Ordoñez said.
The Bureau of Customs (BOC) has already sought the help of CeMAP to help curb technical smuggling of cement imports after several attempts of undervalued cement imports tried to enter the country.
Customs Commissioner Alberto Lina said the agency continues its dialogue with various industries to strengthen its drive against all types of smuggling in hopes of ensuring the public’s safety, collecting the government’s rightful revenue, and promoting a level playing field.
“We will enforce the full force of the law when attempts to harm not only local industries but the national economy are caught in our customs borders,” Lina said.