Temporary storage proposal hit

Key port stakeholders, including business groups and foreign investors, have raised the alarm on the plan of the Bureau of Customs to establish temporary storages for “overstaying or abandoned” goods, a move which they said reeks of the agency’s inefficiency and propensity for corruption which will lead to higher prices of consumer goods in the long run.

The draft Customs Administrative Order, which was discussed during a forum organized by the BoC on June 8, will implement Section 307 of the Customs Modernization and Tariff Act enacted two years ago.

Among those who attended the forum were representatives from Cargohaus Inc., DHL Express, ICTSI, Paircargo, UPS, Authority of the Freeport Area of Bataan, Association of Petrochemical Manufacturers of the Philippines, Asian Terminals Inc., Association of International Shipping Lines, PricewaterhouseCoopers Philippines, and Philippine Skylanders International Inc.

But stakeholders questioned the provisions of the proposed  CAO, in particular the designation of Customs Facilities and Warehouses which shall bear the brunt of establishing and maintaining the temporary storage facilities.

“This order shows how inefficient Customs is. The provisions contained in the draft CAO are asking for too much and what should be the BoC’s responsibility is unreasonably being transferred to the business sector,” said one of the representatives who attended the BoC forum.

“We are all alarmed at the misguided steps being taken in the guise of modernization,” the source added.

In particular, he said the order erodes the foundation of the Philippine Ports Authority, which has supervision over  port terminals that may be designated as CFWs.

“The PPA needs to weigh in on this, too. The PPA still exists and the designated CFWs are PPA premises. No law has been enacted to change that. Cargo handlers also pay a fixed fee for each square meter of the port terminal, and that does not cover the proposed ‘temporary storage facility.’ They have to change all existing contracts, or abolish PPA instead,” he said.

Section 4.2 of the proposed CAO states that all separate temporary storage facilities shall be part of the premises of the BoC and shall be under its control and supervision.

The draft CAO also requires CFW operators to provide all necessary cargo moving trucks and equipment as well as to physically transfer and secure the goods.

BoC shall dictate the fees and rates to be charged in approved temporary storage facilities.

“But the BoC must remember there is a port or warehouse tariff and in some cases government share on the use of terminal facilities and equipment. If the BoC imposes its own fees and charges, importers will be charged double, which will be passed on to consumers. The order does not only discourage foreign investors, it also threatens to jack up prices of commodities,” he said.

“Cargo handling services are not free, and all relevant fees should be shouldered by the BoC. Fees and other charges are all governed by existing PPA rules.” 

Under the order, the goods stored temporarily must be placed under a customs procedure, auctioned, condemned or re-exported within 90 days after due notice from the issuance of an order of abandonment.

“This whole idea smacks of corruption – stay in the Temporary Storage Area until we’re able to make ‘areglo.’ But what happens after 90 days? Every day there is a number of containers whose status change from ‘live’ to ‘abandoned.’ If the temporary storage facility is full, what happens to those containers? The number of overstaying containers fluctuates so a finite number of slots for temporary storage does not make sense,” the stakeholder said.

In case of loss, damage and deterioration of the goods stored due to the negligence of willful misconduct of the cargo handlers, the draft CAO also holds these operators liable for the payment  of duties and taxes.

Another source privy to the forum, however, insisted that goods in  most container yards and warehouses are insured.

“Therefore any loss will entitle the importer to claim on the insurance. The owner of the goods should then be able to pay the BoC for the duties. Moreover, the facility operator does not have control over the deterioration of certain goods, such as those that are perishable or those that require refrigeration,” he said.

Instead of a temporary storage area within the ports, the source said the BoC should acquire a large plot of land outside Metro Manila where all containers can be transferred upon the issuance of an order of abandonment which is common in other developed countries.

“From a business stand point, the provision for a temporary storage facility really does not make sense. Like transshipment, it is not efficient to allocate an area for overstaying cargo especially those that are for auction or condemnation already. By transferring them outside Metro Manila, they will make it very difficult to get the abandoned containers, and hopefully this will discourage importers from committing the same practice,” he added.

BoC Commissioner Nicanor Faeldon, for his part, defended the draft order, which he said was in line with the Customs modernization program even as he acknowledged that the position of key stakeholders will be taken into consideration.

“We are still in the consultation stage before rolling out the implementing rules and regulations,” Faeldon said.

The BoC has set the  next public consultation on the CFW provision on June 22.