Business World, 5 April 2016


The level of smuggling in the Philippines has reached horrendous heights. Large-scale smuggling of agricultural products retards farm output production, limits manufacturing, and increases income inequality.

“Smuggling in the Philippines is at its worst under President Aquino’s administration, with the smuggled value averaging $19.6 billion annually, an explosion from the comparable figures of $3.1 billion and $3.8 billion yearly during the terms of Presidents Joseph Estrada and Gloria Macapagal-Arroyo, respectively,” says Rigoberto Tiglao, a noted opinion writer, citing data from the International Monetary Fund.

“After five years and four Customs’ chiefs, there is no doubt that this administration has failed the agriculture sector in this regard,” says Samahang Industriya ng Agrikultura (SINAG), an agricultural lobby group.

“If there is one legacy the agriculture sector will remember the Aquino administration for, it is the smuggling that has gone on unabated over its six-year tenure,” SINAG said in a recent Senate hearing.

Smuggling or illicit trade of agricultural products is a major constraint to economic growth and, consequently, on job creation in rural areas, where about half of the poor reside. The availability of cheap, imported goods is a major disincentive for agriculture and food processing activities.

It results in huge revenue losses to the government since pork and chicken have import duties of 30% to 40%, and palm oil has value added tax of 12%. The revenue loss deprives the government of resources that will finance public services such as public infrastructure, education, health and other essential public goods.

Rampant smuggling of agricultural products (rice, sugar, onion, garlic, meat, etc.) is a major determinant of the Aquino III administration’s dismal performance in agriculture. Unsurprisingly, during the past five years, agriculture grew by an average rate of 1.6%. Last year, it even stagnated.

Finally, smuggling has serious redistributive effect, too. The uncontrolled smuggling of agriculture products reduces the potential incomes of farmers and fishermen, most of whom are brutally poor. Since locally produced agricultural goods cannot compete with cheap imported food products, there is little incentive for farmers to produce.


In its waning days, the present Congress approved a bill declaring large-scale agriculture smuggling as economic sabotage. The House and the Senate passed House Bill No. 6380 (An Act Declaring Agricultural Smuggling as Economic Sabotage, Prescribing Penalties Therefor, and for Other Purposes), sponsored by Representative Conrado M. Estrella III, et. al. and Senate Bill 2023, with the same title, and sponsored by Senator Cynthia Villar, et. al., respectively.

The bill provides that the smuggling of sugar, corn, pork, poultry, garlic, onion, carrots, fish, and cruciferous vegetables amounting to a minimum of P1 million will be considered as economic sabotage. Smugglers of rice, amounting to P10 million, also face stiff penalties under the bill.

Under the bill, illegal importers of agricultural products will face an imprisonment of not less than 17 years but not more than 20 years. It will also penalize violators of the law with a fine of twice the fair market value of the smuggled products and its corresponding amount of taxes, duties and other charges.

The bill defines agricultural economic saboteurs to include traders who prey on cooperatives by using their permits for smuggling purposes, officers of dummy corporations, non-government organizations, or associations who knowingly sell, lend, lease, assign, and allow the unauthorized use of their import permits.

It also calls for the confiscation of smuggled products, cancellation and revocation of business license, import permits, and other pertinent documents for importation.

It also permanently disqualifies economic saboteurs from importing agricultural products.

Public officials or employees acting in connivance with private individuals or entities will be dismissed from public office and banned from voting in any elections.

The bill is strongly supported by agriculture stakeholders: the irrigators (Pangasinan Federation of Irrigator’s Association, Provincial Confederation of Irrigators Association of La Union, UPRIIS Confederation of Farmers-Irrigators’ Associations); the academe (Pangasinan State University, Nueva Vizcaya State University, Central Luzon State University); and farmers group (National Federation of Hog Farmers, Philippine Confederation of Grains Associations).


The approval of this large-scale-agriculture-smuggling-as-economic-sabotage bill gave farmers, hogs and poultry raisers, and fishermen a glimmer of hope.

But what happened to the bill? That’s the big mystery. Was it approved, allowed to lapse into law, or vetoed by President Aquino?

Mr. Aquino’s action on the bill will reveal his true color? Is he a smuggler-coddler or smuggler-buster?

If Mr. Aquino vetoes the bill, it would reveal that he does not really care for the farmers and fishermen. In addition, it would show that he does not mind going down in Philippine history as the President who condoned big-time smuggling of agricultural products.

If Mr. Aquino approves the bill into law, or at least passively let the bill to lapse into law, it would show that he’s briefed about the negative effects of rampant smuggling on the economy, on local producers and investors, and on the rural poor. By approving the bill he would demonstrate that he has the political will to run after smugglers in his final days in office.

What is it going to be, Mr. President?