I.

Introduction

The Philippines is an archipelago comprising of 7,641 islands. The country shares

maritime borders with China, Indonesia, Japan, Malaysia, Taiwan, Vietnam, and the island

nation of Palau. In 2015, the Philippines exported goods valued at US$77.9 billion and

imported products worth US$76.8 billion. The Philippines’ top export destinations are China,

Japan, the United States, and Singapore; and the country’s top import partners are China,

Japan, Korea, the United States, and Thailand. In this article we explain best practices for

importing into and exporting out of the Philippines.

The major producers of rice in the world are China, India, Indonesia, Bangladesh,

Vietnam, Thailand, Myanmar, Philippines, Brazil, Japan, USA, Pakistan, and the Republic of

Korea (in this order). These countries make up about 3.5 percent of the rice imports into the

United States.

Rice is the staple food in the Philippines, more important to the economy and to the

people at a lower income levels, hence an important intervention point for promotion of

agricultural development and alleviation of poverty. Rice is what many farmers grow, but it

is also what nearly all consumers eat.

While the Philippines is known for its agricultural lands, the country continues to import

rice illegally specifically here in Isabela City where some business individuals engage in

illegal importation of rice usually coming from Malaysia. Obviously, this type of practice has

been discouraged and prohibited by law. Certain goods are prohibited (banned) or restricted

(subject to certain conditions) for import and/or export. These are goods of social, health,

environment, and wild life and security concerns.

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 Philippine law restricts the importation of certain goods for reasons of national security,

environmental and public health protection, and order and morality, in addition to complying

with international treaties and obligations. A broad range of commodities require import

clearance/licenses from appropriate government agencies prior to importation into the

Philippines. Discretionary licensing arrangements are in place for rice imports. The

National Food Authority (NFA) is the sole importer of rice and continues to be involved in

the importation of corn. Private grain dealers with import clearance are allowed to import

rice. Importation of certain goods like rice for reasons of unjust or unfair trade among those

business owners who diligently abide thru importation rules and regulations is prohibited and

punishable according to the law.

Problems have emerged, the effects of liberalizing rice imports in Isabela city. Retail

prices only fell by 4% according to data from the Philippine Statistics Authority. Its post-

entry audit can take this illegal trade margins from importers.

Isabela City is a component city by virtue of Republic Act No. 9023 which granted

Cityhood, with said grant having been ratified by Isabela's residents on a plebiscite held April

25, 2001.

The elevation of Isabela to 4th-Class City status gave the local government a much-

needed boost, efficiently delivered under the Biel administration, and revitalized Isabela City,

making it an engine of growth for Basilan province. Under this growth, the surging number

of business men engaged in illegal importation of rice where the market value is lower than

the commercial rice sold in Isabela City Public market. Consequently, consumers most likely

patronized the low price of rice taking into consideration that a lot of people in isabela are in

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the poverty line. The city government is not much stricter in implementing the law under

GATT and the World Trade Organization. The regulation of import competition and unfair

trade. International commercial and sales laws. Imports and customs law. Intellectual

property rights and licensing. Labor and employment discrimination law.

Isabela City's business sector is represented by the Basilan Chamber of Commerce and

Industry, Inc., established in 1975. Nearly 90% of the agriculturally productive land area is

owned by Isabela City residents, usually Christian and mostly Catholic. Almost all trading

activities are handled by the resident Chinese community, who has a significant presence in

the professions as well. Zamboangueños are mostly working either as professionals or as City

Government employees Tausugs/Maranaos are engaged primarily in retail commerce,

vending and fishing Bisayas are into micro-small enterprises and rural farming Yakans are

mostly copra dealers, traders, or Provincial Government employees the Department of Trade

and Industry Isabela City Office is located at the Isabela City Hall Complex, Sunrise

Barangay

Primary economic enterprises: Baluno and Menzi are two barangays that produce

agricultural products, primarily rubber. They have their own rubber processing plants from

the raw rubber sap, and sell these products to merchants for export. Also these rubber

processing cooperatives contribute much to Isabela City's employment rate. Other Major

Economic Activities include coconut/copra production and, to a lesser extent, bamboo

crafts/furniture. Rice, if not regulated by National Food Authority (NFA), which is transacted

outside the governing rules and regulations can be considered illegal.

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 Knowing that Philippines follows strictly laws under import and export rules and

regulations, Isabela City, as part of the Philippine jurisdiction is not excused from the law.

Therefore, the problem in illegal importation of rice not sanctioned in the city government

and not publicly declared can be considered as contraband. It is a surmounting among regular

business owners whose business is gradually dying because of unfair pricing of rice.

II. Origin of the Problem

While there was no official documentation on this, according to some key informants,

for rice, the usual modus operandi is for local ships to dock in remote ports to purchase a few

tons of rice and obtain cargo manifests of much higher volume. However, the bulk of the

cargoes are actually downloaded from bigger feeder vessels, sometimes in the open seas if

the weather permits or in some remote areas where they are less likely to be apprehended by

authorities

At least 200,000 metric tons of rice was illegally imported into the country last year

with about 75 percent of that allegedly consigned to only five importers, Bureau of Customs

(BOC) Commissioner John Sevilla revealed over ABS-CBN.

In a news report filed in Rappler.com, the Bureau of Customs filed before the

Department of Justice on Thursday, February 6 smuggling charges against officials of a

cooperative for the illegal importation of 28,000 sacks of rice worth P34 million. The seven

individuals violated Section 3602 of the Tariff and Customs Code of the Philippines and

Article 171 of the Revised Penal Code according to Bureau of Customs.

For years now, the local government of Isabela city failed to look into rampant rice

smuggling and the existence of cartels that control the procurement, importation and sale of

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the basic staple. No investigation prompted them to prohibit and tolerate this unfair business

practices. Other business retailers in isabela were affected by the low price of rice which

eventually takes time to sell their products because it cannot be lowered in price otherwise

their business will be in ruin.

The major effects of rice smuggling or illegal importation could affect not only deny

the government of revenue but also put poor families on the edge of hunger and poverty,

Imported rice entering the country through legal and illegal means continue to flood the local

market, depriving the government of billions in taxes and killing our rice farmers as well.

In 2013, Customs filed 22 rice-related smuggling cases under its Run after the

Smugglers or RATS program. It seized P1.2 billion worth of illegally imported rice and

cancelled the accreditation of 14 importers. (With a report from Buena Bernal/Rappler.com)

The illegal importation of rice actually originated from through a back door trading

through smuggling of goods one of it is the rice from Sabah, Malaysia, Indonesia and other

neighboring places. It started from illegal entry of some residents in Isabela City who were

going to Malaysia without proper documents. Aboard on a wooden boat called “timpil”.

The paper therefore aimed to examine the prevalence of rice smuggling in Isabela

City and its impact to common business traders. It sought to: determine the nature of

smuggling of rice in isabela City, assess the existing policies and procedures on rice

importation; assess the effectiveness of existing policies, anti-smuggling campaigns, and

interventions in addressing the smuggling of rice products; and draw policy implications to

mitigate the problem of smuggling of rice products in the country.

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 III. Strategies

In the advent of finding solutions on issue of rampant rice smuggling in Isabela City,

province of Basilan, the following alternatives were treated as strategies to solve the

problem.

1. Create Anti-Rice Smuggling Test Force to end illegal importation of rice in Isabela

City.

In a move to strengthen the city government campaign against unscrupulous rice traders,

National Food Authority (NFA) of Isabela City and city government should organize and

create a technical working group (TWG) composed of several NFA personnel in Basilan to

coordinate with city government and law enforcement agencies.

2. Rice Tarrification

It may be time to think of alternative delivery mechanisms. A measure that will allow

unimpeded importation of rice, amending the Agricultural Tariffication Act of 1996 and

replacing the quantitative restriction on rice imports,

A tariff is a tax on imports or exports. Money collected under a tariff is called a duty

or customs duty. Tariffs are used by governments to generate revenue or to protect domestic

industries from competition.

In his directive, Aquino stressed the urgency of the task to heed the President’s call

during his State of the Nation Address (SONA) to resolve the issue of artificial rice shortage

caused by hoarders, cartel, and their protectors.

3. Reinforce the anti-smuggling and importation law

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 Rice importation is basically handled by the NFA. Violators of such law must be

sanctioned under court procedure and taken cared by Department of Justice.

IV. Conclusion

In essence, the government’s failure to implement the necessary controls and

measures to mitigate smuggling is a reason to consider. This failure is apparent since there’s

no move if there was, then ineffective to eradicate rice smuggling in the city. To counteract

the problem an anti-smuggling policy is found significant solution to this end.

Other stimulating interventions like ; 1.Reinforce the anti-smuggling and importation

law, 2 Rice Tarrification were some of the salient features that the city government of isabela

particularly the NFA and law enforcing agency like the PNP play a vital role and could

finally finish the problem.

V. Recommendations

1. To address the above, rationalization of regulatory and revenue functions was

recommended as a legislative action. Separating the regulatory and revenue

generation functions in consonance with the inherent capability of the relevant

institutions will also enhance the oversight process in checking unscrupulous

practices.

2. The suggested strategies above must be religiously implemented and sustained to

reveal its real effectiveness.

3. This would serve as reference to those who are in the academe and in business world

to emulate good practices upon implementation of strategies applied.

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VI. References

1. Prudenciano U. Gordoncillo, Cesar B. Quicoy, Julieta A. Delos Reyes and

Arvin B. Vista: Effectiveness of Anti-Smuggling Policies for Selected

Agricultural Commodities in the Philippines, J. ISSAAS Vol. 19, No. 1:8-23

(2013)

2. Ramon L. Clarete, Introspective: Business World, August 11, 2019

(https://www.bworldonline.com/rice-tariffication-problems-and-

measures-to-deal-with-them/)

3. Philippines - Prohibited & Restricted Imports | export.gov

(https://www.export.gov)

4. 5 firms tagged in illegal rice trade | ABS-CBN News

(News.abs-cbn.com › Nation)

5. www.Rappler.com