Enrile vs AmCham on car smuggling

[Motownkid]

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Port in Enrile turf eyed in smuggling
US traders puzzled by volume of luxury cars

MANILA, Philippines—The Cagayan Export Zone (CEZ), a free port that was created at the instance of administration Sen. Juan Ponce Enrile, has replaced Subic Freeport as the place where imported second-hand luxury vehicles enter the country, according to a report of the American Chamber of Commerce (Amcham).

“If the market was only Cagayan Valley residents, why do the sales lots not carry lower-end models?” Amcham asked.

Amcham came up with the observation after its officials, accompanied by representatives of two foreign car assemblers, visited Port Irene on May 12-14. The Amcham contingent was met by James Kochner, Enrile’s son-in-law.

Asked about Enrile’s son-in-law who met with the Amcham contingent, an Enrile aide said that the senator’s family did not have a representative on the Cagayan Export Zone Authority (CEZA) and that he was just concerned about his hometown.

Enrile, who has yet to see a copy of the Amcham report, said that he was not aware that an Amcham contingent went to Port Irene.

The chamber said the current operators in the CEZ appeared to be trying to run under the radar screen by staying small. But the operators and the sales volume are steadily growing and “could someday have more of an impact on the legal auto manufacturing industry,” it said.

In the wake of the concerns raised by Amcham, the chair of the Senate committee looking into smuggling in the country said it would focus on “second wave” free ports, including the CEZ, which is located in Port Irene.

Senate hearings

In the first two hearings on smuggling by the ways and means committee, Enrile trained his guns on the car assembly industry, which he accused of using fiscal perks under the government’s car development program to bring in completely built-up units at giveaway duties.

Enrile showed a video of hundreds of brand-new vehicles of local car assemblers being rolled out at the Manila Port, failing short of directly accusing them of smuggling the vehicles being sold in their showrooms.

“We will set our sights on all free ports in the country to determine whether they are contributing to the estimated P150 billion in annual losses from smuggling,” said Sen. Francis Escudero, chair of the ways and means committee.

Asked if the CEZ in Sta. Ana, Cagayan, was included in the probe, Escudero said: “In fairness to Senator Enrile, he has always been open to an investigation of Port Irene.”

In a report based on its visit, Amcham said the CEZ had already imported 8,000 vehicles in 34 months or an average of 225 a month, most of which were sold in the Philippines.

Pajeros, BMWs

During the first four months of the year alone, 1,773 units, including Mitsubishi Pajeros and BMW Z3s, were shipped into Port Irene, or 61 percent of what was brought there for the whole of 2007.

Amcham said it saw less than 1,000 vehicles in stock during its visit, with no low-end passenger or utility vehicles among the lot.

The chamber reported that only one firm, Apollo International Cagayan Trading Corp., was authorized to import used vehicles. Seven other firms were engaged in auto conversion and resale.

“The precedent of importing used cars for local sales at remote free ports should be of concern to CAMPI (Chamber of Automotive Manufacturers of the Philippines Inc.) and national government leaders,” said the report by the Amcham-Investment Climate Improvement Project (ICIP), which was bankrolled by a US grant aimed at identifying factors that hinder domestic and foreign investments in the country.

Amcham said other free ports may be established in different parts of the Philippines that could also import just 200 a month to help local businesses.

Under different act

The chamber noted that before the Supreme Court ruling on Executive Order No. 156, which slapped a hefty tariff on each unit sold out of Subic, the CEZ sought legal action claiming that the EO did not apply to it because the free ports were operating on different republic acts.

The CEZA said used car importers in Port Irene could sell in the country pending a final court decision.

Car assemblers had successfully lobbied Malacañang to issue EO 156 in 2002. The used-car importers in Subic fought the presidential fiat for several years until the Supreme Court upheld the EO in November 2007.

“The legal action may have been prompted by the realization that the GRP [government] was not enforcing EO 156 at SBMA pending high-level judicial determination and that a similar strategy could be followed at the CEZ Freeport where limited car sales might be possible while the courts determined the application of the law,” said Amcham.

Enrile’s influence

The chamber questioned why the Bureau of Customs did not stop the CEZ car sales while failing to enforce the EO.

“It appears to defer to the influence of Senator Enrile, considered an administration ally, and may view the growing tax collections at CEZ as favorable unlike the gross undervaluation and undercollection that took place at SBMA (Subic Bay Metropolitan Authority). It seems highly unlikely that the Cagayan judge will rule against powerful local interests,” Amcham said.

Amcham said shutting down CEZ’s used-car lots would not affect the viability of the free port because these businesses were employing small numbers which could easily be absorbed by the gambling business in the area catering to foreign high-rollers.

The 13-year-old CEZ was established under Republic Act No. 7922 as the country’s first of “second wave” of free ports after Subic and Clark, originally to attract investments from nearby Taiwan.

Since there were no takers due to Port Irene’s remoteness and poor infrastructure, the CEZ took a different route and second-hand Japanese vehicles started flowing in 2005 at the height of the legal dispute between car assemblers and the Subic Freeport.

“A ‘second wave’ free port lacks any such start-up advantages, which were unique to the former US bases. The CEZ Freeport is the creation of prominent Filipino politician/lawyer/businessman, Sen. Juan Ponce Enrile, a native of Cagayan now in his 80s and a powerful figure in national politics since the mid-’60s, when he allied himself with fellow Ilocano Ferdinand Marcos. There are legislative proposals to create other ‘free ports’ by other politicians in other remote areas,” Amcham said.

The chamber noted that the CEZ created less than 3,500 jobs (75 percent of whom were employed in interactive gambling). It also said that the zone lacked a reliable power supply, an industrial estate for agro-processing or manufacturing, buildings ready for occupancy, and lodging and recreational facilities. The area also has limited air access, according to the chamber.

Correct duties

But CEZ officials argued that their imports met only local demand, that importers pay correct duties and taxes, and that the zone created employment to discourage people from joining the communist New People’s Army.

Customs officials have asserted that correct duties and taxes are paid, citing the surge in import duties from the area to P57 million in January-April this year or 70 percent more than the P81 million collected in 2007, Amcham pointed out.

“A national level BOC official reportedly visits when a shipment arrives to determine vehicular blue-book value. Duties and taxes are paid simultaneously with off-loading and movement to the sales yard area conveniently located on the main road about a kilometer from the pier and two kilometers from the main entrance to the CEZ, which consists of an archway over the road and no active controls—as in Subic—and can hardly be called a gate,” Amcham said.

Unusual focus

Enrile’s unusual focus on local assemblers came shortly after the Amcham came up with a report on the flourishing used-vehicle trade in Port Irene.

Last month, Enrile also lambasted Amcham and other foreign chambers of commerce, calling them “predators or carpetbaggers,” for allegedly interfering in efforts to bring down local power rates.

Enrile’s attack against the chambers of commerce came a day after a joint letter they sent to President Gloria Macapagal-Arroyo on May 27 was widely publicized.

source

[Motownkid]

sus mga amerikano pa jud intawn ang nisita ani.. ang pinoy dili maka limpyo sa kaugalingong tugkaran