214 – 10/01 – Philippine Ports and Smuggling

Ports in the Southern Philippines

The tragic events in the  United States have prompted further concern over the area of Mindanao  in the Southern Philippines. The terrorist group Abu Sayyaf who have bases in  this region are regularly in the news  for  kidnappings and have  known connections with Osama Bin Laden. The instability in the Southern  Philippines is further complicated by the struggle between the two  fundamentalist groups, Moro Islamic Liberation Front and the Moro  National Liberation Front. Members whose vessels are calling at the following ports  Cagayan de Oro, Zamboanga, General Santos and Davao should  advise crew members not to go ashore unless absolutely necessary. If it is essential, then this should be coordinated with the ship’s agent - the Master should  liaise closely with the agent upon arrival for the latest  situation.

There have been reports of  armed attacks on vessels in the vicinity - in response to this, the Philippines  Government has increased the presence of the Philippine Coast Guard who are armed, however their resources are limited.

Technical Smuggling

We have had several cases  this year of vessels being detained by Customs on the grounds of "Technical  Smuggling" – cargo documentation not in order and containing conflicting information. The cargoes which appear to be the ones most closely monitored are Bagged Rice, Bagged Sugar, Timber and Cement. The problem arises when the Manifested quantity of cargo does not match the B/L quantity or destination. This can include other foreign  ports or a change of discharge port within the Philippines. 

Example 1: A vessel arrives at a Philippine Economic Fee Zone port and the charterer changes  the B/L to reflect that only part of the cargo will be discharge in the Philippines and that the remaining balance is for discharge and  transshipment to a foreign port. The vessel, when entering a port in the  Philippines must submit a cargo manifest to Customs, detailing quantities destined for the Philippines and those destined for transshipment. Based upon this manifest,  the appropriate  tax will be calculated. However, the vessel discharges all the cargo and instead of being separated, all cargo goes inland. There are significant cost  differentials in relation to the tax and hence the action of the Bureau of Customs in detaining a vessel which appears to contravene the regulations.

Example2: Another scenario is when the whole cargo is destined for specific ports in the  Philippines. When the inward cargo manifest is submitted, this becomes the basis for the tax due for a specific region of the Philippines. Occasionally, charterers have changed B/L figures because the  cargo has been sold for a better value and wish to sail the vessel to a new port  within the Philippines. The original port receives only part of the intended  cargo the intention being to discharge the balance at a revised port.  Sailing the vessel from the original port without revising the manifest, will lead to the detention of the vessel and severe  penalties.

The above problems have been  compounded by, it is believed, cartels as the mechanics of some of the "Technical  Smuggling" operations requires complex cooperation of personnel ashore - this was  noted with a shipment of luxury cars.

Additionally, the changing of  the discharge port and quantity on many occasions comes under Club Rules where  the member must notify the Club of any such changes, therefore the charterer should not only consider the possible infringement of Customs’ regulations, but also the possibility of  jeopardizing coverage with the club. Owners of vessels chartered to deliver  cargo to the Philippines should be aware of the possible problems if strict  documentation controls are not followed.

Source of information: Pandiman Philippines

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