Biazon doesn’t understand arithmetic

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I wrote a piece “Smuggling at its worst under Aquino” November 15, 2012 in the Philippine Daily Inquirer when I was still a columnist there.

The analysis used data from the International Monetary Fund’s Direction of Trade Statistics, and compared the value of imports as reported by the Philippines and the value of exports to it as reported by the exporting countries. Discounted for the exports’ cost of freight and insurance, the difference between the two figures roughly indicates the magnitude of smuggling in a particular country. Many economists have used the technique, even as early as 1965 in an analysis of smuggling in our country at that time.
The conclusions from the computations are shocking: Smuggling in the Philippines is at its worst under President Aquino’s first two years in office to June 2012, 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 Presidents Estrada’s and Gloria-Arroyo’s terms, respectively. For the first two years of Aquino’s administration, the estimated smuggling totaled $39.2 billion.

Subsequent disclosures have bolstered the analysis, the most recent one being Petron chairman Ramon Ang’s claims that massive smuggling of gasoline and diesel has been costing the country P30 billion to P40 billion in lost government revenues.

While largely shrugging off my analysis, Customs chief Ruffy Biazon however issued a reply November 19 which is accessible at

I was flabbergasted by his response, and you will be too if you read it. His reply reveals not only how ignorant he is of how our imports are monitored but also his shocking illiteracy in arithmetic.

Biazon wrote there: “What may be reported by China as an export to the Philippines may not be reported by the Philippines as an import if it is meant for the Freeport Zones and Economic Zones which utilize imported products in the production of goods which do not enter the domestic market for local consumption.”

Such a statement from the Customs chief is alarming. He is saying that imports of the country’s export processing zones (e.g., the Clark and Subic Bay free ports) are not included in the country’s import figures, as collated by the National Statistics Office, from which the IMF gets its data for the country’s trade figures.

This is completely false. If this were true, our import figures for instance of $61 billion in 2012 would be reduced to only $47 billion, to exclude our biggest import—inputs for electronic products mainly assembled in and exported by firms in the export processing zones.

We really don’t have to go into such counter-factual arguments. While imports to export processing zones are duty-free, the Customs bureau monitors these, and reports their values to the National Census Office in its Bureau of Customs Form NO. 2342-CEWE (formerly EPZA Import Tally Form No. 8102).

Perhaps Mr. Biazon isn’t even aware that there are Customs offices and directors for each export-processing zone. While these Customs officers main work is to compile the import figures for submission to the NSO since no duties are collected, and to be sure that such duty-free imports are actually used by the firms there, strangely there has always been fierce lobbying by Customs officials to head the units in these zones, especially Subic Bay and Port Irene.

It gets worse. In his reply, our Customs chief doesn’t even seem to know basic arithmetic. He wrote: ”(Mr. Tiglao’s chart 1) shows that $19.6 B was the value of alleged smuggled goods. It means that in his table, the $19.6B covers a period of two years, or $9.8B annually.”

Biazon then claimed, “Immediately, it is noticeable that the opening statement of the article, which claimed that the value of smuggling in Mr. Aquino’s first two years totaled $39.2 billion, is not supported by chart 1 presented in the same article, which shows $19.6 billion for the same period.”

But table was very clearly titled “annual average”, that the $19.6 billion is the annual average value of smuggling. To get the total for Aquino’s first two years in office, you multiply that, and not divide it as Biazon did, by two and you will come up with the $39.2 billion figure. I’m afraid the concept of an arithmetical average seems to be beyond Biazon’s comprehension.

Biazon continued: “Mr. Tiglao is claiming that the annual value of smuggled goods is $39.2 billion. But in (the table) in his opinion piece, it is indicated that the total estimated value of smuggled goods for the first two years of the Aquino administration is $33.2 billion. Once again, this does not match the statement at the beginning of his piece that under “President Aquino’s first two years, the value of smuggling totaled $39.2B.”

Our Customs commissioner just can’t seem to read well. The table was very clearly titled estimates of smuggling from “selected countries”, not from all exporting countries . . . Only eight countries—where our country gets most of our smuggled goods —are included in that table. I calculated these figures to show that as many have suspected, the bulk of smuggled items have been coming from China

In his most recent posting at his blog, Biazon wrote: “Smuggling is a problem that hounds every Customs administration not just in the Philippines but around the world, even the most technologically advanced Customs administrations face the same problem.”

But at least Customs chiefs before him, I’m sure, understood simple arithmetic concepts like “average” and could read tables right.

In all this however, I wonder though why we haven’t heard a pip from the retired marine general and self-styled crusader, Danilo Lim, Biazon’s intelligence chief who is really the main Customs officer in charge of cracking down on smugglers.