Questions on the reliability and accuracy of the published imports and exports data have been raised by some sectors. An improvement in the trade balance has been observed, with electronics industry as the main driver of exports growth, but with no corresponding increase in its imported materials. This was further supported by a comparative study which showed that reported material value of electronic exports exceeded imported raw materials in spite of the fact that electronics are highly import-dependent. These observations led to the conclusion that there was underestimation of imports, specifically consigned electronic imports.
To address the issue, a Task Force (TF) on Import Statistics composed of representatives from the Bangko Sentral ng Pilipinas (BSP), National Economic and Development Authority (NEDA), National Statistical Coordination Board (NSCB), and the National Statistics Office (NSO) was created by the BSP. On the basis of the joint report presented by the Task Force, the NSCB Executive Board in its February 22, 2002 meeting, directed the National Statistics Office (NSO) to revise imports data for the years 1996 1 996 -2001 to account for the underestimation, and to put recent developments in the balance of payments and external accounts to proper perspective
The TF through the BSP and NSO conducted a joint Survey of Imported Raw Materials with the top 15 electronic companies as respondents. Based on the results of the survey, t he TF came up with a proposed methodology for the revision of imports data, which was presented and approved by the NSCB Executive Board. Using this approved methodology and responses of top 10 sample companies in a subsequent survey, the NSO computed and released the revised import data for 2002 together with the import revisions for 2000 and 2001 by month.
The TF on Import Statistics continued to find ways to further improve the valuation methodology and continuously apprised the Board on its activities, particularly, the conduct of orientation among importers and exporters on the proper filling out of import/export declaration forms, and the importance of providing correct information. On March 5, 2004, the TF presented its recommendations to the NSCB Executive Board, one of which is the creation of the Inter-Agency Committee (IAC) on Trade Statistics to work on the activities of the TF that are beyond the TF's mandate and terms of reference,
The IAC on Trade Statistics (TrS) continued the work of the TF by exploring means to further improve the valuation methodology. While the Survey of Imported Raw Materials was conducted to correct imports, the understatement was only partially addressed as the NSO limited the correction to the sampled companies only. T he survey suffered from poor quality of response from some companies such that parameters derived from the survey could not be used to correct subsequent reports. Further, the conduct of a joint survey on a regular basis is not sustainable due to budget constraints and response burden. As the understatement persists, the IACTrS continued to consult with Semi-conductors and Electronics Industries of the Philippines, Inc. (SEIPI) and electronics companies.
Series of briefings on the Automated Export Data Documentation System (AEDS) of the Bureau of Customs (BOC) have likewise been conducted by the IAC to provide directions on the proper filling out of the customs declaration forms for the purpose of correcting under/over coverage of electronics exports . The AEDS trainings also provided an insight into the electronic industry as a whole and strengthened the initial findings in the previously held dialogues with the electronics industry. These findings were:
* The industry functioned largely under consigned arrangement/outsourcing in which manufacturing is limited to mostly assembly work and therefore, local value added is relatively low. The value added, or the amount that local companies charged to the foreign companies for assembly work, enters the local company books as its revenue. Note that f.o.b. values of exports and imports under consigned arrangements are not entered in the books of the local companies.
* Companies do not know the exact value of their imports and have no urgent need to know since, as previously mentioned, these are off balance sheet items. In most cases, import values are dictated by the foreign companies whose only use for the companies is to comply with customs declaration.
* For big companies, declaration is done by brokers and forwarders who would not be in a position to report the true value of imports.
* Moreover, since consigned imports are non-dutiable, they are not subjected to thorough customs examination and therefore, any error in valuation would not be corrected.
Given the above observations, it is unlikely that the present monitoring system that is purely dependent on documents - Import Entry and Internal Revenue Declaration (IERD) collected by the NSO from BOC will give a good measure of the true value of imports. Hence, the IAC proposed another methodology to estimate the true measure of imports of consigned electronics using the material value of electronic ex ports derived compiled from the Export Declarations (ED) instead of the f . o . b . import figures from the Import Entry and Internal Revenue Declaration (IEIRD) of consigned electronic exports .
METHODOLOGY
The methodology being proposed by the IAC-TrS involved the use of the information compiled from the Export Declaration (ED) and the Automated Exports Declaration System (AEDS) collected by the NSO from the Bureau of Customs (BOC). One limitation in using the BOC forms is the reliability of the information contained therein. There are cases that the material value content of exports (Box 44 of the AEDS form) is not filled out. The mandatory filling out of Box 44 is thus a necessary step to have a more reliable information.
Detailed steps are as follows
1. Generate the top 25 electronic exporters for the year in terms of their fob value of exports. The top 25 comprise 85 to 87 percent of the total fob value of electronic exports.
2. Categorize these electronic exporters into the manner of acquisition of their raw materials, that is, whether the raw materials are acquired on a consignment basis (consigned exporters), or directly imported (direct exporters) or both (mixed exporters).
3. Generate a file for consigned exporters consisting of their fob value of exports (X) and the value of raw materials (material value) reported in the Export Declaration (ED) and the fob value of imports (M) from the Import Entry Internal Revenue Declaration (IEIRD).
4. Validate the value of raw materials (MV) with the import (M) figures.
* If the material value (MV) of the exporter is greater than imports (M), replace the value of imports with its material value to get the revised import (M').
* If the material value (MV) is less than imports (M), retain the value of imports.
5. Compute the value added ratio (VAR) using the revised import, M' that is, VAR = (X - M')/X.
6. If the computed value added of a company is greater than 501 percent, exclude that particular company in the group of consigned exporters for which the value added ratio (VAR) will be generated.
7. Sum the exports (X) and the imports (M') for the remaining companies in the group and compute the value added ratio.
8. Apply the computed value added ratio to the total electronics export to get the revised electronic imports for the year. In formula,
M'' = X t - VAR t-1 * X t
Where: X t = total electronic exports at time t
VAR t-1 = value added ratio for the sample consigned
exporters for the previous period
M'' = revised imports for electronic sector
9. Compute for the difference between the total revised electronic imports (M'') and total electronic imports (M).
10. Distribute the computed difference in (9) proportionately to all consigned imports for the following commodities:
1. PSCC 9310111 - Dice of any material, imported on consignment basis for the manufacture of semi-conductor devices
2. PSCC 9310112 - Molding compounds, imported on consignment basis for the manufacture of semi-conductor devices
3. PSCC 9310113 - Frames of any material, imported on consignment basis for the manufacture of semi-conductor devices
4. PSCC 9310114 - Gold wire, imported on consignment basis for the manufacture of semi-conductor devices
5. PSCC 9310119 - Other materials and accessories imported on consignment basis for the manufacture of semi-conductor devices.
FINDINGS
Below are the resulting figures when the proposed methodology is adopted:
