Reforming towards fair and efficient trade

As one of the central pillars of economic development, trade and commerce occupy a singularly vital space in a nation’s agenda. When trade is strong, a country bustles with life creating goods, transporting resources, and engendering prosperity. When trade is held back, whether by smuggling, by illicit markets, or rampant malpractices that strangle competition, growth struggles. People can lose jobs, struggle to compete, or be unable to find livelihoods altogether.

To promote efficient, fair, and secure commerce is the purview of the Bureau of Customs (BoC), which celebrates its 124^th anniversary this February. The organization has been taking on the supervision of import and export cargoes; the prevention and suppression of smuggling; and ensuring lawful collection of revenues towards a better Philippines for over a century.

Global trade is as old as civilization itself. In the Philippines, long before Spanish or American rule, trade relations were already firmly established between indigenous groups and the country’s neighbors in Southeast Asia. Tributes and primitive trade levies were collected by local datus or rajahs, arguably the predecessor of the customs bureau today. This practice of collecting tributes was known as the Customs Law of the Land.

Naturally, such rules create rulebreakers. For those who deemed the tributes unjust or excessive, black markets emerged that sought to evade the tariffs charged by the datus and rajahs, concealing goods and deceiving authorities. The BoC considered this as smuggling in its primitive form. Even hundreds of years later, the same cat-and-mouse game between smugglers and customs officials persist.

Under Spanish rule, customs law existed as part of imperial trade regulation. After the US took over in 1898, existing Spanish customs practices were gradually overhauled into a more formal revenue collection agency under American colonial law. The Customs Service Act and related legal acts in the early 1900s helped establish the structure that eventually became today’s Bureau of Customs.

In the early decades of the 20^th century, successive laws reorganized customs administration, abolishing older roles like the Captain of the Port and creating professionalized collectors of customs across major ports, embedding the bureau firmly within the colonial and later national state apparatus. Across the rest of the 20^th century, the agency underwent repeated legal and institutional reforms, from tariff revisions to early automation efforts, as Philippine trade expanded and customs enforcement became more complex.

Globally, structural shifts because of containerization and modern logistics were accelerating legitimate trade and smuggling at the same time. The rise of massive freight ships with internationally standardized shipping containers has both improved efficiency and throughput for authorized traders, and created new challenges for port authorities as smugglers now had the capacity for hiding things at scale.

Modern customs agencies responded by moving from inspecting everything, which was an increasingly impossible task, to risk-based targeting, which meant inspecting only the items suspected of illegal activity while auditing the rest. This culminated in the passage of the Customs Modernization and Tariff Act in the 2010s, which aligned Philippine customs procedures with global standards on trade facilitation, valuation, and risk management.

Today, the BoC operates under the Department of Finance, functioning not only as a border control and trade regulation agency but also as the government’s second-largest revenue collector after the Bureau of Internal Revenue, reflecting its central role in the modern Philippine fiscal and trade system.

Bolstering timeless practices through technology

In 2025, the BoC achieved a total revenue collection of P934.4 billion, surpassing the previous year’s haul by P17.7 billion or 1.9%. This growth was driven by the BoC’s strict enforcement measures, rigorous monitoring of import declarations, and efforts to ensure that importers pay the correct duties and taxes.

This momentum carried forward into January of this year as Commissioner Ariel F. Nepomuceno announced that they have collected P80.744 billion for the month alone, exceeding its target and reflecting a 100.6% revenue collection efficiency.

“Exceeding our January target is a strong affirmation of the hard work of our Customs personnel and the growing cooperation of the trade community. We are committed to sustaining this level of efficiency to support the President’s economic agenda and to exhibit the BoC’s ability of delivering reliable public service,” the commissioner said.

At the start of the year, Mr. Nepomuceno reaffirmed their continuing efforts to deliver measurable outcomes consistent with the priorities set by the Marcos administration, reiterating the bureau’s priority reform agenda embodied in the “I A M” framework — Integrity, Accountability, and Modernization — which serves as the foundation of the BoC’s ongoing reforms.

At the heart of this reform is an aggressive push for full digitalization, which seeks to eliminate the face-to-face interactions that have historically allowed for “grease money” and corruption. The bureau introduced the upgraded Online Tax Estimator, a more intuitive, web-based tool that helps importers anticipate duties and taxes with greater accuracy, even before lodging declarations. The BoC also launched the Origin Management System (OMS), which automates the issuance and processing of the Product Evaluation Report (PER), a mandatory document for goods intended for export under Free Trade Agreements (FTAs), reducing processing times and promoting export competitiveness.

Meanwhile, to strengthen regional interoperability, the BoC also implemented the ASEAN Electronic Document Exchange, enabling faster cross-border verification of trade documents and ensuring regional interoperability. The proposed integration of the Automated Export Declarations System (AEDS) across economic zones will seek to support the future digitization of export submissions, with the potential to reduce errors and strengthen compliance.

There is also the improved processing for strategic and export-related goods through critical operational upgrades, including the streamlined clearance of aircraft parts at Clark International Airport and the full rollout of the electronic Certificate of Origin (e-CO) portal.

By automating 96% of its procedures, ranging from electronic travel declarations to digital origin reviews, the agency is effectively replacing human discretion with transparent, unalterable data trails.

Alongside digital reforms, policy improvements in 2025 reinforced predictability and reduced administrative burdens for traders. Through initiatives like the Customs Industry Consultative and Advisory Council (CICAC), the agency has opened a direct line of communication with the private sector to identify and remove “bottlenecks” in real time. This efficiency is paired with a much more intensified border protection strategy.

Finally, the most challenging aspect of this reform is the cultural overhaul of the agency’s internal workforce. The BoC is attempting to break old patronage systems by implementing merit-based promotions and pursuing ISO certifications for all 17 major ports across the country.

Among the areas that Mr. Nepomuceno mentioned that the agency was focusing on were personnel welfare and professional development. By professionalizing the ranks and holding officers accountable through “digital footprints,” the bureau aims to foster a culture where integrity is institutionalized rather than optional.

International organizations like the World Bank have expressed support for such initiatives, with the institution granting $88.28 million in financing for the entire modernization program. These reforms are designed to outlast individual administrations, ultimately evolving the BoC into a technology-driven border security firm that balances national security with the rapid pace of global trade.

As times continue to change, the BoC continues to evolve along with it. Although the tools are different, the game plan is the same as it has ever been: serving the Filipino people by facilitating fair and efficient trade for all. — Bjorn Biel M. Beltran