02/08/2012 (Business Mirror) - State-run CIIF Oil Mills Group have asked the Bureau of Customs (BOC) to closely monitor shipments of vegetable oil into the country and detect possible massive  technical smuggling.

CIIF Oil Mills President Jesus Arranza met with officials of the BOC on Monday to press for the inclusion of vegetable oil in its watch list of “hot items.”

“We asked Customs Commissioner [Rozzano Rufino] Biazon to conduct a post-entry audit of the importation of vegetable oils, in particular, palm olein. If we’re correct, the government could be losing billions from unpaid value-added taxes,” said Arranza, who is also chairman of the Federation of Philippine Industries (FPI), in an interview.

Palm olein is the liquid component of palm oil obtained when the oil is separated by a process called fractionation, according to the Cambridge World History of Food. Palm olein and palm oil are used as ingredients in many foods.

Arranza listed at least six companies that import palm oil on a regular basis at prices much lower than world market prices.

Based on documents obtained by the group, the six importers of palm oil imported the commodity at a price range of $340 to $518 per metric ton (MT). Current prices, however, average at $1,020 per MT.

“If you compare their price and that of legitimate importers, the difference is quite remarkable. I cannot understand how can you have a difference of $800 to $1,000 [per MT] on a traded commodity. I’m just stating a fact that their declared prices are very much lower than the prices declared by legitimate importers,” said Arranza.

Arranza explained that the imported palm come from Indonesia and Malaysia so these shipments are no longer assessed with import duties pursuant to the Asean free-trade agreement. By undervaluing their importations, importers dodge the proper payment of value-added tax (VAT) at 12 percent of the value.

“From the VAT that these companies failed to pay to the national government, they have launched massive advertising campaigns and promotions by selling at significantly lower prices than that of legitimate importers like us,” he said.

The CIIF Oil Mills Groups owns and operates six oil mills, but only four including San Pablo Oil Mill are still in operation.

San Pablo Oil Mill imports palm oil from Malaysia and processes it as cooking oil under the Mitra brand.

As early as 2010, FPI had asked the BOC to conduct a post-entry audit of palm oil and palm olein that enter the Philippines after uncovering importation records from the years 2007 to 2009 showing that some companies undervalued their shipments.