The Department of Finance (DOF) has flagged a possible sugar smuggling scheme employed by unscrupulous traders taking advantage of the Sugar Regulatory Administration’s (SRA) export replenishment program.

In a statement on Monday, July 12, Finance Secretary Carlos G. Dominguez III said he has received reports alleging that certain traders authorized to export sugar were importing higher volumes than what they had been shipping overseas.

In particular, Dominguez disclosed an unnamed company that “has been shrewdly replacing its overseas shipments with volumes that are way higher than what it had exported.”

Earlier, SRA adopted its export replenishment program allowing local sugar producers who have already made shipments under the US sugar tariff-rate quota in the current crop year to import the commodity to help address the gap in the local supply.

Under the SRA rules, the importation of sugar into the country is allowed provided that the volume of sugar that an exporter may import shall not exceed the volume it shipped to the US.

The Philippines is one of the select countries given an annual allocation of “A” sugar exports to the US market.

But Dominguez said the SRA program could be abused by unscrupulous sugar traders.

“The sugar price domestically is much higher than the world market price. So there is going to be an incentive for people to smuggle in sugar,” Dominguez said.

According to Dominguez, reports about the sugar trading firm involved in the alleged smuggling scheme came from officials of the Bureau of Internal Revenue (BIR) in Cebu.

“Please keep an eye on those gaps,” Dominguez told Customs Commissioner Rey Leonardo Guerrero during a recent DOF executive committee meeting.

As for the BIR, Deputy Commissioner Arnel Guballa said he has long been coordinating with the SRA to ensure that traders secure prior clearance from the bureau to be able to import sugar, in compliance with Dominguez’s earlier directive.