The Bureau of Customs seized almost 2,800 bales of used clothing, comforters and other garments worth at least P22-Million in nine separate warehouse units in Baguio City on Tuesday (September 2, 2014). The used clothing, mostly branded apparel from the United States and Canada, are believed to have entered the country through locators at the Subic and Clark Freeport zones as well as the Cavite Export Processing Zone in Rosario, Cavite as scrap fabric intended for manufacture and subsequent export as rags.
An investigation by the Bureau’s Intelligence Group, however, found that certain locators inside economic zones use their privilege to import raw materials tax-free to smuggle used clothing in the guise of scrap fabric. These locators then sell the used clothing dealers who then supply local ‘ukay-ukay’ business owners.
Export Manufacturing Enterprises registered with the Philippine Economic Zone Authority (PEZA) and located at PEZA Zones are allowed tax-free and duty-free importation of raw materials, capital equipment, machineries and spare parts. They are also exempted frompaying wharfage dues and export tax, impost or fees.
However, Republic Act Number 4653 (An Act to Safeguard the Health of the People and Maintain the Dignity of the Nation by Declaring it a National Policy to Prohibit the Commercial Importation of Textile Articles Commonly Known as Used Clothing and Rags), which has been in effect since 1966, bans the commercial importation of used clothing.
“While times may have changed, it is the duty of the Bureau of Customs like any other law enforcement agency of the government to implement RA 4653, not bend it even for practicalities’ sake. Moreover, we need to ensure that legitimate stakeholders in the local garments industry are protected from unscrupulous and illegal importations of clothing. What makes this situation worse is that we have found evidence that certain locators granted fiscal privileges by our government have abused these perks,” said Bonifacio De Castro, District Collectors of the Bureau of Customs in San Fernando, La Union.
The seized used clothing will be subjected to seizure and later, forfeiture proceedings in favor of the government. Follow-up operations will commence to identify and file cases against the erring importers and traders.
The proliferation of entrepreneurs selling used clothes or ‘ukay-ukay’ over the years had adversely affected local garments and clothing industry, eating into the profitability and competitiveness of many retailers and manufacturers.