SURVEY OF IMPORTED RAW MATERIALS
A PRELIMINARY REPORT
NATIONAL STATISTICS OFFICE
JANUARY 15, 2003
SURVEY OF IMPORTED RAW MATERIALS:
A PRELIMINARY REPORT1
I.
Background
Prior to 1999, the National Statistics Office (NSO) Foreign Trade
Statistics (FTS) consistently showed an unfavorable Balance of Trade
(BOT). The Bangko Sentral ng Pilipinas (BSP) called the attention of the
NSO since the turnaround in BOT starting 1999 was inconsistent with
other indicators in the balance of payments. For instance, it was pointed
out that there was a significant gap between the value of imports for the
manufacture of electronics on consignment basis and the material value of
electronic exports on consignment basis. These concerns motivated the
NSO to review its FTS as early as January 2001, as part of its continuing
efforts to strengthen the robustness and integrity of its data.
A Task Force on Import Statistics was then created in June 2002 to
study and review the import statistics compiled by the NSO. Composed of
representatives from BSP, NSO, National Statistical Coordination Board
(NSCB) and the National Economic Development Authority (NEDA), it was
chaired by the NEDA’s National Policy and Planning Staff Director. The
Bureau of Customs and Philippine Export Zone Authority acted as
resource agencies during some of the task force’s meetings.
One option to correct import figures considered by the task force,
was the use of NSO’s export data and the Security and Exchange
Commission's report on revenue/cost structure to derive the parameters
for the estimation of previous year’s consigned imports. However, derived
parameters using data from financial statements looked discouraging.
1
Report presented by NSO Administrator Carmelita N. Ericta to the
NSCB Executive Board, NEDA sa Pasig, January 15, 2003
2
Another option was to visit the electronics companies and obtain
personally from them records of their importation. This strategy however,
was not pursued due to the long period requirement for individual
company
visits
coupled
with
the
unavailability
of
companies’
representatives during scheduled visits. Moreover, a strict timetable was
given to the task force to come up with the revision. It was also suggested
to the task force to use material value of exports to adjust imports
statistics. However, NSO preferred to use document-based methodology.
The Task Force ultimately decided to conduct a survey on imported
raw materials. It was jointly undertaken by the BSP and the NSO.
Electronics companies were selected as they represent the top importers
of consigned raw materials for electronics, which, based on the findings of
the Task Force, could be the source of the understatement of total imports
for the last few years. Imports of the electronics industry were the source
of a big gap when the imports of the industry were compared with their
exports figures.
The share of consigned electronics imports to total electronics
imports was 63% in 2000 and 49% in 2001. On the other hand, the share
of electronics export to total export value in 2000 was 60% and in 2001,
53%.
II.
Existing System of Generating Imports Statistics
This section presents the existing system of the NSO in compiling and
generating import statistics.
1.
Source Documents
The following Bureau of Customs (BOC) and Philippine Export
Processing Zone (PEZA) documents are used in compiling import
statistics:
3

Import Entry and Internal Revenue Declaration (IEIRD) – this
document is filed for imported merchandise with dutiable
value of more than P 2,000.
Filed in seven copies, the
duplicate copy is marked with “National Statistics Office
Copy”.

Informal Import Declaration and Entry (IIDE) – this document
contains importation with dutiable value of two thousand
pesos or less and personal and household effects whenever
duty, tax, or other charges are collectible.

PEZA Import Tally/Customs PEZA Warehousing Entry
(CEWE) – this is a joint Customs-EPZA Warehousing Entry
(CEWE) form used in the examination and assessment of
importation intended for the Export Processing Zones. The
form printed by the Bureau of Customs as an account form is
pre-numbered and filed in six copies. The NSO is furnished
with a photocopy of the form.

Bill of Lading/Airway Bill Identifier – the Bill of Lading is an
important supporting document to the Import Entry being
filed by the importer or his authorized agents. This is used
as an identifier when matching the import document against
the inward foreign manifest. For goods carried by aircraft,
the Airway Bill takes the place of the Bill of Lading.
2.
Items/Information Collected
The NSO collects the following items of information from the
various source documents:

FOB Value – Free On Board value of shipment

Insurance – cost of risk involved in shipment of goods by air
or sea

Freight – cost of transporting the shipment by air or sea

Local port of unloading – port where shipment was actually
unloaded
4

Trader’s name (confidential) – name of importer and
corresponding address

Carrier’s particulars – name of vessel

Foreign port of loading – foreign port where the shipment
originated from
3.
Data Collection
The NSO collects the foreign trade documents from the ports and
airports and PEZA offices throughout the country. The NSO – National
Capital Region (NCR) personnel are assigned at different ports/airports
and PEZA office in NCR to collect foreign trade documents daily. All
other field offices transmit foreign trade documents weekly to the NSONCR.
4.
Processing of Import Documents
The figure below shows the flow of processing the data in the
import documents:
5
PROCESSING OF IMPORT DOCUMENTS
COLLECTION
RECEIPT
&
CONTROL
PHASE 2
PHASE 3
Computation
Coding
FOB
Insurance
Freight
Traders
Vessels
Local & Foreign Port
PHASE 1
Coding
SORT
AIR
by Air or
Vessel
VESSEL
Edit/
Review
MACHINE
PROCESSING
Commodity
Country
Quantity
Gross Kilo
MATCHING
MONTHLY
TABULATIONS
25
Please refer to Annex 1 for detailed discussion on the collection
and processing of import documents.
On the other hand, problems
encountered on the existing system of generating the FTS are described
in Annex 2.
III.
Survey of Imported Raw Materials
Fifteen companies were selected to represent the top importers of
consigned raw materials for electronics. These companies accounted for
90% and 75% in the electronic sectors for the years 2000 and 2001,
respectively.
The survey intended to collect import and export data as far back
as 1996. However, some respondents stated that as a matter of practice,
only records for the last three years were kept on file.
The 15 companies were provided with a survey questionnaire
through e-mail. The questionnaire contained export data as recorded by
the NSO from customs manifests. Respondents were requested to verify
the exports data based on their records. However, companies were asked
6
to provide their own import data. Exports and imports data based on
company records were intended to provide a better approximation of the
company’s value added (VA).
For responding companies, the NSO compared the data from the
survey with the data previously obtained from the FTS.
IV.
Survey Results
1. Ten companies responded out of the 15 samples. This accounted for
67% response rate. Out of the ten responding samples, five were
PEZA locators.
2. Survey reports on imports of the responding companies were
consistently higher than the FTS.
3. All companies priced their imports based on quotation by their
suppliers (as evidenced by invoices) which could either be the parent
company or an independent supplier, with the exception of one
company.
4. The survey results showed no significant trend of difference to indicate
revision of export figures
5. Companies reported export value based on different valuation. Some
reported export earnings as those consisting only of assembly charges
and as such, amounts were much lower than the FTS. Companies
that followed the prescribed FOB valuation agreed with the FTS.
However, there were few companies whose reported export values
were higher than the FTS.
6. Unit price of imported raw material would not be exactly equal to the
unit price of material inputs to exports. This is due to the difficulty of
monitoring movements and matching of various inputs for a particular
product. Thus, as a matter of practice, the company would adopt a
standard cost accounting of inputs to price the finished product. It was
noted by the companies, however, that the standard cost used for
pricing did not differ significantly with the actual cost incurred.
7
7. One company cited that pricing by its consignor/s of raw material was,
in some cases, significantly lower than the price used for the same raw
materials for export pricing. Thus, material value of exports would be
higher considerably than imported raw materials.
V.
Methodology for Revision
Revisions were done only for consigned imports for 2000 and 2001.
(1) For responding companies, the survey report replaced the FTS.
(2) For non-responding companies, the following steps were done:
(a) The share of the company to total consigned imports per FTS
was computed.
(b) An adjustment factor representing the ratio of the total survey
report to the total FTS for responding companies was
computed.
(c) The revised company report was computed as follows:
R = FTS + [FTS x share to total consigned imports
x adjustment factor]
(3) The sum of the revised reports for consigned imports of responding
and non-responding companies was then computed.
8
VI.
Findings
Below are the resulting figures when the proposed methodology is
adopted:
Value in US $
Items
2000
(a) Original Consigned Imports
2001
4,345,570,350
2,739,153,464
3,882,666,250
2,041,916,492
6,986,137,778
5,548,265,783
(d) Revised Consigned Imports
7,449,041,878
6,245,502,755
(e) Net Adjustment
3,103,471,528
3,506,349,291
(f) Direct Imports
2,558,051,435
2,899,369,603
6,903,621,785
5,638,523,067
10,007,093,313
9,144,872,358
(i) Original Total Imports
31,387,401,692
29,550,811,145
(j) Revised Total Imports
34,490,873,220
33,057,160,436
(k) Total Exports
38,078,249,794
32,150,202,692
(l) Original Balance of Trade
6,690,848,102
2,599,391,547
(m) Revised Balance of Trade
3,587,376,574
-906,957,744
Less: (b) NSO Consigned Imports of
sample companies
Plus: (c) Revised Consigned Imports of
sample companies
(g) Original Total Electronics Imports
(h) Revised Total Electronics
Imports
(d) = (a) – (b) + (c) or (d) = (a) + (e), where (e) = (c) – (b)
(h) = (d) + (f)
or (h) = (a) + (e) + (f)
(j) = (i) - (g) + (h)
or (j) = (i) + (e)
(m) = (k) – (j)
9
VII.
Recommendations/Future Work
In view of the results of the study, the NSO recommends the adoption of
the methodology presented for the revision of import data and the full automation
of the pilot Import Cargo Transfer System of the Bureau of Customs and the
Philippine Export Zone Authority.
Future work also needs to be undertaken on the following aspects:
1. The survey results showed that there was no material basis for the
validation of export data especially for raw materials. Hence, further
work is necessary to review the present definition and valuation of
exports.
2. Box 46 (FOB value of raw materials used) of the export declaration
form is mandatory to be filled up.
However, not all exporters
accomplish this portion of the form. The NSO shall coordinate with
BOC and PEZA for the strict implementation on the filling-up of this
entry. As such, the actual material value of raw materials used can be
directly lifted from the form rather than derived.
In the present system, the Valuation of Material Value is only
derived from the pro forma invoice attached to the export declaration
form, that is,
Value Added = Testing Cost + Assembly Cost
Material Value = Total Value of Shipment – Value Added
The difference in the derived material value from exports and
the value of imports of raw materials is maybe due to the following
reasons:
a. Cost of research and development may have been included
in the material value
b. Total value of shipment is dictated by mother company
10
3. The NSO shall continue to coordinate with electronics companies
through
the
Semiconductor and
Electronics Industries in the
Philippines, Incorporated (SEIPI).
4. The NSO shall undertake a periodic assessment of the monitoring
system together with BOC, PEZA, and other economic zones to keep
abreast with the changing reportorial requirements and systems
developments.
11