The Swedish Nobel laureate for economics Gunnar Myrdal correlates corruption with discretion. Thus, to eliminate discretion is to combat corruption in a political economy. This brings to mind the beleaguered Sugar Regulatory Administration, which has been rocked by scandals. The President, who concurrently chairs the agency, has appointed new SRA executives, while Congress has started an inquiry on the entire sugar importation fiasco.
SRA discretion
Created under Executive Order 18, SRA is mandated to promote the sugar industry’s growth and development through greater private sector participation and improvement of laborers’ working conditions. Among its functions is to establish domestic, export, and reserve allocations. To my knowledge, the agency also enjoys the sole discretion of selecting or allocating importation quotas to local traders to import sugar.
Now that we have new personalities at SRA, it is high time to reform the rules and regulations on sugar importation. For instance, why did the SRA approve Sugar Order 4 when it has not released all legally-imported shipments covered under SO 2 and 3 to the local market? What anti-corruption measures has the SRA instituted to curb the “tongpats” or kickback per bag of imported sugar? Just imagine, corrupt individuals in SRA would have “earned” P600 million had we pushed through with the importation of 300,000 metric tons, to quote Senate President Juan Miguel Zubiri.
Unless and until SRA’s discretionary authority is amended, I believe that criminal and corrupt acts in the agency and within the industry would remain unabated. The agency should not have the sole power to allocate importation quota to a select and even favored few. Let me reiterate that we have many law-abiding sugar traders. But if the importation remains exclusive to them, I’m afraid unscrupulous traders would continue with their hoarding or smuggling activities. After all, they need to recoup the “tongpats” they provided to corrupt officials in exchange for their allocation to import.
I recommend that the government give certain parties the right and authority to import sugar in times of crisis. During a shortage, why don’t we allow industrial users like Coca-Cola or Pepsi, as well as supermarket chains, to directly import sugar? As main product users, I don’t think these soft drink giants would involve themselves in unlawful trading. I also believe that our biggest supermarket chains are above board in their business practices.
By authorizing these entities to directly import sugar, the entry of smuggled items into the domestic market would be minimized. However, if the country has enough supply, then these companies should get their supply from our local farmers and producers.
Artificial shortage?
As regards the supply deficit, some sectors say we are facing an “artificial” shortage. Sugar hoarders wanting to manipulate the market price, much to the detriment of local consumers, precipitated the crisis.
I previously wrote that under the Price Act, there is prima facie evidence for hoarding if a person has stocks of more than 50 percent of his normal inventory. How can we determine normal inventory?
When inspecting the inventory of a warehouse, government authorities cannot make an immediate and definitive distinction between imported and domestic sugar. If they do not have access to the accounting records of a warehouse, how can they determine prima facie evidence? Given the undue price increase, and as dictated by the law of supply and demand, traders are expected to dispose of their domestic and imported goods.
But if we do not have a shortage, why is the government set to import 150,000 metric tons of sugar in October? The local milling season begins in September and by the following month, we would have enough supply.
The government should answer this question once and for all. If there is a shortage, I think the majority would support the President’s decision to import. My only fear is that legitimate sugar traders would fall prey to unscrupulous people in SRA. I pray that the government finally puts an end to this vicious cycle of “tongpats” at SRA.