Chapter I

BACKGROUND AND RATIONALE

1.1 INTRODUCTION

International trade is the exchange of goods and services between countries.

This type of business gives to a world economy, in which prices, or supply and demand

affect and are affected by global events. Trading globally allows consumers and

countries to be exposed to goods and services not available in their own countries. A

product that was sold to the global market is an export, and a product that was bought

from the global market is an import. Historically, the Philippines have been the

unimportant center for commerce for centuries it’s ethnic minority. Outlanders have

visited the archipelago trading in the first and early second millennium. As of the 21 st

century, the country is a member in several international trade organization, including

APEC, ASEAN, and WTO.

In an era of globalization and increased liberalization, based on the dynamic of

foreign trade where a customs brokerage has a vital role for without it economic growth

to a large extent was importers or exporters who lack time and unfamiliar with customs

rules and regulations could not transact their business efficiently. The customs

Brokerage industry in the Philippines has a significant role. It serves as an intermediary

between government, importers, and exporters. Duly licensed Customs Brokers and

their accredited firms are the ones authorized to transact in the Bureau of Customs on

behalf of the importer or exporter. Customs Brokerage services in the Philippines

involves consultation, preparation of documents for imports and exports, declaration

and payment of Customs Duties and Taxes, and processing of import and export entries

(Republic Act No. 9280).

 Since there is a significant number of demands from different clients, services of

Customs Brokerage are in need to meet the demand of international trade as the

Customs Brokerage Firms render their services, it is impossible for them not to

encounter a problem which sometimes results to the dissatisfaction of their clients and

delays of shipments. Questions may be due to fortuitous events like natural disasters

and accidents causing a delay of the delivery of goods; due to client’s negligence like

failure to submit or accomplish necessary documents, and, ; sometimes due to the

miscommunication and short period, time given to the employees of the brokerage firm

perform their work. With these problems, it will affect the transaction between the

exporter/importer and the firm that keep their shipments moving through customs and

across borders which is one of the primary sources of the revenue of our country. That

is why the researchers decided to conduct this study to propose recommendations to

lessen the problems they encountered.

1.2 STATEMENT OF PROBLEM

This study aims to determine the challenges faced by the Customs Brokerage

Firms. Specifically, it seeks to answer the following questions:

1. What is the profile of the brokerage in terms of:

1.1 Kind of business organization;

1.2 Number of years in operation;

1.3 Number of employees; and

1.4 Capitalization?

1.5 Location?

2. What are the problems encountered by the Customs Brokerage Firms with

regards to:

2.1 Import entry document operation;

 2.2 Filing of wrong order or short landed claim and processing;

2.3 Payment of charges to government agencies;

2.4 Delivery of goods; and

2.5 Providing legal and technical advice,

3. What recommendations may be proposed to lessen the problems?

1.3 RESEARCH OBJECTIVES

To determine the different challenges encountered by the Customs Brokerage

Firms in General Santos City.

To know what are the solutions for the said challenges to lessen the problem

encountered in Customs Brokerage Firms.

To have a better understanding of the Customs Brokerage Firms Operations.

1.4 SCOPE OF THE RESEARCH

This study will focus mainly on the challenges encountered by Custom brokerage

Firms. The researchers will choose some customs brokerage firms in General Santos

City as their respondents. The researchers believed that this study would show the

challenges encountered by a customs brokerage firm.

1.5 DELIMITATIONS OF THE RESEARCH

The target respondents in this study will be limited to only ten customs brokerage

firms located in General Santos City. The questionnaire will cover the profile of the

brokerage firms as to their kind of business organization; the number of years in

operation; the number of employees, capitalization, and location.

1.6 SIGNIFICANCE OF THE STUDY

The researchers believed that the results and findings of this study would benefit

the following:
 To the Customs Brokerage Firms, this study provides possible solutions to

prevent problems encountered and suggests remedies to solve problems that can

enhance their quality of services to determine the problem and makes

recommendations.

To the Importers and Exporters, they will have a good benefit considering that

customs brokerage firms plays important role in processing and releasing shipments.

To the Importers and Exporters, they will have an excellent benefit considering

that customs brokerage firms play essential role in processing and releasing shipments.

To the Customs Brokers, this study reveals the level of importance of Customs

Broker’s role in meditating transactions in a way that the personnel of a customs

brokerage firm are mostly customs brokers.

To Mindanao Polytechnic College, it will be used as an additional reference

that can provide some information related to a similar nature.

To the Bachelor of Science in Customs Administration students, it would

help them to understand the challenges encountered by the brokerage firms. This will

also provide information as a reference in the study that they will be conducted.

To the present researchers, it will make them knowledgeable by being aware of

the services of the brokerage firms and the problems they encounter that they may face

in the future.

To the future researchers, they could use this study as another source of

information or basis that will help them to conduct their research related to this study.

1.7 DEFINITION OF TERMS

Terminologies used in the studied were to be understood in ordinary meaning;

however, technical terms were given their conceptual and operational definition.
 Customs Brokerage Firms. This refers to a private company that provides

transaction services in addition to research and investment advice

(thefreedictionary.com). In this study, it relates to the entity that provides their client and

efficient and reliable professional services to their customers at a competitive cost.

Customs Broker. This refers to a bona fide holder of a valid license for a

customs broker and also a holder of a valid certificate of accreditation from the BOC

(Llorando, 2006). In this study, it refers to the one who is knowledgeable in preparing

and processing of necessary documents.

Importer. This refers to a person primarily liable or the payment of duties and

taxes on imported goods. He may be a consignee, importer of record, the owner of the

products if the actual owner is not known fictitious (Llorando, 2006). In this study refers

to the one who is seeking assistance to the brokerage firms in clearing goods from

customs barriers.

Exporter. This refers to the owner of the goods to be shipped out (Section 106 of

CMTA).