Arroyo orders tariffs on rice imports lowered
By Amy R. Remo
Philippine Daily Inquirer
First Posted 15:34:00 03/28/2008
MANILA, Philippines -- President Gloria Macapagal-Arroyo has ordered the Department of Finance to draw up a mechanism to relax tariff rates on rice, similar to that on oil, to allow greater private sector participation in the importation of the staple grain, Agriculture Secretary Arthur C. Yap said Friday.
"Basically, this is a move to open up importation to a greater and broader sector of society rather than keeping it with the National Food Authority [NFA]," Yap said in a briefing.
Normally, the private sector is allowed to import a maximum 300,000 metric tons of rice annually. This importation has to undergo tenders conducted by the NFA.
However, over the past two years, less than 10 percent of this volume was brought in by private groups due to high prices and tariffs.
Currently, tariffs for rice and corn stand at 50 percent and 40 percent, respectively.
Yap, however, did not disclose details regarding talks with Finance Secretary Margarito Teves, saying only that he was leaving it up to the finance official to come up with a mechanism.
The agriculture chief added that the Department of Agriculture has been mulling the possibility of allowing the private sector to import rice as "these people are calling for an end to the NFA's monopoly of importation."
"So rather than going through the very extreme process of just displacing the NFA immediately and letting the private sector take over, why don't we lower the tariff and see whether the private sector will take the call and if it is capacitated to make the importation," Yap said.
Yap announced earlier that he was willing to consider liberalizing tariffs on rice and corn to increase the flow of these vital commodities into the country.
While tariffs keep prices of imported goods above local prices, Yap noted that imported rice was more expensive even without the 50-percent tariff.
At a tender held earlier this month, the price of imported rice was up to as much as $747 a metric ton, a big jump from a previous tender in January this year when rice was priced at only $430 a metric ton.
"So maybe we can start studying our tariff regimes right now so we can increase the flow of vital commodities and not hurt the local agriculture sector at the same time. We are studying what that threshold point will be," Yap said.
The agriculture chief also said that the tariff reduction may be revenue neutral since the NFA applies for a tax expenditure subsidy, which essentially covers the 50-percent tariff slapped on rice.
The tax expenditure subsidy is allocated under the budget of the national government.
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