ANALYSTS said the executive issuances released by Malacañang last week can help moderate inflation, but they also believe the government must exert more effort in improving agriculture in order to fully address the problem, especially for the medium to long term.
Malacañang released last week Administrative Order (AO) 13 on removing nontariff barriers and streamlining administrative
procedures, as well as three memorandum orders listing the other government measures to curb inflation.
Notably, the AO also authorized the National Food Authority Council to approve additional rice importation beyond the minimum access volume (MAV) commitment specified under Executive Order 23, series of 2017, for allocation to the private sector, subject to conditions imposed by Republic Act 8178, or the Agricultural Tariffication Act of 1996. The latter allows importation of certain agricultural products beyond MAV upon payment of appropriate rates of duties and compliance with other conditions specified therein.
The order added that the DA shall issue the appropriate Certificate of Necessity to allow importation of adequate volumes of fish to augment the 17,000 metric tons of fish imports already being distributed in the market.
Economist Calixto V. Chikiamco, president of Foundation for Economic Freedom, agreed that the executive issuances will moderate inflation in the coming months, but noted that this will only happen “if oil prices don’t spike due to the Iran sanctions effective November” and “if the government doesn’t yield to demands for wage increases.”
If the wave of US sanctions targeting Iran’s oil and gas industry cuts Iranian oil supply completely, oil prices are seen to reach above $100 per barrel, according to an industry expert.
Iran is the third-largest oil producer among the members of the Organization of the Petroleum Exporting Countries.
Sanctions against Iran were reimposed after US President Donald J. Trump’s decision to withdraw the US from the Iran nuclear deal or the Joint Comprehensive Plan of Action.
Meanwhile, businessmen also see another inflation trigger in the possibility of new wage hikes being mandated. Minimum-wage earners in four regions in the country may soon finally get additional pay, the Department of Labor and Employment said last week.
Chikiamco also did not rule out the possibility that this projection of higher inflation in the coming months may soon become a reality even with the executive issuances touted as inflation busters.
“Oil prices may also spike when Iran sanctions bite. Food and oil are main inflation drivers,” he said in a message to the BusinessMirror. “But let’s see if the peso strengthens as remittances come nearing December.”
Still, Chikiamco noted it is important for the medium term that the government look into the country’s low agricultural productivity and weak export growth, which makes the Philippines vulnerable to inflation spiked by food shortages and a sharply depreciating peso.
For Jose Enrique A. Africa, executive director of IBON Foundation, the executive issuances are “damage-control measures,”
adding that the administrative order ironically will just cause even more long-term damage to domestic agriculture, displacement of farmers and fisherfolk, and lead to future inflationary pressures.
“These damage-control measures could moderate inflation slightly but at the cost of undermining agriculture and our food security over the long run. The country cannot be made captive to the production decisions of agricultural exporters nor subject to rising prices from a peso in chronic decline,” Africa told the BusinessMirror in a message.
He also warned that the administrative order is even turning out to be a “Trojan Horse exploiting the current inflation crisis to advance the economic managers’ ideological agenda of liberalizing agriculture.”
“It is so odd,” he added, “that our economic managers still insist that liberalization will develop domestic agriculture. Countries that have long protected and continue to protect their agricultural sectors for good reason include Vietnam and Thailand, who we import rice from, as well as advanced industrial powers such as the United States, European Union and Japan.”
Importation of farm and fishery products in case of tight domestic supply should only be a short-term emergency measure, according to Africa.
Although the administrative order places good emphasis on measures to reduce red tape, it also actually contains a few concrete things, Ateneo School of Government Dean Ronald U. Mendoza said.
He said the administration can seize this opportunity to finally think of institution-building policies ,“instead of three- or six-month shortcuts based on threats and fear of replacement for officials.”
“The discussion on ‘lowering’ nontariff barriers is inevitably a capacity building and institutions-enhancing exercise. Things like setting up e-governance, lessening red tape and processing time, and reducing people-to-people interaction and discretion so as to reduce corruption,” Mendoza told BusinessMirror.
“The administration can seize this moment to start a comprehensive and meaningful reform effort on agencies that have traditionally [not just under Duterte, so to be fair he inherited some of these problems, too] been underperformers: Customs, NFA [National Food Authority], Department of Agriculture and MMDA [Metropolitan Manila Development Authority], among others,” Mendoza added.