Removing the 10 percent tariff on frozen potato products would ensure that French fries stores will remain in business and keep their workers in this time of economic crisis, food importers have told the government.
In a public hearing last week, Prime Pacific Foods Corp. and Multi-M Food Corp. argued their case before the Tariff Commission on why the 10 percent import duty on frozen potato should be eliminated. They said this would cut the business cost of fast-food stores and franchisees and would therefore enable them to keep their labor force.
Manny Lee of Multi-M said the firm has a client that operates about 1,000 stalls nationwide, with each store employing at least three people, and it is on the brink of laying off workers due to the economic impact of the pandemic.
“We have a customer that has more than 1,000 branches that employ three people per branch. As such, the impact of this decision is important to a lot of business entities and it is relevant as a whole to both business and labor,” Lee said.
Lee also said Multi-M recorded exponential growth in terms of revenue between 2007 and 2019, when the tariff on frozen potato fries is at zero percent.
“We experienced an exponential growth during the zero percent regime. It is now hard to see that growth in this 10 percent regime.”
Prime Pacific and Multi-M are petitioning before the Tariff Commission the elimination of tariff on frozen potato fries. The import duty on the product reverted to 10 percent after the Philippines passed its rice trade liberalization law in keeping with its commitments to the World Trade Organization.
Previously, the Philippines had to apply zero tariff on frozen potato fries as a concession to retaining the quantitative restriction on rice.
Tariff Commission Chairman Marilou Mendoza asked the petitioners for assurance that the elimination of tariff on frozen potatoes would not have an adverse impact on local farmers.
In their defense, the firms claimed potatoes produced locally are not suitable for making French fries. They said the variety of potato planted by farmers in Benguet, for one, have a lower yield and contain less grey matter.
To this, Mendoza said it might be time for the importers to invest capital in research on how to convert local potatoes into French fries. She argued this would not only benefit farmers, but end users as well, as it will reduce logistics cost with potatoes now sourced locally.
With the public hearing concluded, the Tariff Commission will receive on July 22 the position papers of all stakeholders before it hands down a decision on whether to eliminate the tariff on frozen potato fries.