Three weeks after President Duterte asked Congress in his State of the Nation Address to prioritize the approval of the rice-tariffication measure, the House of Representatives on Tuesday passed on third and final reading House Bill (HB) 7735, or the proposed “Revised Agricultural Tariffication Act,” which would convert the quantitative restriction on rice into tariffs. The bill will now be transmitted to the Senate for its own deliberations and approval.
Notable among the provisions of HB 7735 is the creation of the Rice Competitiveness Enhancement Fund, which comes from the duties collected from rice imports, to help rice farmers become more competitive. The Senate will have its chance to strengthen the safety nets for rice farmers and consumers through import tariffication.
The rice tariffication bill will help reduce the price of rice by P3.40 per kilogram. If implemented in the last quarter of this year, bill sponsors said it could reduce headline inflation by about 0.20 percentage points, and an additional 0.60 percentage points in 2019.
Under HB 7735, the Lower House has set the bound tariff rate for rice imports outside the minimum access volume at 180 percent. The measure indicated that the Philippines will impose a bound tariff rate of 35 percent for rice from the Association of Southeast Asian Nations, regardless of volume. Manila will also impose a 40-percent bound tariff most-favored nation rate for in-quota rice imports from countries that do not belong to the Asean.
Other provisions of HB 7735, however, need further study. For example, the bill authorizes the National Food Authority to allocate import permits among certified and licensed importers. In other words, it gives the NFA the discretion to choose its preferred rice importers. We all know that discretion breeds corruption. And we also know that, for the longest time, the biggest headaches for our regulators are the rice cartels and rice smugglers. Legislators now have a chance to craft sanctions to curb rice smuggling.
Unscrupulous traders will always try to evade paying duties and taxes if the government won’t press its heavy foot on their throats. The problem with the current system is the absence of coordination among government agencies as far as rice importation is concerned. For example, a rice trader—Jomerito “Jojo” Soliman, owner of Sta. Rosa Farm Products—recently cried foul over allegations made by the Bureau of Customs (BOC) that he was behind the unlawful importation of 200 containers of Thai rice, insisting that his transactions were legal.
The rice trader maintained that all of his rice importations were allowed and cleared by the NFA. He said a letter issued by the NFA on July 27, 2018, upheld the rice importation of Sta. Rosa Farm subject to the payment of 50-percent tariff. Insisting that the shipment was not smuggled, he said it was a “special importation” channeled through the NFA so that it will be sold at a lower price in the market to help replenish the country’s rice stock.
The BOC, however, said the 200 containers of rice arrived from Thailand at Manila International Container Port without import permits. That’s why they were seized and were later auctioned off even before the expiration of the prescribed period for appeal.
Hopefully, with the rice-tariffication measure signed into law, cases like this will become a thing of the past. We need the help of rice traders to help boost the country’s supply of our staple food. But we also need to clean up the rotten setup where crooks in the government can demand bribes from rice traders. This measure can help remove the politics involved in the rice business.
Image credits: Ed Davad