Philippines' House Lifts Import Cap on Rice, Approves Tariff System

A vendor waits for customers at a rice and egg shop in Paranaque, Metro Manila, Philippines, Aug. 7. (Reuters Photo/Erik De Castro)

By : Enrico dela Cruz | on 9:00 PM August 15, 2018
Category : International, SE Asia

Manila. The Philippines' House of Representatives on Tuesday (14/08) approved a bill that seeks to replace the import limit on rice with tariffs, a measure that may boost the country's purchases of the staple food.

The measure sets the tariff for rice imported from Southeast Asian countries such as Vietnam and Thailand, the country's traditional main suppliers, at 35 percent, in line with an existing Asean trade agreement.

For rice coming from outside the region, rates of 40 percent to 180 percent shall be applied.

Under the current quota system, the private sector's rice imports each year are capped at 805,200 tons, to be sourced from specific countries and with a 35 percent tariff.

The House, which voted 200 to 7 in favor of the bill, with two abstentions, came less than a month after President Rodrigo Duterte certified what he called a "crucial reform" as urgent amid rising domestic rice prices.

Frustrated with rice price spikes that had fed inflation, and smuggling and hoarding by private traders, Duterte asked lawmakers in July to prioritize the removal of the import limit or quota, also called quantitative restrictions, and switch to a tariff system.

The country's annual inflation quickened in July to 5.7 percent, the highest in more than five years and marking the fifth straight month the rate breached the central bank's 2-4 percent target range, partly because of higher rice prices.

Under pressure to tame inflation, the central bank last week raised key interest rates by half a percentage point in its most aggressive policy tightening move in a decade, after two rate hikes this year of 25 basis points each.

Duterte, who believes rice could be imported more freely under the tariff system, expects the measure to boost domestic supply and bring down prices by up to 7 pesos ($0.13) per kilogram, from as high as over 50 pesos.

However, some farmers' groups are up in arms, worried about the influx of cheap rice imports, but lawmakers approved a proposal to channel all tariff revenue to a Rice Competitiveness Enhancement Fund intended to improve farmers' productivity.

The Senate has yet to come up with a counterpart bill.

Under the House measure, the state grains procurement agency, National Food Authority, remains authorized to import rice but solely for buffer stocking requirement, and to issue import permits to private traders.

Reuters

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