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Philippines: ‘Rice imports undervalued by P1 billion under tariffication’
MANILA, Philippines — Local farmers are claiming an undervaluation in rice imports by nearly P1 billion for the first four months of the year.
The Federation of Free Farmers (FFF) is calling anew on the government to immediately investigate the alleged undervaluation and the wrong application of tariff rates on rice imports, which have reportedly resulted in the loss of tariff revenues of at least P890 million from January to April.
Data from the Bureau of Customs (BOC) showed a total of 766 million metric tons of rice were imported during the period with tariff collections reaching P4.8 billion.
However, a study conducted by FFF indicates that tariff collections could have been higher by P890 million had the government made the proper assessment of rice import values.
FFF national manager Raul Montemayor said tariffs on rice imports are based on the cost of imports from the point of origin or the free on board price, plus the cost of freight and insurance.
Based on FFF’s analysis, the BOC failed to collect an additional P471 million in tariffs due to the apparent undervaluation of freight on board (FOB) prices of imports.
In such cases, importers declared FOB prices which were lower than the BOC’s own reference prices, which, in turn, are based on internationally published rates.
For example, a shipment of 6,014 MT of rice with five percent brokens arrived from Vietnam in April with a declared FOB value of $319.63 per MT.
The BOC accepted this even though it was almost 30 percent lower than its $447 reference price and lost P13.7 million in additional tariff collections.
“If this is the practice, what then is the purpose of the reference rates? What will now stop
an importer from conniving with the exporter to issue undervalued invoices or issue two separate invoices to split the total cost of the imports?” Montemayor said.
FFF study also showed that freight and insurance costs for the imports were grossly misdeclared with an estimated P416 million lost.
“By not diligently enforcing its rules, the BoC did not only reduce the government’s collection of much-needed tariff revenues. More importantly, it deprived millions of small rice farmers of a cumulative amount which should have helped them cope with the ill effects of liberalized rice imports and even COVID-19,” Montemayor said.
Under the Rice Tariffication Law, P10 billion will be allocated annually for six years which will be used to increase the productivity and reduce the costs of production of rice farmers.
Although the fund itself is not dependent on tariff collections, the RTL provides that tariff proceeds in excess of P10 billion in a year can be used for additional support programs for farmers and will be appropriated by Congress.
“Funds for these supplemental programs may end up zero or very small as a result of tariff shortfalls resulting from undervaluation and other anomalies,” Montemayor said.
Last year, the FFF also flagged RTL’s tariff shortfall of P1.9 billion but did not receive any feedback from the government.
Source: https://www.philstar.com/business/2020/06/11/2020024/rice-imports-undervalued-p1-billion-under-tariffication