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Philippines: Lifting QR on rice imports benefits economy – DOF
MANILA, Philippines — Removing the quantitative restrictions (QR) on rice imports would bring several benefits to the economy, such as lower rice prices and poverty reduction, the Department of Finance (DOF) said yesterday.
In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said lifting the QR on rice, in favor of imposing higher tariff, would encourage traders to import the commodity and allow the influx of cheaper rice into the domestic market.
He said this would, therefore, cut the retail price of rice by as much as P7 per kilogram.
Citing studies done by the National Economic and Development Authority (NEDA), Beltran said pulling down the price of the staple would be beneficial to the majority of poor households as they spend at least 20 percent of their budget on rice.
He added that reducing rice prices would be crucial to the poverty reduction thrust of the Duterte administration because it is a major driver of inflation.
The World Trade Organization first allowed the Philippines to impose a 10-year QR on rice imports in 1995. It was extended in 2004 until 2012, and then was renewed again in 2014. Another extension was granted until June 30, 2017 to give local farmers more time to prepare for free trade.
The economic managers of the Duterte administration earlier decided to allow the expiration of the QR. Importing outside the volume restrictions will entail a higher import tariff, Beltran said.
At 35 percent, the undersecretary said the proposed tariffication of rice would generate P27.3 billion in additional revenues in the next six years, which he said can be used to augment the funding for the government’s social protection projects like cash transfers and rice productivity programs, such as farm-to-market roads and irrigation.
“The tariff revenues that will be generated from rice imports can augment the funds used for the government’s social welfare programs for the poor (e.g., Conditional Cash Transfer) and rice productivity programs that will enhance efficiency. Tariff revenue is estimated at P27.3 billion annually from 2017 to 2023,” Beltran said.
Beltran said such cash transfers could cut poverty incidence by as much as three percent and help at least 730,000 people out of the poverty trap.
Furthermore, the chief economist said the impending expiration of the QR would pave way for the proposed reorganization of the National Food Authority (NFA).
“Given that import quotas will be eliminated, the private sector is encouraged to increase importations, thereby reducing import requirements of the NFA and its financial burden to the government,” he said.
Source: http://www.philstar.com/business/2017/12/19/1769631/lifting-qr-rice-imports-benefits-economy-dof