THE GOVERNMENT HAS PAVED THE WAY for private firms to import tax-free sugar to stabilize the price of the commodity in the local market.

Malacañang on Wednesday issued Executive Order No. 857 authorizing the state-run National Food Authority (NFA) to import sugar together with the private sector.

The order essentially told the grains authority to include sugar in its commodity coverage to stabilize the country?s supply and prices of the sweetener and authorized the NFA ?to use its corporate fund, manpower and other facilities? as may be necessary.

Specifically, the grains authority was allowed to become the importer on record so that sugar may be imported without the 38-percent duty currently imposed on the commodity.

?The private sector and the NFA shall import sugar using the tax expenditure scheme of the NFA,? the order said, referring to NFA?s tax subsidy from the national government. The government is set to forego P2.1 billion in taxes by allowing this scheme.

The order will remain in effect until Dec. 31, 2010.

The NFA has drafted guidelines for the importation pending Malacañang?s order and an authorization from the Department of Finance on the tax subsidy. The draft was made in coordination with industry stakeholders and the Sugar Regulatory Administration (SRA).

According to the final draft of the guidelines, 150,000 tons of sugar will be imported. Of this, industrial users such as food and drink manufacturers will be allowed to bring in 75,000 tons. Each industrial user will have an individual allocation of 5,000 tons.

Meanwhile, 30,000 tons will be allocated to institutional users such as hotels and bakeries and 15,000 tons may be brought in for small businesses such as retailers. Institutional and small business users may each import 1,000 tons of sugar.

The NFA may import 30,000 tons to be sold as low-priced sugar in government-accredited outlets (known as Tindahan Natin outlets) to benefit low-income families. But the same volume could still go to private firms.

An official of the NFA said the guidelines were ?not yet final? until these have been published, complete with dates for a pre-bidding conference and the date for auctioning the rights or permits to import.

The firms who acquire the import rights will have to find the sugar supply, negotiate the price and manage the delivery.

The tentative delivery dates for the imported sugar were April 30 (for 60,000 tons) and June 30 (90,000 tons). However, stakeholders in the sugar industry have asked the government to make sure the imported sugar would be delivered after the milling season has ended in April. If the government relents, this will bring the schedule back to the original May to August delivery target.

Local sugar prices are at an all-time high of around P1,900 per bag. Archimedes Amarra, executive director of the Philippine Sugar Millers Association, said he has ?never seen prices reach this high before.?