DOF clarifies: Rice tariffication law takes effect on March 5

MANILA, Philippines – The Rice Tariffication Act takes effect on March 5 — not March 3 as earlier announced, with up to P11 billion in import duties expected to be collected under the law during its first year of implementation, the Department of Finance (DOF) said Tuesday.

Separately, the country’s chief economist said the law will bring down domestic rice prices closer to global prices, hence, ensuring the availability of cheaper supply in the market.

In a statement, Finance Assistant Secretary Assistant Secretary Antonio Joselito G. Lambino II explained that since Republic Act (RA) No. 11203 was published in the Official Gazette on February 18, the removal of rice import quota will start 15 days later or on March 5.

President Rodrigo Duterte signed RA 11203 on February 14.

However, during last Monday’s National Food Authority (NFA) Council meeting, “the members assumed that the publication of the law was done on Feb. 15, hence, they agreed that imposing tariffs on rice imports should start on March 3,” Lambino explained.

The following tariff rates will apply under RA 11203:

• 35 percent if rice was imported from within Asean;
• 40 percent if within the minimum access volume (MAV) of 350,000 metric tons for imports coming from countries outside Asean; and
• 180 percent if above the MAV and from a non-Asean country.

The rice tariffication law also took away NFA’s commercial functions and regulatory powers, only retaining its emergency buffer stocking mandate.

With the removal of the rice import quota or so-called quantitative restrictions (QR), prices of the Filipino staple food were expected to be slashed by P2-7 per kilo, and would bring down the inflation rate by 0.6 percentage point this year, Lambino said, citing Bangko Sentral ng Pilipinas (BSP) estimates.

The government would collect P7-11 billion in tariffs during RA 11203’s first year of implementation, he added.

During the NFA Council meeting led by Finance Secretary Carlos G. Dominguez III, the interagency body ordered the grains agency to submit a restructuring plan within 30 days instead of NFA’s proposal to do so during a 180-day period.

For Dominguez, “30 days is sufficient to make a plan,” he said in a Viber message to finance reporters.

The NFA Council also green-lighted transferring the functions of NFA to the Department of Agriculture (DA), as well as the transfer of the Food Development Center from NFA to DA during a shorter period than the proposed 60-day period.

Asked if the government can already implement the Rice Tariffication Act on March 5 even as its implementing rules and regulations (IRR) was still being crafted, Dominguez replied: “The provisions of the law are very clear.”

“There are parts of the law that are clear, upfront and can be implemented earlier than the parts of the law that require an IRR to implement. So the heart of the reform, which tariffies rice importation with the least government intervention, will be implemented as soon as possible to bring down rice prices for more than 100 million Filipino rice consumers,” Dominguez said.

For its part, the state planning agency National Economic and Development Authority (Neda), which leads the crafting of the IRR, said in a statement also on Tuesday that a draft of the proposed guidelines “will be subjected to public consultation in the coming days.”

“The draft IRR contains provisions on the removal of NFA’s regulatory powers and the streamlining of import requirements. It also provides details on the necessary institutional arrangements that will enhance competitiveness and institute safety nets to assist local farmers affected by the removal of the QR on rice imports,” Neda said.

“Anyone, whether a small or a big trader, can now import as long as they have secured a phytosanitary clearance from the DA and paid the corresponding tariff. By removing the NFA’s decades-old monopoly on rice importation, we promote greater participation of the private sector and enhance competition in the market,” said Socioeconomic Planning Secretary Ernesto M. Pernia.

Also, “the law provides sure and transparent support to farmers through a comprehensive assistance program to the tune of at least P10 billion a year for the next six years,” the Neda chief added.

“In particular, the Rice Competitiveness Enhancement Fund (RCEF) will be used to provide key interventions to support farmers and enhance their competitiveness and profitability, including farm machinery and equipment to improve farm operations, rice seed development, propagation, and promotion, expanded rice credit, and extension services. A portion of the rice tariff revenues in excess of P10 billion will be used to provide direct financial assistance to rice farmers affected by the removal of the QR and for diversification to high-value crops,” Neda said.

“The law also grants the President the power to increase, reduce, revise or adjust existing tariff rates to safeguard Filipino farmers. In case of imminent danger of rice shortage, the bill empowers the President, for a limited period and for a specified volume, to allow importation at lower tariff rates for the benefit of consumers. The bill also enables the President to increase the applied tariff to more than 100 percent (but not to exceed the specified bound rate) if warranted,” according to Pernia.

“A special safeguard duty on rice will also be imposed to protect the rice industry from sudden or extreme price fluctuations. A safeguard duty is a temporary increase in import duty of an agricultural product to deal with import surges or price falls, under the WTO [World Trade Organization] Agreement on Agriculture,” he also said.

Pernia said the law likewise mandated the formulation and adoption of a rice industry roadmap within 180 days from its effectivity date. /kga