NEDA to study impact of sugar liberalization

MANILA, Philippines — The National Economic and Development Authority (NEDA) will begin to study this year the impact of the liberalization of sugar importation, saying it is needed to drive down the price of the commodity and improve the competitiveness of local industries.

In a recent interview, officials of the country’s leading socioeconomic planning agency said the high price of sugar in the country is preventing several industries—like food manufacturing— from becoming competitive.

Socioeconomic Planning Secretary Ernesto Pernia said this is already being discussed within the economic development cluster.

“We talked about sugar as the next to be liberalized (after rice),” he told reporters. “Let users import them directly so they can avoid the high intermediation cost,” he said.

The removal of constraints in the importation of sugar comes in the wake of the legislation of the replacement of quantitative restriction in rice with tariffication to increase supply and drive down prices.

The domestic sugar industry is among the most regulated and protected sectors in the country with the Sugar Regulatory Administration (SRA) strictly allocating the use of locally-produced sugar and setting the maximum import volume for the commodity.

Pernia acknowledged, however, that it would be more difficult to liberalize sugar than it is to tarrify rice because the lobby would be stronger.

“It will be a tougher fight because the industry has political backing,” he said.

NEDA will conduct a study on the benefits and effects of free importation of sugar to enable the economic team to come up with a firm recommendation and draft a bill.

“There are many industries using sugar. They are complaining that sugar prices are high,” said Pernia. “if we allow imports, it will compete with local production and bring down local prices.”

NEDA Undersecretary for Policy and Planning Rosemarie Edillon said NEDA would be working with University of the Philippines (UP) economist Ramon Clarete in assessing the impact and identify the benefits of liberalizing sugar trade.

Several options considered to liberalize sugar importation include amending the law creating the Sugar Regulatory Administration (SRA) or easing constraints administratively.

Should legislation be needed to remove constraints to importation, Edillon said the opening of the new Congress would be a strategic time to file a bill.