Duterte removes non-tariff barriers to agri imports

MANILA, Philippines — As prices of goods continue to soar, President Duterte has issued an order removing non-tariff barriers to importation of rice and other agriculture products and streamlining administrative procedures for accrediting importers.

Duterte’s Administrative Order (AO) No. 13 is directed at the Department of Agriculture (DA), National Food Authority (NFA), Sugar Regulatory Authority (SRA) and Department of Trade and Industry (DTI).

The Palace issued the order after the country’s economic advisers recommended that steps be immediately taken to arrest inflation, which accelerated to 6.4 percent in August from 5.7 percent the previous month.

AO 13 also sought to minimize the processing time for applications for importation. 

“There is an urgent need to tame the price spikes of basic agricultural commodities by adopting measures that remove non-tariff barriers and streamline administrative procedures to allow importation,” the order stated.

In issuing AO 13, the administration said it seeks to address the shortfall in supply and ensure stable prices of agricultural products in the domestic market.

The Palace also seeks to liberalize the issuance of permits and accreditation to traders as well as temporarily allow importation by sugar-using industries to lower their input cost – but subject to reasonable regulations.

“(This) will facilitate the importation of food beyond what we call as the authorized Minimum Access Volume (MAV). This means that traders can import more and all the fees will be removed,” presidential spokesman Harry Roque Jr. said yesterday, explaining the AO.

“There is a need to liberalize the issuance of permits and the accreditation of traders who import rice to break the monopoly of rice hoarders; and to temporarily allow direct importation of those utilizing sugar to import sugar if needed,” Roque added.

The President is also authorizing the NFA Council to approve additional rice importation beyond the MAV commitment for allocation to the private sector.

The DA is also allowed to issue the appropriate Certificate of Necessity to allow the importation of adequate volumes of fish to augment the 17,000 metric tons of fish already being distributed in the market.

In the order, the President directed the Bureau of Customs “to prioritize the unloading and release of (imported) agriculture products” to minimize or eliminate red tape.

In signing the order, Duterte invoked Republic Act 7581 or the Price Act, which mandates that the state “ensure the availability of basic necessities and prime commodities at reasonable prices at all times without denying legitimate business a fair return on investment.”

Based on the order, it’s the duty of the state to “provide effective and sufficient protection to consumers against hoarding, profiteering and cartels with respect to supply, distribution, marketing and pricing of said goods, especially during periods of calamity, emergency, widespread illegal price manipulation and other similar situations.”  

In AO 13, Duterte also ordered the creation of a surveillance team comprising the DTI, NFA, National Bureau of Investigation and Philippine National Police to monitor the importation and distribution of agricultural products.

The group is tasked to ensure the immediate distribution of agriculture products to warehouses and retail outlets, as well as prevent price manipulation.

As this developed, Executive Secretary Salvador Medialdea also signed Memorandum No. 26 for President Duterte directing the DA and the DTI to adopt measures aimed at reducing the gap between farm gate prices and retail prices of agriculture products.

It also mandated the setting up of public outlets and cold storages where producers of agricultural commodities, as well as poultry producers, can sell directly to consumers.

Hearing deferred

Fearing further economic backlash from the effects of the controversial Tax Reform for Acceleration and Inclusion (TRAIN) Law,  the Senate committee on ways and means is suspending deliberations on the second tranche of the tax reform measure at least until the Department of Finance (DOF) is able to present credible data that the proposed measure would not lead to loss of jobs.

The committee held its first hearing yesterday on the proposed Tax Reform for Attracting Better and High Quality Opportunities (TRABAHO) bill passed by the House of Representatives. Senators said they were not satisfied with the explanation of DOF officials.

“The government should really take this issue on jobs seriously. The bill should stay true to its name – that it would create more jobs rather than kill them,” Sen. Sonny Angara, chairman of the committee, told Finance Undersecretary Karl Kendrick Chua.

The senator also expected the National Economic and Development Authority (NEDA) to present its cost-benefit analysis of the incentives contained in the measure. But no representative from NEDA was present during the hearing.

Sen. Sherwin Gatchalian, chairman of the economic affairs committee, said a cursory examination of the measure left him confused as it showed the allocation of as much as P6 billion to fund safety nets for workers who may be displaced with the enactment of the bill.

“We’re branding the bill as creating work but we’re receiving mixed signals here,” Gatchalian said.

The senators said they welcome the intention of the bill to rationalize fiscal incentives to businesses by making them performance-based, time-bound and transparent to make sure that those benefitting from tax breaks and other incentives really contribute to the economy.

Director Dominique Tutay of the Department of Labor and Employment (DOLE) told the panel the bill might lead to job losses.

Tutay said  DOLE and DOF have yet to complete their joint study on the impact on jobs of the measure.

She revealed that based on their job displacement monitoring, 30,000 jobs in the industry and services sectors were lost in the first quarter of 2018.

Job loss fears

Following the passage of bill in the House, the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) released a statement warning that the bill would force them to lay off 140,000 workers.

They said several multinationals are now locating their expansions outside the country, largely due to the uncertainty over the status of their current tax incentives.

The House version provides for P500 million to be used for cash grants for displaced workers. An additional P500 million would be allocated for targeted training and skills upgrading.

Chua explained the allocations are just “contingency funds for possible job losses.”

Based on data from the DOF, a total of 1.7 million direct and seven million indirect jobs were generated by companies registered with investment promotion agencies (IPAs).

Angara has stressed the primary goal should be to create high-paying jobs, especially in the countryside.

“It seems that the grant of incentives is uneven across regions. We want to spread growth and development in the provinces,” he said.

DOLE official Tutay said the agency would be able to complete its study on the impact on jobs in two weeks.

The leadership of the House of Representatives, meanwhile, will start hearing on Monday the fourth package of TRAIN.

“This is a reform as significant as the recently signed TRAIN law that it aims to complement as it deals with the financial sector which contributes a lot to the economy and plays a crucial role in financing large-scale investments such as the build, build, build program,” committee on ways and means chair Rep. Estrellita Suansing said, referring to House Bill 8252 which seeks to provide neutrality in tax treatment, tax system, tax competitiveness and increase capital mobility and financial inclusion.  

DOF’s Chua, who was present during the committee briefing, said the revenue impact of this measure is around P13 billion on its first year. It is expected to decline as some tax rates become lower.

The finance official also stressed the government should look at the measure from a long-term perspective.

“Sometimes, when we just look at one provision of one package, we do not see the full benefit,” he said, apparently referring to the much-maligned TRAIN 1, widely blamed for rising inflation.

Chua said the government aims to address the deficiencies of the financial sector and institute necessary reforms to at least achieve revenue neutrality so that important government projects get regular and adequate funding.

Suansing, an ally of Speaker Gloria Macapagal-Arroyo and who took over the post of her predecessor lone Quirino Rep. Dakila Cua, said TRAIN 4 aims to make taxes on capital income and financial intermediaries simpler, fairer and more efficient.

HB 8252 or TRAIN 4 is authored by Suansing and her husband, incumbent Rep. Horacio Suansing Jr. of Sultan Kudarat.

Package 2 or the Trabaho bill seeks to lower corporate income tax while expanding the tax base.

Train Package 3 proposes improvements in the valuation of property so that the government can finance many of its local social services and programs.

The last package, also called “Package 2 Plus,” targets taxes on mining and excise taxes on alcohol and tobacco.  – with Paolo Romero, Delon Porcalla