Diokno sees extension of low tariffs on agriculture

MANILA, Philippines — The head of the country’s economic team is confident of seeing lower tariff rates on major agricultural commodities extended, as inflation sizzled to a 14-year high last month and is feared to soar further.

Finance chief Benjamin Diokno said he is optimistic that the lower tariff rates – as authorized under Executive Order 171 – would be extended, especially after inflation rose to 7.7 percent in October amid more expensive food commodities.

“Right now, it’s with the Tariff Commission but I think it’s just a matter of time before they approve it (extension),” Diokno told The STAR on the sidelines of the Philippine Extractive Industries Transparency Initiative conference yesterday.

“Yes, it will be extended. I think they will do that because we really need it,” he said.

EO 171 effectively reduced the tariff rates on pork, corn, rice and coal but the measure will expire by the end of the year.

The EO, issued by the previous administration, aimed to address inflationary concerns amid high oil prices that already trickled down to food items.

The Tariff Commission is set to hold a public consultation today to hear the sides of various stakeholders. Whatever is reached during the public consultation would be raised to the Committee on Tariff and Related Matters under the Department of Trade and Industry.

Finance undersecretary and chief economist Zeno Ronald Abenoja has emphasized that EO 171 has helped temper inflation to a large extent.

Abenoja estimates that 0.2 to 0.3 percentage points could have been added to headline inflation over the past months if the reduced tariff rates were not implemented.

“That’s what we have avoided. It’s likely that the same estimate will stand if the EO is not extended,” Abenoja told The STAR.

The Department of Finance and the entire economic team have been pushing for the EO’s extension, as inflation remains alarmingly high.

Abenoja argued that challenges continue to persist, both on the global and domestic fronts, thus the need for interim measures to prevent the situation from getting worse.

“Commodity prices have continued to be high and there are some challenges on the supply domestically. We are also affected by seasonality such as the typhoons so that will be taken into account,” Abenoja said.

“It’s (the situation) very fluid. We don’t know how much damage [there will be] because it’s still ongoing. Typhoons caused disruptions and if higher tariffs return by Jan. 1, there could be an uptick in inflation in the near term,” he said.

EO 171 extended the reduced tariff of 35 percent on imported rice until January, when tariff rates return to 40 percent in-quota and 50 percent out-quota.

It also lowered the in-quota tariffs on corn imports to five percent from 35 percent and set zero tariffs on coal.