The National Economic and Development Authority (NEDA) Board headed by President Ferdinand Marcos Jr., has approved lower tariffs on rice and extended existing tariff cuts on some other commodities to combat inflation and ensure ample supply, NEDA Secretary Arsenio Balisacan said yesterday.
The NEDA board also approved the Comprehensive Tariff Program for 2024-2028 that calibrates the current tariff rates until 2028 to ensure access to, and affordability of, essential commodities.
Balisacan said the Comprehensive Tariff Program is a strategic move that will balance the interest of consumers and local producers which is crucial for fostering rapid, sustained and inclusive economic growth. An executive order will be issued on the new tariff program.
Tariffs on rice will be cut to 15 percent for both in-quota and out-quota rates, down from 35 percent, through to 2028, Lower tariffs on corn, pork and mechanically de-boned meat were also extended until 2028.
The Philippines will also lower import duties for chemicals and coal briquettes to reduce energy prices, Balisacan said.
The Philippines is one of the world’s largest rice importers.
“This tariff reduction will substantially ease the upward pressure on domestic prices,” Balisacan said.
Annual inflation quickened for a third straight month in April to 3.8 percent , driven by an uptick in transport and food prices, including rice.
“Reducing rice tariff is expected to bring down rice prices for consumers while also supporting domestic production through tariff cover and increased budgetary support to improve agricultural productivity especially as global rice prices remain elevated,” Balisacan said.
Balisacan said based on the latest inflation reports of the Philippine Statistics Authority in the past three months, rice contributed about 2 percentage points or over 50 percent to the headline inflation.
He added the current upward price pressure for rice has been driven by the effects of the El Niño phenomenon as well as increasing demand given the growing population and economy.
Impact Balisacan said this is expected to lower rice prices to at least P29 per kilo but not as a general price but for the poor and vulnerable sector who will be receiving direct subsidies from the government.
Balisacan said that while the tariff is lowered to 15 percent, it would still generate a substantial amount for the government and the Rice Competitiveness Enhancement Fund (RCEF).
He said the rice sector would continue to enjoy comparatively high tariff protection from competitive imports as the “tariff is higher for the 80 to 90 percent of the total 11,484 tariff lines under the Asean Tariff Nomenclature 2022”.
“The remaining tariff is still quite substantial. It’s still 15 percent. So whatever imports, if those imports are coming in at still elevated high prices, it’d still be quite a substantial tariff revenue for the RCEF,” he said in mixed English and Filipino.
On the impact of the reduced tariff on rice farmers, Balisacan said there are specific programs that address the plight of farmers such as provision of subsidies, assistance and services.
Balisacan emphasized the importance of the tariff reduction as rice prices in the world market are expected to continue to increase until September.
“The market says that by September we will likely see a moderation of prices, but some other forecasts also showed that if beyond September (prices) may still continue to elevate. So, it’s better be prepared,” he said.
Other tariff moves
Balisacan said the NEDA Board also agreed to maintain until 2028 the reduced tariff rates on corn, pork and mechanically-deboned meat identified under Executive Order No. 50 that was issued in 2023.
Balisacan said this would ensure the stable supply of these commodities, help manage inflation, promote policy stability and investment planning and enhance food security.
The reduced rates on meat and other products under the modified Most Favoured Nation (MFN) rates was initially effective until the end 2024.
Balisacan said the NEDA Board likewise approved the recommendations of the Committee on Tariff and Related Matters (CTRM) to maintain the current rates on more than half of the tariff lines covering various agricultural and industrial products especially for raw materials and intermediate inputs used in manufacturing.
He said tariff cover for various other agricultural products such as sugar, onions, shallots, garlic, broccoli, carrots, cabbage, lettuce, sweet potatoes, cassava, coffee substitutes, complete feeds, and feed preparations are retained, while tariff lines on certain chemical and chemical products, textiles, machinery and transport equipment are merged to simplify the tariff structure for more efficient customs administration and improve the ease of doing business.
He said the tariff maintenance will ensure access to inputs and support efforts to improve productivity and competitiveness as well as help domestic industries by reducing the cost they incur for their inputs, enabling them to be more competitive especially in the global market.
Taxes on inputs to manufacture antiseptics, detergents and medical deserts are also reduced to “help lower production cost and improve consumer welfare.”
Also approved was reduction of tariff on certain chemicals and coal briquettes to improve energy security and reduce input costs.
“Tariff reduction on coal will help ensure its availability at reasonable prices, thus supporting more stable electricity prices and supply in the country. Given our present energy constraints, this reduction will be timely as we steadily work toward implementing planned investment, transmission facilities and renewable energy infrastructure in the coming years,” Balisacan said.
Infra progress
Meanwhile, the NEDA board also discussed the progress of the 185 infrastructure flagship projects (IFPs) under the Build Better More Program for the first quarter of the year.
Balisacan said since the President’s State of the Nation Address in 2023, three IFPs were completed, eight are still under construction, while go signals were given to six other projects.
