Tariffication law to cut rice smuggling
Credit to Author: The Manila Times| Date: Fri, 01 Mar 2019 17:35:08 +0000
The tariffication law is crucial in the government’s campaign against rice smuggling, the Department of Finance (DoF) said yesterday.
In a press conference, Finance Assistant Secretary Antonio Lambino said the law is the most important weapon as it removes the incentives to smuggle rice.
Signed by President Rodrigo Duterte recently, the tariffication law provides for the removal of import restrictions on rice with tariffs; lifting of quantitative restrictions; and allowing the National Food Authority (NFA) to procure its buffer stock from the country’s farmers.
The law also mandates the creation of a rice comprehensive enhancement fund which provides for P10 billion annually for six years to ensure that duties collected from imported rice will help local farmers.
“Before, because the volume of imports were controlled, and few are benefiting on the previous importation regime, the incentives are bigger because artificially the prices are high. Now, because the price will come closer to the world price or regional price, the incentives to smuggle were lessened,” Lambino said.
Lambino said the rice tariffication act aims to bring down smuggling cases to as low as possible. “In rice, the biggest incentive for smuggling was the artificially high price of rice in our retail markets. Without tariffication, the incentive was so high. But now that we have tariffied, the imported price will be [shouldered] by the importer plus a manageable tariff that will go to the farmer[s], the main incentive for smuggling was removed,” said Lambino.
He added that the government’s move to liberalize the importation of rice is helpful. Because anyone can import rice as long as they are willing to pay tariff, the incentive to smuggle was taken out, he said. “What would you do to the stock you will hoard if there is much supply and more will come in because anyone can already import? They [traders] will lose money,” he added.
“So, it brings about good behavior, in other words. We have set up our import rules so that we can strengthen force to follow the law rather than break the law,” Lambino said.
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