The Department of Finance (DOF) is "strongly objecting" to the appeals for President Duterte to recall his executive order (EO) that reduced the tariffs of imported rice, saying its benefits would outweigh the revenues that the government will lose.
The House Committee on Agriculture discussed Thursday, July 1, the proposed resolution calling for the revocation of EO No. 135, which reduced the rice import duties for Most Favored Nations (MFNs) to 35 percent, from the previous 40 to 50 percent, for a period of one year.
The DOF supported the position of the Department of Agriculture (DA) in maintaining the need to further open up importation to supposedly prevent any increase in rice prices due to the export bans in Vietnam and Thailand -- the Philippines' top sources of rice imports -- amid the COVID-19 pandemic.
"The benefit of tariff rate adjustment outweigh the cost of foregone tariff revenue," Finance Undersecretary Elsa Agustin told the House panel.
Citing estimates from the Bangko Sentral ng Pilipinas (BSP), the DOF official said the reduction of the rice tariffs will result in consumer savings of about P724 million to P836 million.
Foregone revenues "will only amount to" P231 million to P740 million, she said.
"This means there's a net benefit of around P605 million," Agustin added.
Further, she said the reduction is only 1.5 percent of the total P15.5 billion collected by the government from rice imports in 2020.
Agustin stressed the need to import from non-ASEAN countries to counter the inflationary impacts of rice, citing an "upward trend" in the contribution of rice to overall inflation since March last year, even as prices have decreased in the first quarter of this year.
"EO 135 is a tool that can help to further drive the retail price of rice down," Agustin said.
"This is particularly helpful for low-income households that they devote fifth or 20 percent of their household income to rice alone," she said.
DA officials, in the hearing, said the government also hopes to lessen the Philippines' dependence in Vietnam for rice by increasing imports from India instead.
Secretary William Dar, through his chief of staff Leo Sebastian, said this could also strengthen the Philippines' trading relationship with India.
"India is a major source of COVID-19 vaccines," said Sebastian, who was presenting the DA's position in lieu of Dar.
Farmers' groups and other stakeholders, as well as lawmakers, however, are not convinced with the executive department's explanations on the need to import, maintaining that the government should work on improving local production and helping Filipino rice farmers.