Lifting of ban on foreign investments in rice and corn sectors in the country has been pushed in light of the need to develop and improve production of these two staple commodities of Filipinos.

In a statement, the Foundation for Economic Freedom (FEF) has called on the 19th Congress to build on its momentum to attract more capital into the country by removing foreign investment restrictions in the critical rice and corn sectors – staple commodities of the Filipino food basket.

As far back as 1960, FEF said that by virtue of the Rice and Corn Nationalization Law (RA No. 3018), non-Filipinos were prohibited from participating in the rice and corn industries. In 1973, through the Rice and Corn Law (PD No. 194), efforts were made to reduce this restriction by allowing the entry of foreign persons or entities in the said sectors to promote a national effort to develop the domestic rice and corn industry, especially in cases where grains, including rice and corn and/or by-products thereof, are used for direct consumption or as raw materials.

The same law, however, empowers the then-National Grains Authority (NGA) to prescribe a period allowed for foreign wholly-owned companies to engage in the rice and corn trade, after which a mandatory divestment of a foreign operation was required at a minimum 60-40 ratio in favor of domestic equity.

Subsequently, in 1998, the National Food Authority (the successor of NGA) issued Resolution No. 193-98 setting the period of divestment for foreign companies at thirty (30) years counted from the time of actual operations. It is worth noting that the mere acquisition as raw materials for manufacture or processing of finished goods, culture, production, milling, processing and trading, of rice, corn and their by-products constituted “participation” in the said sectors.

These laws and issuances have restricted the entry of foreign investments in these capital-starved sectors. These policies have hampered the growth of foreign participation in these two vital staple markets, while threatening the many foreign companies involved in the rice and corn sectors today, including those which use these commodities as inputs to their production processes such as food and feed manufacturers, as well as livestock and poultry growers.

The fact that the country must rely on imports for these staple commodities suggests that further investment in the rice and corn sectors is utterly needed from both domestic and foreign sources. The added benefit of foreign investment in these sectors can also translate to the transfer of new technologies (such as biotech seeds) and the development of higher value-added downstream industries (such as ethanol or even starch/syrup production).

As the new administration looks to pursue food security as a foundation for national development, FEF said the opening up of the rice and corn sectors can unleash a new age of investments and technology transfer that can boost the productivity of these commodities on the supply side, while also inducing a healthy demand for these crops in more modern, higher value-added contribution sectors downstream.

FEF believes that opening up these sectors to foreign capital would mean generation of more jobs, increase market competition, improve affordability, accessibility and availability of rice and corn for all Filipinos.

“This reform is especially timely given the food shortages, high food prices, malnutrition, and hunger the country faces today,” the statement noted.

“In this regard, we urge the 19th Congress to pursue the full repeal of the Rice and Corn Law and opening up the rice and corn sectors to full foreign participation,” FEF concluded.