The Bangsamoro should defy the NFA

The simplest and least expensive move for fighting poverty is to let any Filipino be free to buy cheaper rice from abroad. The great enemy of this move is the National Food Authority (see “End the NFA monopoly!” Opinion, 4/22/17).

Rice costs only half as much in Thailand. The wholesale price of rice in the Bangkok metropolis in June 2018 (latest available month) was 12,360 baht per metric ton, for 5 percent broken rice, which is high quality. This is only 19.78 pesos per kg at the exchange rate of 1.60 Philippine pesos per Thai baht (price data from the Bank of Thailand: https://www2/bot.or.th/statistics/ReportPage.aspx?reportID=898&language=eng).

On the other hand, the wholesale price per kg of well-milled rice was42.30 pesos in the Philippines as a whole, and 40.40 pesos in Metro Manila in particular, as of the third week of July (source, Philippine Statistics Authority: https://psa.gov.ph/content/updates-palay-rice-and-corn-prices-0).

The government is failing on its promise to remove controls over rice imports. Sadly, there is no reduction in the NFA’s rice import monopoly in House Bill No. 7735, “An act replacing the quantitative import restrictions on rice with tariffs and creating the Rice Competitiveness Enhancement Fund.” The bill lets the NFA retain “sole authority to undertake the direct importation of rice, of ensuring food security and maintaining sufficient national buffer stocks.”

Then it authorizes the NFA “to allocate import permits among certified and licensed importers for importation other than maintaining buffer stocks.” This only solidifies the NFA’s present powers to decide the rice importation details of how much, when and (most of all) who.

HB 7735 also provides that “for imported rice originating from ASEAN Member States, the import duty rate commitments of the Philippines in the ASEAN Trade in Goods Agreement (ATIGA) shall be adopted.”

The import duty for rice was already reduced to 35 percent in 2015, by Executive Order No. 894 (6/18/2010). To me, that is at least 30 percent too high, since ATIGA sets 0-5 percent as the normal tariff for the area. I think the ideal tariff is zero.

The Bangsamoro has a way to defy the NFA, however. The new Bangsamoro Organic Law, RA No. 11054, states in Art. XIII, Sec. 28, “Economic Zones, Industrial Estates, and Free Ports,” that the Bangsamoro Government may establish a Bangsamoro Economic Zone Authority (BEZA), with similar powers as those of the Philippine Economic Zone Authority. Its Parliament may provide such additional powers and functions to the BEZA as may be necessary to meet the special circumstances of the Bangsamoro Autonomous Region.

There is a proviso that “for goods consumed and services rendered outside the established economic zones, industrial estates, and free ports in the Bangsamoro Autonomous Region, all relevant national taxes shall be imposed.” But the section also states: “The area of coverage of a free port may be so much as may be necessary of that portion of the constituent local government units of the Bangsamoro Autonomous Region, subject to such criteria as the Parliament may provide in a law for that purpose.”

This suggests that the economy of the entire region could be organized to be as free as that of Hong Kong.

I hope the Bangsamoro people will work rapidly to set up their government, and take full advantage of all the economic freedom that seems available in their new organic law. Their looming prosperity will make them the envy of Filipinos everywhere.

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