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DEMAND AND SUPPLY - Boo Chanco (The Philippine Star) - February 22, 2019 - 12:00am

Speaker Gloria Macapagal Arroyo delivered on President Duterte’s priorities as far as the House is concerned. No one could have expected the former Speaker, even if he is also from Davao, to deliver what Speaker Arroyo did.

On top of the list is the landmark reform of our rice industry. President Duterte deserves congratulations for showing real political will to embrace long needed change that will benefit rice farmers as well as rice consumers.

Despite resistance from his own agriculture secretary, the President signed the rice tariffication bill into law. He could have just allowed it to lapse and then pin responsibility on his economic managers and Congress. But he signed it to deliver a strong point that he wants a new system.

Starting March, NFA will no longer control rice importations. Instead, rice imports will be covered by new tariffs: 35 percent for rice imports sourced from ASEAN members; 40 percent for imports within the 350,000 metric ton minimum access volume (MAV) regardless of source country; and 180 percent for above-MAV imports from non-ASEAN country.

The tariffs are expected to raise between P7 billion to P11 billion in additional government revenues in its first year of implementation. Economic managers are also expecting a P7 per kilo drop in rice prices with the influx of imported rice and with it, result in a lower inflation rate.

Government will pass on the 35 percent tariff on imported rice to farmers to help them become more competitive. Under NFA trading restrictions, only 23 percent of the potential protection was passed on to farmers in 2017.

UP economist Ramon Clarete estimates that rice consumers in Metro Manila in 2017 paid on average 41 percent more than the landed price of rice imported freely from Vietnam or Thailand. But our rice farmers sold their rice at only nine percent above this free trade price. The difference, or 32 percent went to rice traders, millers, or were simply lost to market inefficiencies in the rice value chain.

By signing the rice tariffication bill into law, President Duterte kicks off the process of substantially reducing the inefficiencies and collusion in the rice market system. Clarete explained this old system made rice farmers poor over the last half century. Farmers will be better off as they capture more of the intended trade protection of the law from rice traders in collusion with corrupt NFA agents.

Indeed, Clarete pointed out, most of the rice farmers are also rice consumers during most part of the year. The new law benefits them, along with non-rice farmers in rural areas, fisherfolk, workers, and residents in urban areas.

The new law also opens the market to conglomerates like San Miguel whose experience and resources can provide the efficiencies that can bring down further the retail price of rice. It will also be easier to track import volumes and tax liabilities with San Miguel than it would be with Divisoria rice traders.

President Duterte also signed into law the Mobile Number Portability Act that allows cell phone users to switch networks without changing their numbers. This is in line with the President’s desire to have more competitiveness in the telco industry.

As the law itself pointed out in Section 3 (a), it wants “to promote consumer welfare as it fosters the freedom to choose and to respond to quality, price and other relevant considerations without the consumers having to change their mobile numbers whenever they change mobile service providers or subscription plans.”

Mobile number portability is the ability of a mobile postpaid or prepaid subscriber to retain an existing mobile number despite having moved from one mobile service provider to another, or to change subscription mode from postpaid to prepaid or vice versa. Under this law, telcos must act within 24 hours from the time a subscriber submits application.

I like this new law. NTC could have ordered this, but it had always been too scared or too much of a captive regulator of the telco industry to do so.

But then, we still have just two telcos to choose from. Many of us already have accounts in both, just to make sure. We still need the third, fourth, and possibly fifth telco to fully benefit from the law.

Still, it is a good start and the intentions of the Duterte administration in having this law is laudable.

But there could have been more laws delivered to promote our welfare as telecoms consumers… the Open Access bill for instance.

It is amazing how a single senator stood in the way of passing legislation that will speed up internet speed by introducing more competition through open access. That could have had more immediate effect on our lives than the third telco.

Then there is the law creating the Department of Human Settlements and Urban Development. It consolidates the Housing and Urban Development Coordinating Council (HUDCC) and the Housing and Land Use Regulatory Board (HLURB). Hopefully, this will give us a more comprehensive way of addressing the housing needs of people.

Good intentions, but with the same bureaucracy, we cannot expect much unless Duterte appoints a really good secretary. Will this mean we will have better planning and land use policies? I have my doubts, but hopeful.

Given the high rate of growth of our urban areas, we need better regulation and better regulators. The areas around Clark are booming and it will be a pity if the nearby towns end up like Metro Manila did.

Problems like congestion due to lack of planning and appropriate regulations can be observed in Angeles, Mabalacat, and San Fernando. Ayala is starting to develop virgin fields in Porac of 1,800 hectares and only 22 percent open space instead of the minimum 30 percent required by PD957. So much work to do for this new department.

There are many other new laws signed by the President in recent days. On the whole it is good to see some progress with these new laws. Interesting to see how the implementation side works out.

Boo Chanco’s e-mail address is Follow him on Twitter @boochanco

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