Foreign investments to be restricted in rice sector


The Philippines will allow foreign direct investments (FDIs) in some aspects of rice sector, but maintained that it would not allow full foreign equity in production and supply chain.

In a memorandum to Department of Agriculture Secretary Proceso Alcala, Assistant Secretary Dante Delima said that the National Rice Program favors partial foreign investments in agriculture in light of a letter from the National Economic and Development Authority, seeking the agency’s views or positions on proposals to lift limitations on foreign participation in agriculture.

“In general, the National Rice Program is of the view that rice, as the country’s food staple, is a political commodity and should not be left in the hands of foreign capital to control,” Delima said.

“This level of food sovereignty, at least insofar as rice is concerned, is consistent with the [Aquino] administration’s thrust to become self-sufficient in rice and other food staples as outlined in the Food Staples Sufficiency Program [FSSP],” he added in the memo.

Delima, citing the FSSP, which is also the National Rice Program’s roadmap, clarified that rice remains an important crop as food and as source of livelihood.

“More than two million households are engaged in rice-based farming; millions more of farm laborers and tens of thousands of merchants, depend on rice farming and trading for a living,” he said.

In addition, the National Rice Program coordinator said that the realities of world trade make self-sufficiency a desirable goal.

He added that the country can be held to ransom by any reason (economic, political, or ideological), and world rice trade is the subject of political decisions by governments, who are the biggest market players and who consider rice a vital commodity.

“It is for these considerations that we strongly oppose a proposed 100-percent foreign equity in rice production and supply; while allowing for limited foreign direct investments in postharvest and marketing activities, subject to consultations with rice stakeholders,” Delima said.

The official, however, said that they support foreign direct investments in the area of farm mechanization, postharvest facilities, credit, processing of by-products and other high-end products and exports.

He proposed that the government’s investment board designate the amount of FDIs, while joint venture agreements may be subject to mutually agreed upon ratio of investments.

Delima also said that tax holidays and tax relief may be granted for a specific period, like five years, while lease contracts may be subject to a 25-year term, renewable every 10 years thereafter.

Employment of local citizens may be mandated in areas where no or little skill is required; while for areas that need special skills, the number of employees from the local skilled labor force or experts may gradually be increased over time.

A percentage of the net profit of the investor should remain in the country, while the remainder may be transferred back to the foreigner’s country, with the permission of the Board of Investments, Delima said.


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