|
THE World Bank estimated that the country’s rice-subsidy policy
cost the government an average of 1.6 percent of its economic output
in 2000 to 2005.
In its report East Asia: Testing Times Ahead,
the Washington-based lender warned the Philippine government and its
neighboring countries to avoid universal subsidies as they can
quickly become fiscally ruinous.
“The efficiency cost of the Philippines’
rice self-sufficiency policy is estimated to have cost an average
1.6 percent of GDP [gross domestic product] in 2000 to 2005,” the
World Bank report said. GDP is the total value of goods produced and
services provided within a country during one year.
“In some cases, governments may also be in the
position where removing policy distortions will help reduce the cost
of food for the poor while also improving economic efficiency, for
example by reducing or removing import restrictions on food
imports,” it added.
In the Philippines, the report said, rice
imports are subject to a 50-percent import tariff, as well as
quantitative import controls.
Vera Songwe, outgoing lead economist of the
World Bank in the Philippines, recommended to the government to
liberalize the market on basic commodities such as rice.
Songwe said the country consumes about 33,000
metric tons of rice a day.
“The best thing to do is for the government to
begin to liberalize the market and have prices reduced for all,
that’s one of the ways to address the issue. We need competition,
irrespective of the kind of commodities,” he told reporters.
The World Bank estimated that every 10-percent
increase in rice prices reduces the real value of the expenditure of
the poorest tenth of the population by 2 percent.
Earlier, Felipe Medalla, an economist and a
former Socioeconomic Planning secretary, proposed to open up rice
importation to the private sector as a long-term solution to address
a possible rice crisis in the country.
Medalla said the government is losing money
because it buys rice at a high price and sells low to the consumers.
The former Socioeconomic Planning chief added
that he had heard from an official of National Food Authority that
there will be losses of P100 billion by 2010 because of expensive
rice importations.
The World Bank report said the sharp rise in
international food prices is likely to have a significant impact on
the living standards of the poor throughout the developing world,
posing one of the more urgent and difficult problems facing
governments today.
“Food comprises a larger share of the
consumption basket of the population in most developing East Asian
economies,” the report added.
In the US, the share of food in the consumption
basket of the average household is 15 percent, while in East Asia it
ranges between 31 percent and 50 percent.
In Malaysia, it accounts for about 31 percent;
China, 34 percent; Thailand, 36 percent; Indonesia, 40 percent;
Vietnam, 43 percent; and the Philippines, 50 percent.
“The impact of food increases on the poor also
depends on whether they are net food consumers whose real income
will be reduced by higher food prices, or net producers of food, who
will tend to benefit. The urban poor and landless rural workers are
generally food consumers as, typically, are a significant fraction
of poor small landholders,” the World Bank report said.
-- Darwin G. Amojelar
|
