Federation of Free Farmers Board chair Leonardo Montemayor said the group is strongly opposing the Regional Comprehensive Economic Partnership (RCEP), adding that tariffs on salt, monggo, onions, and other products remain high.
Montemayor, facing the hearing of the Senate Subcommittee on Foreign Relations, that the agri-fishery sector was kept in the dark even before former President Rodrigo Duterte signed a Free Trade Agreement (FTA) on September 2020.
The Senate panel is chaired by Senate Pro Tempore Loren Legarda. The Senate until now has not ratified the FTA which calls for the Philippines to partner with countries such as Australia, New Zealand, Japan, South Korea, and China.
The Senate inquiry was conducted to look into the RCEP’s effects on the country’s economy, particularly the agricultural sector and the life of every Filipino. Montemayor also divulged they did not know about the RCEP and FTA not until it was signed by the former president
Montemayor also said the group is small, as it makes up 25% of the labor force which includes farmers, fishers, and other agricultural producers.
Furthermore, he said their contributions to the gross domestic product (GDP) is 35%. Montemayor also lamented that despite their huge contribution, the highest poverty incidence is found in the rural sector that include the agricultural workers.
He said they have long been waiting for the measures of the government so that the country’s agricultural products will not be affected by the FTA.
Senate President Migz Zubiri said they did not ratify the RCEP in the previous Congress due to their concerns to the agricultural sector.
Trade chief. Alfred Pascual guaranteed that the department will carefully look into the negotiations. He said products sensitive to Filipino farmers like onions and meat will not be included in the tariff.
Albay Rep. Joey Sarte Salceda, chairperson of the House of Representatives committee on ways and means, meanwhile has vowed to address issues regarding “the value added tax treatment of indirect exporters and local suppliers of direct exporters.” Macon Ramos-Araneta and Maricel V. Cruz
Salceda said his committee is set to file resolution to enable Congress to resolve the matter, as well as file a bill to amend Section 311 on Investments Prior to the Effectivity of this Act, and other relevant sections of the National Internal Revenue Code, as amended “The implementing rules and regulations of the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Law restricted VAT zero-rating to items directly and exclusively used for exports, and to registered exporters, although, as Salceda pointed out “the law did not make the latter distinction.”
“The BIR reports that there are 4,136 registered export enterprises, however, this is a small portion of the universe of those affected by the change in VAT treatment,” he added.
He pointed out the entire downward linkages of the export sector, especially small businesses with few resources for VAT refund applications, are bearing the costs.
“And of course, if they are unable to refund their costs, our export prices go up, costing us our competitiveness. This is why for two years now the Committee has sought relief from the FIRB on this matter.”
Salceda stressed his committee will file a resolution expressing the legislative intent of the CREATE law, as well as a bill clarifying ambiguities in both CREATE and TRAIN laws for indirect exporters and local suppliers.
Salceda earlier said that the veto of the TRAIN (Tax Reform for Acceleration and Inclusion) law’s portions on VAT perks for some local suppliers and enterprises does not amend the law, or supersede the more recent CREATE law.
“The President’s veto cannot amend the law. And in this case, the law did not make a distinction about who is VAT zero-rated and who is not. Neither should the implementing rules, or the implementor.”
“A more logical fix is for the FIRB not to tie its own hands, since that benefit may be useful in attracting a desirable investment in the future. Instead, as is intended, the FIRB can grant the VAT zero-rating incentive on an applicant-to-applicant basis, rather than close down the entire incentive for local suppliers.”
Salceda stated: “My constituents in Albay are suppliers of exporters, or exporters themselves. We have a big footprint in the handicrafts export business. And their size of businesses are the ones being hurt by this interpretation.”
“In the interest of export competitiveness, let’s settle or correct this issue once and for all.”
