The advocacy group Foundation for Economic Freedom (FEF) on Wednesday pushed for the lifting of foreign investment restrictions in the rice and corn sector to boost productivity, increase farmers’ income, promote competition in the industry, and bring down prices.
The group presented its position during the second roundtable discussions on attracting foreign investment in the country sponsored by the House of Representatives Congressional Planning, Budget and Research Department and the Committee Affairs Department.
Marikina City Rep. Stella Quimbo, senior vice chairperson of the House Committee on Appropriations, moderated the discussions.
The FEF stand was articulated by its technical consultant, Maria Charina Ubarra, a former House legislative officer. It was later supported by representatives of the American Chamber of Commerce, Board of Investments, Department of Agriculture, and National Food Authority.
Ubarra told legislators that their position has a two-fold objective: remove limitations on foreign investment in the rice and corn sector, and encourage foreign investments to develop and boost the sector’s productivity.
She said restrictions are not only contained in the Constitution but in two laws: Republic Act 3018, which limited the industry to Filipinos and which was enacted on August 2, 1960, and Presidential Decree No. 194, issued by the late President Ferdinand Marcos Sr. on May 17, 1973.
She said the decree allowed foreigners to engage in the rice and corn business but imposed a “time-lock delay” —the requirement for them to divest 60 percent of their ownership to Filipinos 30 years after they start operations.
“The divestment requirement is a unique restriction to the Philippines and the rice and corn sector, in particular. Foreign companies that have established operations in the country are hesitant to expand their operations as they near the divestment period, since they will lose control of their investments,” she stressed.
Ubarra pointed out that foreign companies in the agriculture sector do not compete with local farmers because they are only buyers and users of local produce which they transform into “high-end and high-value” products.
These firms however compete with local companies that also use rice and corn as raw materials, she added.
Such competition and technology transfer and assistance to farmers in turn bring about lower prices of rice and corn-based consumer products, she said.
She said other stakeholders in agriculture, like hog, poultry and seafood producers, also benefit from such competition in terms of better quality feeds and access to technologies.
She said the Philippines is lagging behind its neighbors in rice production despite the fact that Thailand and Vietnam learned productive rice growing practices from the International Rice Research Institute in Los Baños, Laguna.
The former House legislative officer urged lawmakers to repeal or amend RA 3018 and PD 194 to make them consistent with the goal of the Marcos administration of growing the agriculture sector.
Nueva Ecija Rep. Ria Vergara expressed surprise over the existence of the law nationalizing the rice and corn industry.
“I mean this is a 1960s law that is no longer relevant. What have we done about it?” she asked.
“Up ‘till now, we are not aware of it. Some of us have not even been born then. We should repeal it immediately,” Vergara said, eliciting an agreement from Quimbo and Albay Rep. Joey Salceda.
Raquel Echague, who heads the resources-based industries service of the Board of Investments, echoed the reluctance of foreign companies to expand due to the ownership restriction in existing laws.
“We have six companies with P4 billion in investments that are hesitant to expand due to the divestment requirement,” she said.
She said liberalization should extend to downstream industries like the production of feeds for hogs, cattle, poultry, fish, and similar produce.
For his part, Christopher Ilagan of the American Chamber of Commerce and Industry said there are a number of American firms operating in the country that have expressed concern over the divestment requirement in PD 194.
“They continue to operate because of lack of enforcement, but it has become an ethical issue for them,” he said.
Two other panelists in the roundtable discussions (RTD), Agriculture Assistance Secretary U-Nichols Manalo and National Food Authority Administrator Roderico Rayo Bioco, supported the proposal to repeal or amend RA 3018 and PD 194.
Last week, during the first RTD, economists led by former finance secretary Margarito Teves, a board member of FEF, supported moves in Congress to amend the Constitution’s restrictive economic provisions.
