MANILA February 1 (Reuters): Philippine President Rodrigo Duterte signed an ordinance on Monday (February 1) setting price caps on pork and chicken in the capital region as more expensive meat pushed food inflation to double-digit levels.
Retail prices for pork in the Philippines, the world’s seventh largest pork importer before local demand declined due to the coronavirus pandemic, rose more than 50 percent in January year over year when the pig farm ran the pig farm.
The resulting crisis in the pork supply has also increased the price of chicken as demand has increased despite a domestic oversupply of poultry meat.
Upward pressure on pork and chicken prices increased over the Christmas holidays, pushing annual meat inflation to 10 percent in December and adding to headline inflation, which was 3.5 percent, its highest level in nearly two years.
Rising inflation, which economists expect to be above the middle of the government’s full-year target range of 2-4 percent in January, could put pressure on the central bank to reverse its accommodative monetary policy in support of the pandemic-hit domestic economy.
Pork prices in Metro Manila markets now have to sell at 270 to 300 pesos (7.47 to 8.30 S $) per kg, according to Duterte’s order, up from more than 400 pesos in some outlets since December.
The price of dressed chicken is now 160 pesos per kg from 200 pesos per kg. To stabilize prices, Agriculture Secretary William Dar said in January that pork imports could triple this year to 162,000 tons.
Meanwhile, a joint Philippine congressional body passed a bill on Monday to lower the corporate tax rate to attract more foreign investment and help the coronavirus-affected Southeast Asian economy recover.
The bill, one of the top priorities of President Rodrigo Duterte’s administration, will reduce the corporate tax rate for large companies from 30%, the highest in Southeast Asia, to 25% and for small businesses to 20% by 2029.
Congressman Joey Salceda, chairman of the bicameral committee, said reconciling the upper house and lower house versions of the law would remove investor uncertainty about the country’s financial regime.
“(It) will be like opening the floodgates on investment,” Salceda said in a statement.
The bill will also streamline incentives for investors to clean up over 300 billion pesos ($ 6.24 billion) of spills resulting from tax breaks and other perks that are constantly given to investors.
Salceda said the tax reform measure will create 1.8 million jobs over the next decade and result in tax savings of pesos 931 billion for businesses.
Salceda said the bill will also allow duty-free imports of COVID-19 vaccines, which are expected to arrive this month.
Although the Philippines was one of Asia’s fastest growing economies prior to the pandemic, foreign ownership restrictions, high electricity costs, and poor infrastructure make it lag behind regional competitors when it comes to attracting FDI.
Some lawmakers, including Duterte’s allies, have proposed changes to the economic provisions of the Philippine Constitution to liberalize investment rules. – Reuters