Vietnam is expected to deliver up to 700,000 metric tons of rice to the Philippines before July this year, he added The volume forms part of a supply guarantee made by Vietnam early this week involving 1.5 million tons of the grain.

Yap said this is the reason Vietnam reduced its export quota for the first 10 months of this year by 1 million tons.

"They want to guarantee the supply for us," he said.

"The President (Arroyo) has ordered Finance Secretary (Margarito) Teves to come up with a mechanism wherein the tariff rate on rice will be relaxed to allow greater private sector participation in rice importation," he said.

Yap didn’t say to what level the tariff, which now stands at 50 percent, would be cut.

The government is further opening up rice importation amid concerns of a possible supply shortage. The tariff reduction is also expected to soften domestic prices.

Yap said the finance department will likely pattern the rice tariff adjustment to the mechanism used for oil imports, wherein the tariff rate is reduced as world oil prices rise to certain levels.

State agency the National Food Authority primarily imports rice for the Philippines, the biggest importer of the grain in Asia. While the NFA sets aside a volume of around 300,000 tons for the private sector to import, the program hasn’t been availed of in the past few years because of higher global rice prices and the prohibitive tariff.

The Philippines may import as much as 2.7 million tons of rice this year to prevent a supply shortage during the lean months of July, August and September. It has already imported a total of 1.1 million tons so far this year, and has secured an export commitment from Vietnam to supply 1.5 million tons for the rest of the year. (Dow Jones)