TRADE Secretary Peter Favila said the government is extending to another six months the implementation of the zero-percent tariff on milling wheat and cement.

Favila told reporters during a luncheon meeting between President Gloria Macapagal-Arroyo and several business leaders at the Bahay Pangarap that they are just awaiting the corresponding executive order but the extension would be from January to June this year.

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Arroyo initially issued Executive Orders 765 and 766 in November 2008 providing a zero percent tariff on wheat, cement and cement clinkers until June 2009. It was amended and extended to six month in July 2009 and expired last January 12.

Favila said there were initial concerns from the Departments of Budget and Management (DBM) and Finance (DOF) when he first recommended the extension of the duty free importation of wheat and cement to the Cabinet.

“And rightly so, had some reservations in the sense because of its implications on revenues but when (Finance) Secretary (Margarito) Teves, was asked how much is the revenue impact, and it turned out, it was only, not really so significant an amount,” he said.

He explained that lost revenue was not enough compared to the number of consumers especially the poor who would benefit from the zero-tariff. “Maganda sana sabihin na subsidies should be minimized but what do you do? You cannot let people wait. Government has to act and act decisively.”

The duty-free wheat importation is expected to help keep prices of bread especially pandesal at an affordable cost especially after prices of loaf breads rose due t high prices of high-protein wheat in the world market.

The zero-percent tariff would also apply to cement citing the booming construction industry, though Favila admitted that that prices of cement have already started to stabilize.

He added that there was a time when prices of cement were still high which they later traced to a manufacturer who kept the prices at a high level. Charges were later filed against unscrupulous manufacturers and traders.

As this developed, the Department of Trade and Industry is meeting with the association of bakers in the country following the hike in prices of bread, citing there was no adjustment in the prices of flour.

Favila said bakers would have to prove through receipts among others that the prices of flour increased and contributed to the prices of bread.

He however acknowledged that current high prices of sugar maybe a factor to the current prices of bread.

As of last week the suggested retail price (SRP) for sugar, based on the recommendations of the Department of Agriculture, is at P52 but it is now being sold at P54. (JMR/Sunnex)