Duty cut on imports will provide relief to end-users

The Federal Ministry of Commerce is yet to implement the duty cut on import of palm oil products from Malaysia that was supposed to come into effect in early 2012.

The Pakistan government should reduce duty on palm oil products’ imports from Malaysia just like the 15 percent duty cut made for Indonesia, importers said.

The duty cut will provide some relief to end users, who are braving high prices of cooking oil and vegetable ghee in the country.

The palm oil products imports increased by 31 percent during July-October 2012 as compared to the same period last year.

The import was recorded at $1.870 billion in ten months 2012 as against $1.495 billion during same period 2010-11.

Pakistan imports around 8 percent of its total requirements of edible oil products from Indonesia. Major quantity of imports is made from Malaysia.

After linking of the imports with the composite rates of dollar, the increase in edible oil prices hit the masses severely as the price of palm oil in local markets has gone up.

We imported more than 2 million tonnes of edible oil products, that catered to about 76 percent of the total country’s edible oil consumption,” said Pakistan Vegetable Oil Mills Association (PVOMA) member Nasir Ibrahim.

The international price of Refined Bleached and Deodorised (RBD) palm oil is hovering around $800 per metric tonne while the price of palm olein around $790 per metric tonne.

The country consumes around 2.2 million tonnes edible oil every year out of which 0.63 million tonnes is contributed by the local growers and the remaining is imported to bridge the demand and supply gap, he added.

He said the import trade price duty should be increased or decreased in proportion to the changes in the price of imported edible oils in the international market. He said the rates of sales tax levied at 16 percent and withholding tax and federal excise duty charged at the rate of 2.0 percent on the imported palm oil should also be decreased. Imports are made under Malaysian Palm Oil Concessionary Trade Agreement, like Free Trade Agreement, he added.

Duties on imports of palm oil products range between Rs 9,600 and Rs 11,000 per metric tonne and the share of edible oil in the total food imports remained 43 percent during this period.

A crop analyst at Sindh Agriculture Forum said around more than 50 solvent extraction plants are operating in Pakistan, which produce more than 600,000 tonnes of edible oil yearly.

According to him, Pakistan was importing around 40,000 tonnes of soya bean under PL-480 programme from USA.

He said due to higher import cost, the manufacturers of vegetable ghee and cooking oil are unable to pass on the maximum benefit in case of any slight decline as they are facing multiple problems including power and gas load shedding and production loss.

Preferential Trade Agreement signed between Pakistan and Indonesia earlier this year would become operational within two weeks’ time. It will provide edible oil importers an initial relief of $35 per tonne on import, which will help country save $70 million foreign exchange per annum.