KARACHI, Jan 9: Who is making a quick buck in edible oil imports, which went up by about 54 per cent in last six months despite a rise in international prices?

Total edible oil import bill amounted to $252 million during July-December period of 2002, which is more than 50 per cent of Pakistan’s total food import bill of $475.71 million. During same period in last fiscal year the import of edible oil claimed about $182 million only.

The State Bank of Pakistan blames the enforcement of non-adjustable GST on vegetable ghee industry as the main factor which has led informal oil traders to carve out a big place for them in the domestic market.

According to business circles, cooking oil traders, who, thanks to Pakistan government’s budgetary taxation policies, are now making huge imports from Malaysia and marketing it in domestic market.

The 2002-03 federal budget imposed a 15-per cent general sales tax on local supplies of vegetable ghee and cooking oil. Tax rate on imported vegetable oils was increased from 15 per cent to 20 per cent.

Imposition of GST and an increase in the import duty on raw materials used in vegetable ghee industry raised the production cost. The State Bank’s first quarterly report (July-September 2002) notes a decline of 9.6 per cent in vegetable ghee production. “The informal sector has increased its market share during first quarter of 2002-03” is the candid observation of the SBP report.

Vegetable ghee merchants say the taxation policy is not generating significant amount of revenue for the government expenditure. But it is giving lot of opportunities to the unscrupulous cooking oil traders, mostly in NWFP, to take advantage.

At present the government is not getting any significant amount of revenue but this taxation policy has pushed up the prices of vegetable ghee, and ultimate victims are the consumers.

“Re-introduction of GST exemption on vegetable ghee supply and withdrawal of 20 per cent non-adjustable duty on vegetable oils will not make the government very poor but it will definitely help Jamali government provide some relief to the people,” an international food dealer told Dawn.

In last six months the traders have imported about 582,000 tons of edible oil. The State Bank report has indicated a possible fall in Malaysian oil prices which, however, does not seem to be in sight.

Besides edible oil, import of pulses went up by more than 52 per cent in dollar value and almost 50 per cent in quantity. Traders have imported about 269,000 tons of pulses worth about $83 million in last six months. During six months of 2001-02, about 180,000 of pulses worth $54.40 million were imported.

Other important food category items in import bill are dry fruits, which have increased by over 30 per cent, mainly because of stabilization in neighbouring Afghanistan and reopening of trade routes. Tea import has declined by 5 per cent in quantity and over 3 per cent in dollar value term.

Rationalization of duty structure on spices has increased volume of documented sector trade.

More than 14,000 tons of spices worth about $11 million has been imported in last six months, showing an increase of 68.43 per cent in quantity and about 41 per cent in value. Spices were smuggled in huge quantities when government had increased duty on import during last fiscal year.

Powdered milk, sugar and wheat in meagre quantities are other items of import bill.