June 3, 2003	Tuesday	Rabi-us-Sani 2, 1424

ISLAMABAD, June 2: The edible oil manufacturers have asked the government to increase customs duty on import of oilseeds in the forth-coming budget to provide protection to the local suppliers.

Budgetary proposals submitted to the finance ministry, the manufacturers said the government should either reduce duty on health-friendly soft oil to the oilseeds level or increase duty on oilseeds rationally to provide a level-playing field to the stakeholders.

According to the proposals, a copy of which made available to Dawn on Monday, the edible oil manufacturers said such a step would discourage import of high-priced oilseeds resulting into saving of millions of dollars in foreign exchange.

They said the government should also reduce duty on palm olien or keep it at the existing level.

Presently, the government charges a fixed duty of Rs10,850 per ton on RBD palm oil, which includes Rs50 per ton cess to Pakistan Oil Seed Development Board. Further, there is 15 per cent sales tax on duty paid value plus 3 per cent deduction of withholding tax on total import value besides duties. The net duty thus comes to Rs16,500 or $320 per ton import price of oil. In comparison, the duty on soft oil is Rs9,100 per ton plus all other duties levied on RBD palm oil. The cumulative duties come to Rs14,500 to Rs14,700.

The manufacturers said that undue concessions in import duty and other taxes to the importers of oilseeds is causing huge revenue losses to the government annually, which at the same time is also discouraging the production of oilseeds locally.

The government kitty is directly bearing a loss of Rs2 billion annually as the duty on import of oilseeds is only Rs1500 per ton against Rs16000 per ton on other oils, they said.

They are of the opinion importers and extractors of oilseeds are not only paying less duty to the government but they also sale their product in the market without paying full taxes and the poor people of Pakistan are burdened inordinately for the high profits of these importers and units holders.

The edible oil manufacturers said government should immediately enhance duty on import of oilseeds to make competitive the local seeds. They have also pointed out that the imposition of sales tax on oilseeds should not be at the refined stage instead it should at the crude stage to avoid the tax evasion.

They proposed the government to make duty structure on import of oilseeds equivalent to other oils or reduce duty on palm olien, soft oil, by Rs2 per kg so that the ghee industry could enable itself to bring down the prices of end-product.

A study of the edible oil policy suggests that the government charges around Rs16,500 per ton cumulative duties on the import of refined, bleached, deodorized (RBD) palm oil and Rs14,500 per ton on soft oils. However, on account of oil seeds there is only 10 per cent import duty that amounts to Rs1500 per ton.

The study also reveals the import price of rapeseed is $260 per ton and that of rapeseed oil is $360 per ton. This means foreign exchange worth $575-650 per ton is spent on the extraction of edible oil from imported oilseeds, which is $290 per ton higher than its extracted form priced at $360 in the world market.

Officials in the finance ministry when asked about the issue they claimed the government provided this concession to boost the solvent extraction industry that was on the verge of collapse. Moreover, the oil thus extracted has a very low melting point that makes it ideal for human consumption.

They said that local production of oilseeds was very low, mainly comprising cottonseed. The plants run for three months on local seeds while for the remaining period they rely on imported seed, they added.

It is also interesting to note that only five to six out of more than 50 solvent extraction plants could be made operative even two years after the duty concession offered to the industry.