KARACHI, Jan 19: Ghee manufacturers have said that export of vegetable ghee to Afghanistan has declined by 50 per cent due to reduction in sales tax refund and duty drawback rates on exports.

As a result exporters of Malaysia, the UAE and Singapore have captured the Kabul market. Pakistan used to export 100,000-125,000 tons of ghee to Afghanistan every year.

The export of vegetable ghee to Kabul suffered 65 per cent decline in December 2006 (13,896 tons) as compared to 4,802 tons in November 2006. In January, 2007, hardly 2,000 tons had been shipped to the neighbouring country.

One of the reasons for slow exports, besides cut in refund and rebate, is frequent increase in prices of ghee in Pakistan as a result of costlier imports of edible oil from Malaysia and Indonesia.

“I had taken up this matter with Commerce Minister Humayun Akhtar Khan at the FPCCI on Friday but the minister did not give any proper response to the problem,” Chairman Pakistan Vanaspati Manufacturers Association (PVMA) Shaikh Amjad Rashid said.

However, he said he had handed over a note to the commerce minister highlighting the problems being faced by the exporters over phenomenal decline in exports to Afghanistan.

He said that even the local sales of ghee and cooking oil remained laggard despite the Eidul Azha season due to rising prices in the last few months. Total sale of ghee and cooking oil in local markets was over 6,000 tons a day but in December and January sales posted a decline of 30 per cent as many consumers of lower income bracket could not afford to pay higher prices.

In a letter to Humayun Akhtar, he said that the government had allowed duty drawback on export of vegetable ghee manufactured from RBD palm olein at Rs9,682 per ton in August 2005, but the Central Board of Revenue (CBR) fixed the duty drawback rate at Rs6,720 per ton thus reducing the same by Rs2,962 per ton. In other words, Rs2,962 per ton can be termed as additional customs duty.

Likewise, the sales tax refund was reduced by Rs1,888 per ton from the year 2002 to 2006. In 2002, sales tax refund was zero rated and in September 2006 it was fixed at Rs5.99 per kg. Total reduction in duty drawback and sales tax refund stood at Rs4,850 per ton.

He said that the CBR chairman in a meeting with PVMA on October 6 had issued orders for quick release of sales tax refund and duty draw back up to December 2005, besides issuing orders for provisional release of sales tax refund and duty drawback from January 1, 2006 onwards but the Collectorates had been holding refund of duty draw back and sales tax.