Slippery edible oil importers basking in official indifference

FE Team | Published: June 20, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Shamsul Huq Zahid
While consumers are paying through their noses for edible oils, some unscrupulous importers are, reportedly, engaged in, what can be described as, 'tel neye telesmati' (scandalous developments over oil).
According to a newspaper report, a lot of discrepancies have been detected in statistics maintained separately by the central bank and the National Board of Revenue (NBR) on oil imports. The quantity of oil imports as recorded by the central bank is higher than that of the NBR, thus, raising a strong suspicion about duty evasion. There are allegations that some importers got their entire consignment of oil released from the in-bond warehouses only paying a part of the duty. Two such incidents of duty evasion were detected by the authorities concerned recently and forced the importers concerned to pay full amount of duty.
There were also allegations that prices quoted in letters of credit (LCs) against import of edible oils were more than that in the international market. The reasons behind showing inflated prices could be aimed at pushing up prices of the item in the local market and make undue profit.
The newspaper report mentioned above broke another piece of information that, if true, might appear quite amazing to many. It said Indian State Minister for Commerce Joyram Ganesh during his meeting with the leaders of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and high officials of the commerce ministry in Dhaka last year announced the decision of his government to allow duty-free access of 12 Bangladesh goods to the Indian market and sought a list of products from the latter. A list was handed over to him. But he was surprised to see the name of soyabean oil on it. The Indian government rejected the list altogether for being unscrupulous in naming the products by the Bangladesh side. It could be that the FBCCI leaders and government officials included soyabean oil in the list failing to find 12 local products suitable for the Indian market.
India with a view to encouraging production of edible oils at home has been maintaining higher duty on soyabean oil imports. The situation is quite opposite in Bangladesh. However, due to huge gap in prices of the commodity in the domestic markets of the two countries, it is suspected, a substantial quantity of imported edible oils is smuggled out of Bangladesh to enter the Indian market.
The government decision to impose zero duty on imported edible oils from July 01 next would rather make the situation more favourable for those involved in smuggling of the commodity. However, the government, under the circumstances, has no option other than exempting edible oil import from duty since the prices of the commodity at the retail level recorded about 25 per cent hike over a period of last three months.
In a free market economy, if businesses decide to operate unscrupulously, it becomes very difficult for the government to contain them. The businesses have the ability to create an unpalatable situation for both consumers and the government. The reaction of the businesses to a few actions against hoarders soon after the takeover by the present interim administration is a pointer to that fact.
The consumers, rightly or wrongly, do not hold the traders dealing in essential items in high esteem, basically due to the high profit-motive of the latter. A case in point is the hike in prices of sugar in the market soon after the budgetary proposal to raise the specific duty on the item. The finance adviser in the budget for the next fiscal (2007-08) proposed withdrawal of duty from lentils and edible oils. But the prices of none of these items have recorded the slightest fall until now. The consumers have been familiar with this kind erratic behaviour of the traders and the trade bodies have always preferred to ignore any complaint from the aggrieved consumers. However, surprisingly, the incumbent FBCCI president decided to be an exception this time. When newsmen wanted to know from him the reasons for increase in the prices of sugar soon after the announcement of the budget, he turned out to be extremely critical about the dishonest traders involved in sugar price-hike and asked the government to take strong punitive measures against them. His criticism, however, has had some results-the prices of sugar at the retail level have returned to their previous levels.
It is believed that if the authorities concerned launched a thorough probe into the imports of edible oils during last few months, it might hit a mine of irregularities.