NBR studying alternative ways to rein in prices of edible oil

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Naim-Ul-Karim
The National Board of Revenue (NBR) is contemplating to fix a Specific Rate of Duty (SRD) on import of Crude Degummed Soybean Oil (CDSO) and Crude Palm Oil (CPO) and make pre-shipment inspection mandatory to prevent unethical practice.
As there was no impact in retail prices even after imposition of zero customs duty on import of CDSO and CPO, sources said, the NBR is now considering alternative ways to rein in the local prices of edible oil especially before holy Ramadan.
According to the Customs House of Chittagong, the prices of CDSO and CPO have gone up in the international market to $750 and $840 per tonne from $400-$450 per tonne respectively during the last six months.
The government withdrew customs duty on import of CDSO and CPO but retained those on the lists of essentials for which PSI is not mandatory.
"We observed that a section of importers have already started showing lower prices than that actually prevailing in the international market in order to evade VAT," a customs official said.
Besides, customs officials expressed the fear that unscrupulous importers might import refined oil instead of crude oil by taking advantage of relaxation in PSI.
The country's monthly demand for edible oils is around 100,000 tonnes on an average and nearly 90 per cent of the demand is met by imported soybean and palm oils, they said.
However, prices of brand soyabean and palm oil have not declined even after imposition of zero tariffs. Moreover, grocers were found to be selling soybean and palm oil above the printed retail price.
Presently, the retail prices of different brands of edible oil vary between Tk 73 and 78 per litre, which was Tk 41-50 last year.
When asked, retailers alleged that they are buying the items from the suppliers at a cost printed on the price tags as retail price.
When asked, A Rouf Chowdhury, president of Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association, said: "The refiners are selling their oil at no profit."
Prices of crude oil increased substantially as customs authority in Chittagong is assessing tax at substantially higher rate and thereby confirming the assertion of the refiners that prices have gone up, he further said.
Chowdhury said it is unfortunate that the customs authority is assessing tax on current international price of crude oil even for which L/C was opened two months ago at lower rates than the present one and added, this is grossly irregular.
The refiners fear that price of oil is likely to go up unless more than 17 per cent taxes including VAT and Advance Income Tax (AIT) are removed immediately.
"The action must be taken immediately to import oil to create a meaning full impact on the market before the Ramadan," he added.