Raising of import duty on sugar to protect public sector industries demanded
Friday, 15 June 2007
FE Report
Bangladesh Sugarcane Industries Development Forum (BSIDF) has urged the Caretaker Government (CG) to increase import duty on raw sugar from Tk 4,000 to Tk 5,000 per tonne, and on refined sugar from Tk 5,000 to Tk 8,000 per tonne, as the public sector sugar industries are currently facing uneven competition from the private sector sugar refineries and the sugar traders due to imbalance in import duty on sugar, said a press release.
The release said, sugar industry is one of the largest public sector agro-industries. The government had imposed import duty on raw sugar at Tk 2,250 per tonne, and on refined sugar Tk 5,000 in 2005-06. Availing of the advantages of two different types of duty structure, the private sugar traders are importing huge quantities of refined sugar at prices below Tk 25,000 per tonne from the neighbouring countries in the name of raw sugar. As a result the government is being deprived of differential duties of Tk 2,750 per tonne from imported sugar.
On the other hand, imported sugar is selling in the local markets at Tk 29,000 per tonne (Tk 29 per kg), which is also below the production cost of Tk 36,000 per tonne (Tk 36 per kg) of the public sector sugar mills.
The number of public sector sugar mills, owned by Bangladesh Sugar and Food Industries Corporation (BSFIC) under of the Ministry of Industries, were seventeen. Out of which, two sugar mills have already been privatised, leaving fifteen sugar mills under the public sector.
All the sugar mills under BSFIC are located in the country's rural areas. There are five hundred thousand farmers along with their 1.5 million (15 lakh) family members who are benefited from sugarcane production. The farmers sell their production directly to the sugar mills that also employ 15,000 people, the release also said.
Under the open market economy, the public sector sugar mills are unable to pay their total dues of Tk 2,977.18 million to the local sugarcane farmers, as they could not sell their produced sugar amounting to 1,64,995 tonnes worth Tk 5,939.82 million, due to the uneven competition from the private sugar importers.
For making payment of dues to the farmers, the sugar mills had to reduce their sugar prices even below the production cost. Despite that, the mills could not sell their stockpiled sugar, because the private importers are selling sugar at prices below Tk 29,000 per tonne, as they can import refined sugar at prices below Tk 25,000 per tonne from the neighbouring countries in the name of raw sugar.
Meanwhile, the local refineries, in their recent appeal to the government, have also highlighted the issue of imbalanced import duties between raw sugar and refined sugar. The private refineries have also informed the CG that the total sugar production capacity of the seven refineries are around 1.9 million tonnes against the country's total requirement of around 1.0-1.2 million tonnes. They have reiterated their capability to meet the country's sugar requirement without any import of refined sugar.
The refineries have also suggested that the government discourage import of refined sugar on the same ground, and have also sought due protection from the government against the importers of refined sugar.
The finance adviser also enhanced import duty on raw sugar from Tk 2,250 to Tk 4,000 per tonne.
But according to BSIDF, the initiative may not fully solve the problem, presently faced by the public sector sugar mills. Therefore, the Forum has suggested that import duty should be increased to at least Tk 5,000 per tonne in place of proposed Tk 4,000 on raw sugar, and from Tk 5,000 to Tk 8,000 per tonne on refined sugar.
The release also said, by reducing the import duty on sugar, the consumers are not benefited to the desired extent, because, a number of other commodities that use sugar as their raw material do not show any downward trend.
Therefore, no public outrage is apprehended due to duty increase and slight price hike of sugar. Rather it will greatly contribute to protecting the public sugar mills by creating a level playing field for different stakeholders, and help stabilise sugar prices further, the release added.
Bangladesh Sugarcane Industries Development Forum (BSIDF) has urged the Caretaker Government (CG) to increase import duty on raw sugar from Tk 4,000 to Tk 5,000 per tonne, and on refined sugar from Tk 5,000 to Tk 8,000 per tonne, as the public sector sugar industries are currently facing uneven competition from the private sector sugar refineries and the sugar traders due to imbalance in import duty on sugar, said a press release.
The release said, sugar industry is one of the largest public sector agro-industries. The government had imposed import duty on raw sugar at Tk 2,250 per tonne, and on refined sugar Tk 5,000 in 2005-06. Availing of the advantages of two different types of duty structure, the private sugar traders are importing huge quantities of refined sugar at prices below Tk 25,000 per tonne from the neighbouring countries in the name of raw sugar. As a result the government is being deprived of differential duties of Tk 2,750 per tonne from imported sugar.
On the other hand, imported sugar is selling in the local markets at Tk 29,000 per tonne (Tk 29 per kg), which is also below the production cost of Tk 36,000 per tonne (Tk 36 per kg) of the public sector sugar mills.
The number of public sector sugar mills, owned by Bangladesh Sugar and Food Industries Corporation (BSFIC) under of the Ministry of Industries, were seventeen. Out of which, two sugar mills have already been privatised, leaving fifteen sugar mills under the public sector.
All the sugar mills under BSFIC are located in the country's rural areas. There are five hundred thousand farmers along with their 1.5 million (15 lakh) family members who are benefited from sugarcane production. The farmers sell their production directly to the sugar mills that also employ 15,000 people, the release also said.
Under the open market economy, the public sector sugar mills are unable to pay their total dues of Tk 2,977.18 million to the local sugarcane farmers, as they could not sell their produced sugar amounting to 1,64,995 tonnes worth Tk 5,939.82 million, due to the uneven competition from the private sugar importers.
For making payment of dues to the farmers, the sugar mills had to reduce their sugar prices even below the production cost. Despite that, the mills could not sell their stockpiled sugar, because the private importers are selling sugar at prices below Tk 29,000 per tonne, as they can import refined sugar at prices below Tk 25,000 per tonne from the neighbouring countries in the name of raw sugar.
Meanwhile, the local refineries, in their recent appeal to the government, have also highlighted the issue of imbalanced import duties between raw sugar and refined sugar. The private refineries have also informed the CG that the total sugar production capacity of the seven refineries are around 1.9 million tonnes against the country's total requirement of around 1.0-1.2 million tonnes. They have reiterated their capability to meet the country's sugar requirement without any import of refined sugar.
The refineries have also suggested that the government discourage import of refined sugar on the same ground, and have also sought due protection from the government against the importers of refined sugar.
The finance adviser also enhanced import duty on raw sugar from Tk 2,250 to Tk 4,000 per tonne.
But according to BSIDF, the initiative may not fully solve the problem, presently faced by the public sector sugar mills. Therefore, the Forum has suggested that import duty should be increased to at least Tk 5,000 per tonne in place of proposed Tk 4,000 on raw sugar, and from Tk 5,000 to Tk 8,000 per tonne on refined sugar.
The release also said, by reducing the import duty on sugar, the consumers are not benefited to the desired extent, because, a number of other commodities that use sugar as their raw material do not show any downward trend.
Therefore, no public outrage is apprehended due to duty increase and slight price hike of sugar. Rather it will greatly contribute to protecting the public sugar mills by creating a level playing field for different stakeholders, and help stabilise sugar prices further, the release added.