Refiners seek duty cut on raw sugar imports

Refiners have demanded of the government to withdraw all duties on import of raw sugar due to skyrocketed prices of sugar in the local market.
They also requested ensuring uninterrupted supply of gas to their production units so that they could continue operations and supply of the essential item.
The Bangladesh Sugar Refiners Association (BSRA) in a recent letter to the commerce ministry submitted a set of proposals, requesting it to take necessary steps to keep prices of the sweetener stable in the market.
It sought deferred payment facilities all year round on import of raw sugar and the MoC to instruct the banks to open letters of credit (LCs) on a regular basis without any hindrance.
The proposal came against the backdrop of the recent price surge along with supply shortage of sugar in the local market.
Sugar was selling at Tk 100-120 per kg in the city's kitchen markets which is much higher than the government-set prices of Tk 95 per kg (packed) and Tk 90 per kg (loose).
The association also requested to ensure supplying required dollars to facilitate payments of imported sugar.
To keep the domestic market stable, the refiners have been importing raw sugar at international prices. Sugar price often fluctuates in the global market.
At present, the commercial banks are allowed to open LCs up to US$3.0 million as per Bangladesh Bank instructions, but one vessel contains 55,000 million tonnes of non-refined sugar worth $ 27-28 million, according to the letter.
Currently, the banking cost has been increased significantly due to opening high volumes of LCs, it added.
The exchange rate of the US dollar was between Tk 96.00 and Tk 98.00 at the time of opening the LCS. But in case of a delayed payment, the banks are currently charging up to Tk 105 against one US dollar from the refiners, it said.
Earlier, the import duty was between Tk 22,000 and Tk 23,000 per tonne. Now, it has increased to a range between Tk 31,500 and Tk 32,000 per tonne.
As a result, the mill gate price of sugar (after refining) stands at Tk 0.1 million to Tk 0.105 million per tonne. However, the refiners are currently selling sugar at Tk 85,000 per tonne at the mill gate.
"We have received a letter from the sugar refiners' association recently. We have already discussed it with the authorities concerned," said a high official of the commerce ministry.
The total tax incidence on import of sugar is higher than that of other essential commodities, said a source.
When contacted, a refiner said: "We request the government to impose only specific duty on import of raw sugar tonne-wise like that of cement industry by withdrawing the existing regulatory duty, VAT and customs duty."
At present, some 15 per cent VAT is applicable to import of raw sugar while the import duty (customs duty) is Tk 3,000 per tonne, BSRA secretary general mentioned.
A 30 per cent regulatory duty is also applicable to the import of sugar. In addition, the government imposes 2.0 per cent advance income tax (AIT), he added. However, there is no VAT at the production stage of raw sugar.
There are five private sugar refineries in the country. They have been selling necessary sugar by refining raw sugar imported from the international market.
Currently, the daily production capacity of the private refiners is about 10,200 tonnes.
The country's annual demand for sugar is from 1.8 to 2.2 million tonnes. The country imports 2.7 to 2.8 million tonnes of raw sugars annually.

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