Local sugar refiners are seeking a switch from the current tariff structure to a specific duty on raw sugar imports, citing a cash crunch amid a falling global sweetener price, according to an official document.
The Bangladesh Sugar Refiners Association -- a platform representing five sugar producers in Bangladesh who altogether meet 98 per cent of local demand -- has proposed a specific duty of around Tk 5 per kg, replacing the existing tariffs that amount to over Tk 40 per kg.
"Previously, there was no duty levied on raw sugar imports," the association said in a letter submitted on 18 August to the finance and commerce advisor. "During 2009-2015, the customs duty was fixed to Tk 4,000 per tonne from Tk 2,000."
Since 2016, a 15 per cent value-added tax (VAT), 30 per cent regulatory duty (RD), 2.0 per cent advance income tax (AIT) and 2.0 per cent advance tax (AT) have been imposed on the import price of raw sugar, said the letter.
Consequently, the total taxes on sugar have surged from a maximum of Tk 4 per kg to over Tk 40 per kg, according to the letter.
These high taxes require an upfront payment of Tk 7.0 billion for a 50,000-tonne master vessel of raw sugar. This includes a Tk 5.0 billion letter of credit (LC) payment to the bank and Tk 2.0 billion in taxes, making imports difficult for refiners, said the association.
The sugar refiners believe a complete waiver of import taxes would reduce retail prices of the widely used sweetener.
The annual sugar demand is estimated to be between 2.0 and 2.2 million tonnes. To meet this demand, around 2.2-2.4 million tonnes of raw sugar are imported annually.
Besides, around 50,000 tonnes of refined sugar are imported each year, according to the Bangladesh Trade and Tariff Commission (BTTC).
The authorities acknowledged receiving the request and said a decision would be made after careful examination and assessment. As of now, no decision has been reached regarding the proposal.
There are currently five operational refined sugar mills with a combined annual production capacity of around 3.0 million tonnes.
Besides, there are 15 sugar mills under the Bangladesh Sugar and Food Industries Corporation (BSFIC) with an annual production capacity of 0.2 million tonnes.
In the past four years, the nine operational BSFIC mills produced between 22,000 and 30,000 metric tonnes annually.
Currently, over 98 per cent of domestic sugar demand is met by private sugar mills, while state-owned mills contribute only 1-2 per cent.
In the letter, the refiners have requested the government to issue a statutory regulatory order (SRO) implementing a specific custom duty of Tk 5,000 per tonne on raw sugar imports, effective September 1, 2024.
In the past six months, international raw sugar prices have declined by around $117.
According to the International Sugar Organization (ISO), raw sugar was at $507 per tonne on August 22, down from $623.9 per tonne on February 27, 2024.
Despite the global price drop, domestic sugar prices remain relatively high. According to the Trading Corporation of Bangladesh (TCB), sugar is currently selling for Tk 130-135 per kg.
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