Local markets are witnessing an acute shortage of imported food items which traders attribute to import compression due to rupee depreciation, surge in regulatory duties and the decision dated 22 February 2019 when Ministry of Commerce & Textiles made it mandatory for all imported food/consumer items to have labels printed in Urdu & English and provide details including, nutritional value, halal, usage instructions etc.
During an anecdotal survey carried out by Business Recorder it was revealed that there is a shortage of imported food times in several Pakistani markets such as cereals, cheese, chocolates, juices, drinks and other items. Wholesalers Grocers Association (KWGA) Patron-in-Chief Anis Majeed stated the rupee-dollar parity and regulatory duties had raised the cost of imports.
"We are clearing our goods from the port and moving these to godowns. However, we are not bringing any of these items on the market as the landed cost of imported goods is higher than the prevailing market rates. If we bring these goods onto the market now we will suffer losses," he added.
General Manager Salman Zafar Al-Fatah stores, Islamabad told Business Recorder that they had a chain of 15 stores in Lahore, Islamabad and Faisalabad and had stopped issuing fresh orders for import of edible items especially perishables like imported cheese. He said "the management of the stores has decided to sell the current stock of imported items and make a few purchases from vendors however fresh orders have not been placed as the cost has gone up by too much."
The management of Metro Cash & Carry concurred. Kashif Abbas, a senior member of management, said "imports of items including pulses are continuing, however, the company has slowed down on making fresh commitments from foreign suppliers for pulses and other items and we are hoping for some stability in rupee-dollar parity."
A representative of Pakistan Vanaspati Manufacturers Association (PVMA) said that imports of palm oil were continuing, adding that "if the rupee continues to lose its strength against the dollar then it may cause some fall in the volume of palm oil imports." Metro Cash & Carry is considering withdrawing Rs5 per kg/litre discount on ghee and cooking oil due to cost escalation in palm oil imports.
Nasir Arain, marketing manager at a fast moving consumer goods (FMCGs) importing company said, "We have no option but are bound to clear goods from the port as per commitment with foreign buyers otherwise holding goods' clearance means soaring demurrages." The price of imported FMCGs has surged by 15-20 percent as one dollar is now equal to Rs158 which was Rs110 in January 2018, said Arain.
Chairman Pakistan Tea Association (PTA) Mohammad Shoaib Paracha said due to rupee depreciation landed cost of imported tea had risen by Rs35-40 per kg. FBR has imposed and/or increased regulatory duties on the import of 569 items in the range of 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, 30 percent, 35 percent, 40 percent, 50 percent, 70 percent and 90 percent.
The FBR has imposed 50 percent RD on the import of cheese and curd, natural honey (30 percent); imitation jewelry (45 percent); coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled (20 percent); fruit juices (60 percent); instant coffee in bulk (15 percent); soups and broths and preparations therefore; homogenised composite food preparations (20 percent); ice cream (20 percent); paints and varnishes (5 percent); perfumes and toilet waters (50 percent); articles of apparel and clothing accessories (10 percent); wallpaper and similar wall coverings; window transparencies of paper (30 percent); tableware, kitchen ware, other household articles and toilet articles, of porcelain or China, Ceramic tableware, kitchen-ware, other household articles and toilet articles, other than of porcelain or China (20 percent) and energy saving lamps (2 percent) regulatory duty.
FBR has suffered revenue loss of around Rs 100 to Rs 150 billion during first quarter of 2019-20 due to import compression following increase in regulatory duties and additional customs duties at import stage.
Copyright Business Recorder, 2019
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