ISLAMABAD: The Federal Board of Revenue (FBR) has abolished 2 per cent additional customs duty on the import of edible palm oil for shipments originating from all sources except Indonesia from June 10, 2022, and June 30, 2022. The FBR has issued SRO 805(I)/2022 here on Tuesday to amend the SRO 845(1)/2021 pertaining to the imposition of the regulatory duty.
Under the SRO, in exercise of the powers conferred by sub-section (5) of section 18 of the Customs Act, 1969, the federal government has directed that the following further amendment shall be made in its Notification No. S.R.O. 845(1)/2021, dated the 30th June 2021:
The RD would not be applicable on the import of edible palm oil falling under PCT codes 1511.1000, 1511.9010, 1511.9020, and 1511.9030, for shipments originating from all the sources except for Indonesia, for the period commencing on June 10, 2022, and ending on June 30, 2022.
When contacted, Abdul Waheed, former chairman Pakistan Vanaspati Manufacturers Association (PVMA), said that the decision would not benefit the industry as over 90 per cent of the imports of edible palm oil is from Indonesia.
He stated that Pakistan was a big consumer of Indonesian palm oil and Pakistan was importing $2.8 billion worth of palm oil annually from Indonesia. The industry has conveyed to the government that RBD Palm Olein is available at a discounted price as compared to the other soft oils. Manufacturers of ghee use 70 per cent of RBD palm oil in the production of ghee but ban on Palm Olein will push manufacturers towards the use of canola, soybean, and sunflower oil which are far more expensive as compared to the Palm Olein.
The pressure on Palm Olein in the international market and continuous depreciation of the Pakistan rupee against the USD will have a big effect on ghee prices; therefore, it is the need of time to review and revise downwards the prevailing duty structure on the import of edible oil from Indonesia, he added.
According to the details, the government has removed additional customs duties (ACDs) of two per cent from June 10 to 20, 2022 on the import of palm oil for shipments originating from all sources except Indonesia.
The Ministry of Commerce informed the Economic Coordination Committee (ECC) of the Cabinet that the National Tariff Policy 2019-24 (NTP) stipulates that all proposals for levy, amendment or removal of tariffs shall be examined at the Tariff Policy Commission (NTC) and after approval by the Tariff Policy Board (TPB), shall be submitted to the Cabinet or Parliament, as the case may be, for consideration.
The ECC was informed that the Government of Indonesia had unilaterally decided to impose a ban on the export of palm oil since April 28, 2022, which had created supply uncertainties. The ECC was further apprised that Pakistan was dependent on the import of palm oil from Indonesia and was importing over 85 per cent of its palm oil from there. While the Government of Indonesia had lifted a ban on the export of palm oil from May 23, 2022 but at the same time, it imposed conditions that the exporters would need to ensure 33 per cent supply to the domestic market and to obtain an export permit.
According to the Commerce Ministry, this condition resulted in delays in shipment of palm oil from Indonesia.
The sources said Malaysia was another option which was also exporting palm oil but prices were relatively higher. The ECC was further informed that concessionary tariff for palm oil was being applied to Indonesia and Malaysia under their respective Free Trade Agreement (FTA)/Preferential Trade Agreement (PTA).
The Ministry of Commerce apprised that the business community had approached it with the proposal to mitigate the current situation and ensure sufficient stocks of edible palm oil by extending certain duty advantage to import of palm oil from Malaysia under the FTA.
The Ministry of Industries and Production had also proposed the grant of concessionary tariff relief to facilitate the import of palm oil from sources other than Indonesia on an immediate basis.
The issue of rising prices of edible oil in Pakistan and disruptions in the supply line were also being discussed in the meetings of the PM Task Force on supply of palm oil.
The Ministry of Commerce proposed to remove the two per cent ACDs on the import of palm oil (including crude palm oil, palm stearin, RDB palm oil, and RDB palm olein) for shipments originating from all sources other than Indonesia that reach Pakistan by June 20, 2022, in order to encourage importers to bring palm oil into Pakistan at the earliest.
The Ministry of Commerce observed that such discriminatory interventions against the principles of equal treatment were not in conformity with the WTO Rules, but the unilateral export ban imposed by Indonesia was in violation of the WTO rules and may result in the shortage of palm oil mid-June 2022, if import from alternate sources was not made on immediate basis.
In view of this force majeure situation, the Commerce Ministry proposed a temporary tariff relief measure to mitigate the cost differential of importing palm oil from sources other than Indonesia.
After a detailed discussion, the ECC approved the proposal of the Commerce Ministry which has been ratified by the Cabinet on May 31, 2022.
Copyright Business Recorder, 2022