According to a communication of Ijaz Ilahi Malik, Chairman Pakistan Vanaspati Manufacturers Association (PVMA) to the FBR here on Friday, it has come into association's knowledge that a few individuals in the shape of group have held a meeting with the FBR representing themselves as PVMA representatives, wherein they have proposed the FBR to raise customs duty applicable on import of soybean oil to make it at par with customs duty on canola, sunflower and other edible oils. In this perspective, the association has informed the FBR that the individuals referred are not representing PVMA and whatever they have proposed to the FBR is against the PVMA policy.
Moreover, recently consumption pattern is gradually shifting from hard oil (RBD palm oil) to soft oils, which otherwise is beneficial and declared more healthy for human consumption. Therefore the existing duty applicable on soybean oil is just right and most appropriate taking into account all factors, hence perfectly in line with other input raw materials (local or imported edible oils).
As per PVMA calculations, the raise in customs duty on soybean oil would have an impact of increase of Rs 12 on each litre of cooking oil and Rs 8 per kg of ghee. This increase particularly in the upcoming month of Ramazan would not be desirable by both the consumers and manufacturers. In consultation with the federal and provincial governments the manufacturers are subsidising these products to the tune of Rs 10 per kg and per litre for the month of Ramadan.
In the light of PVMA recommendations, the rate of customs duty on soybean oil should not be revised upward. The PVMA said that for the last five years (minimum) the sunflower and canola oils have not been imported in Pakistan. The customs duty on import of edible oils was raised to over Rs 15,000 per metric ton from Rs 9050/MT to incentivise local farmers in growing oil seed crops, thereby discouraging the import of sunflower and canola oils, as a national policy.
Soybean oil duty remained unchanged since primarily soybean seed contains only 15 percent to 18 percent of oil contents as a by-product, whereas it is mainly imported and consumed in manufacturing of poultry/animal feed. Therefore the existing customs duty on soybean oil is rightly assessed and is at parity with other oils under discussion.
The manufacturing units of vanaspati and cooking oil blend hard oil (RBD palm oil and olein) and soft oil (soybean oil and others) at the ratio of 65:35. Soybean oil being soft oil is blended at the ratio of 35 percent in manufacturing vanaspati ghee which holds 68 percent of total market share (4.0 million metric ton per annum).
Since the local feed industry has grown manifolds, the government of Pakistan awarded special incentives to 'solvent industry' on import of oil seeds to cater for the local requirement of poultry/animal feed industry. With this incentive of the government of Pakistan the import of meals ie soybean, canola etc has become zero. In the light of facts, it is easy to ascertain, as to why customs duty on canola and sunflower oils is higher and for soybean oil it is pegged at Rs 9,050 per metric ton, Ijaz Ilahi Malik added.
Copyright Business Recorder, 2017