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  • News Desk
  • Feb 4th, 2005
  • Comments Off on Import of refined sugar: removal of duty, withholding tax under study
The government is considering to remove import duty and withholding tax on import of refined sugar to put a curb on escalating sugar prices, said highly placed sources based in Islamabad. The sugar prices have increased by 25 percent in the last four months and the government felt the pressure, as it failed to control the situation. "The decision for the removal of import duty and withholding tax might be taken within days as the sugar prices are moving up on day-to-day basis," said the sources.

At the same time, the sources further disclosed that the government would ask the Trading Corporation of Pakistan to sell its sugar stocks in the market.

"The government would ask the TCP to off-load at least 100,000 tonnes sugar in the market," said the sources.

They added that the TCP could be told within days for the sale of sugar. The TCP has a stock of 350,000 tonnes sugar in its stock, which was purchased in the year 2003-04.

The sugar price was Rs 19.50 per kg four months ago. It reached Rs 22 in Ramazan and now it is ranging between Rs 26.50 to Rs 27 per kg in the retail market.

The traders were of the view that the sugar mills have kept tight control over the supply of the commodity, which has created a shortage and prices started moving up.

The country''s annual consumption of sugar is 3.7 million tonnes while last year it had produced 4 million tons.

The traders added that if the government removes 25 percent custom duty and 6 percent withholding tax on sugar import, the landed cost would be around Rs 23.50 to Rs 24 per kg. With the profit of 50 paisas, the imported sugar could be sold at Rs 24.50 to Rs 25 per kg.

"It means that the imported sugar would not offer very cheap prices but both the supply of sugar from the TCP and the import would force the sugar millers to increase their supplies that could result in lowering of the price," said the trader.

They said that sugar could land at Karachi in 10 days if it was imported from Dubai and this would be effective for controlling the prices.

The sugar millers said the sugarcane prices have gone up this year, which increased the cost of production but farmers do not agree with the argument. Farmers have been complaining that the sugar millers use delaying tactics, adding they also do not clear their payment in time.

The traders opined that the other quick and cheaper destination would be India from where sugar could be imported within few days.

"If the import duty and withholding tax are removed, I am ready to import sugar from Dubai," said a commodity trader in Karachi.

Copyright Business Recorder, 2005


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