He said that government has also decided that the import of 500,000 tonnes of white sugar through the Trading Corporation of Pakistan (TCP) will be done by March 31. Tenders for 300,000 tonnes of that have already been issued. "It has been decided to do away with a 16 percent sales tax and 0.85 percent excise duty on the import of sugar as incentives for the private sector to import 700,000 tonnes," said a ministry official.
"The private sector will have to import this quantity by end-June," said the official. The government also plans to import another 500,000 tonnes of white sugar late in the year for building strategic reserves, the official said. A number of Asian countries are battling to meet sugar needs in the face of soaring prices, with London white sugar futures just shy of a record high near $750 a tonne hit last week, and having more than doubled last year.
The decision on duty-free imports of sugar is aimed at reducing prices that have gone up to about Rs 60 (71 US cents), from Rs 45-50 kg in recent weeks. But an industry official said millers were unlikely to import sugar because of high international prices and worry the government would intervene if they set prices reflecting costs.
"The landed cost of imported sugar would be about Rs 70 kg and if millers want to sell it at Rs 78 kg or more, there might be government intervention, so there is no confidence in the market," said Muhammad Khan Saddozai CEO of Layyah Sugar Mills and a member of the Pakistan Sugar Mills Association. Khan also suggested the removal of domestic sales tax on sugar to control prices and ensure private traders could match cheap government prices.
The government had been selling sugar at Rs 45 kg through the Utility Store outlets to help low-income groups. Government and industry officials said in November Pakistan expected to produce about 3 million tonnes of refined sugar from the 2009-10 crop against domestic demand of 4.2 million tonnes. Sugar shortages are expected to be acute after June, when supplies from the crop will run low. Output from the new crop has started coming onto the market. The country produced 3.2m tonnes of refined sugar from the 2008-09 crop, according to estimates from millers, and imported 225,000 tonnes of white sugar last year.