Govt to Abolish 2% Additional Custom Duties On Palm Oil Imports

The federal government has decided to abolish two percent additional custom duties (ACDs) on the import of palm oil.

As per the details, currently, the government charges 2 percent ACD, 2 percent withholding tax, and 17 percent sales tax on the import of crude palm oil, palm stearin, RBD palm oil, and RBM palm olein from Indonesia and Malaysia.

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 Centre and after approval by the Tariff Policy Board, shall be submitted to the Cabinet or Parliament, as the case may be, for consideration.

The Government of Indonesia had unilaterally decided to impose a ban on the export of palm oil on April 28, 2022, which created supply uncertainties. Pakistan is dependent on the import of palm oil from Indonesia as it imports more than 85 percent of its palm oil from Indonesia.

While the government of Indonesia has lifted the ban on the export of palm oil from 23-05-2022 but at the same time, they have imposed the conditions that the exporters would also need to ensure 33 percent supply to the domestic market and obtain an export permit. The said conditions are resulting in delays in the shipment of palm oil from Indonesia.

The other origin to import palm oil is Malaysia where prices are relatively higher from Indonesia due to lower production. It may be noted that a concessionary tariff for palm oil is being applied to Indonesia and Malaysia under their respective FTA/PTA.

The Ministry of Industries and Production has proposed a grant of concessionary tariff relief to facilitate the import of palm oil from sources other than Indonesia on an immediate basis. Furthermore, the Ministry of Commerce has also taken necessary steps to mobilize the trade investment officers in Indonesia and Malaysia to follow up with the host governments for securing the orders for the importers in Pakistan.

In view of the above, it is proposed to remove the 7 percent additional customs duties on the import of palm oil (including crude, palm, palm stearin, ROB Palm, and RDB Palm Olein) for shipments originating from all sources other than Indonesia that reach Pakistan by 20-6-2022, in order to encourage importers to bring Palm oil Into Pakistan at the earliest.

It may, however, be noted that such discriminatory interventions against the principle of equal treatment are not in conformity to WTO flutes, but the unilateral export ban imposed by Indonesia in violation of WTO rules may result in a shortage of palm oil in mid-June 2022 if import from alternate sources is not made immediately. Given this situation, a temporary tariff relief measure is being proposed to mitigate the cost differential of importing palm oil from sources other than Indonesia.

The ECC allowed removing the two percent additional custom duties on the import of palm oil for shipments originating from all sources except Indonesia for 10-20 June 2022, subject to the approval of the federal cabinet.

Meanwhile, Finance Minister Miftah Ismail on Thursday presided over a meeting of the committee on edible oil availability, at Finance Division.

The committee was apprised that sufficient stock of edible oil is available in the country. The proposals for the future requirements and import of edible oil for bridging the supply-demand gap were also discussed. Moreover, the impact of importing edible oil on foreign exchange reserves was also highlighted during the meeting.

It was informed that the price of edible oil is rising globally which would have a significant impact on the trade bill of Pakistan. Federal Minister Rana Tanveer Hussain also gave a workable option to enhance local production of canola oil seeds for import substitution and to ensure the availability of the commodity in the wake of global pressure on the supply chain.

The finance minister directed to expedite the process for import of edible oil from Malaysia and Indonesia to ensure the smooth supply to the consumers and stabilize the price hike of edible oil. It was further directed that required steps should be undertaken to enhance the local production so that its impact on foreign exchange reserves could be minimized.



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