07/01/2008 (The Daily Star, Bangladesh) - The importers and refiners of the country yesterday called on the government to relax value added tax (VAT) and other levies on the import of edible oil to keep the domestic market stable.

They raised the demand at a meeting with Commerce Secretary Feroz Ahmed in Dhaka.

At present local merchants have to pay 18 percent tax, including 15 percent VAT, one percent landing charge and two percent other taxes, on the import of crude edible oil.

MA Rouf Chowdhury, chairman of Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association, led the importers and refiners in the meeting which officials from finance and home ministries, Trading Corporation of Bangladesh (TCB), National Board of Revenue and industrialists also attended.

Rouf Chowdhury told The Daily Star after the meeting that they have urged the government to waive all taxes on the import of edible oil to keep the market steady.

He said the meeting tried to find a way to reduce the skyrocketing prices of edible oil in the local market.

"We've no hand in the price hike of crude edible oil because international-market players determine the price. Bangladeshi edible oil market doesn't matter much in the global market as ours is a very small consuming country. But, the government can take necessary measures to tame the rising trend of edible oil," Chowdhury said.

Fakhrul Alam, country chief of Malaysian Palm Oil Council, said Bangladesh imports 1.1 million tonnes of its annual demand of 1.2 million tonnes edible oil. "Bangladesh imports less than two percent of four crore tonnes of edible oil globally traded annually," he said.

A wholesaler in the capital's Moulavibazar area who attended the meeting said price of oil depends on the supply by the millers.

The commerce secretary said he will inform the government's highest rung of the meeting's views so that the administration could take necessary measures to control the unusual price hike in the local markets.

"But, the government has been trying to enhance the import of edible oil," Rouf Chowdhury quoted the secretary as saying at the meeting.

On Friday, crude soybean oil jumped to $1,200 per tonne in the international market where it was previously sold between $ 950 and $ 1,000 a tonne. Crude palm oil price also exceeded $1,100 per tonne, said local edible oil traders.

Chowdhury attributed the price rise of edible oil in the local markets to the latest international readjustment of fuel oil price, last January's devastating floods in Indonesia -- one of the major palm oil producers -- and the conversion of edible oil into bio-diesel in the western countries.

He said the floods damaged vast swathes of the palm plantations in Indonesia, resulting in a supply shrinkage in the global market.

The businessmen told the meeting that current stock of edible oil can meet two months' demand, adding that a few consignments will arrive soon.

Amir Hossain, a Karwan Bazar distributor, said the price of a five-litre can of edible oil of a particular local brand was increased by Tk 10 due to an official decision. He said he was now selling a can of that brand at Tk 499.

But prices of other brands did not increase further yesterday, market sources said.