05/10/2008 (Daily Times), Karachi - The government should increase custom duty on imported vegetable ghee in order to discourage import and encourage more production in the country, said Pakistan Vanaspati Manufacturers Association (PVMA) Saturday.

A senior member of PVMA, Nasir Ibrahim said the duty should be increased from Rs 10,800 per tonne to Rs16,000 per tonne.

He said the government should levy regulatory duty instead of present fixed customs duty on imported edible oils, which should increase or decrease in proportion to the changes in the price of imported edible oils in the international market.

Ibrahim said the rates of sales tax levied at 16 percent and withholding and FED tax charged at the rate of 2 percent on the imported palm oil should also be decreased.

He said due to higher import cost, the manufacturers of vegetable ghee and cooking oil are unable to control the prices and there was no option other than reducing the taxes.

Ballooning vegetable oil stocks and fast-declining interest from funds in volatile commodities may hold off a recovery in palm oil prices until next year despite its fall to a level much lower than rival soy oil.

He said palm oil’s discount to soy oil has more than doubled to $450 a tonne in just six months as palm has lost half its value since hitting a historic high in March, triggering market talk that palm might have gone too low too soon and would bounce back.