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Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani


Business Recorder



Ghee industry on verge of collapse due to irritant
ISLAMABAD (May 09 2003) : The Pakistan Vanaspati Manufacturers Association(PVMA) on Thursday said that the ghee industry was on the brink ofcollapse because of a number of irritants, which forced shut down of 30mills and the rest may follow if remedial measures were not taken in thenext annual budget.

PVMA Chairman Sheikh Abdul Razak Basit listed tax and duties exemption toFata/Pata units, commercial import of oilseeds, withholding tax, warehousesurcharge on oil import, import of ghee/cooking oil without vitamin A&Dand higher duty on RBD, palm oil, RBD palm olein and soyabean oil as majorirritants to the registered industry at a press conference here and made anumber of budgetary proposals for their removal.

He was flanked by PVMA executive members Sheikh Ikram, Haji M. Akhtar,Sheikh Abdul Razak and Secretary Dr Ghulam M. Samdani.

The PVMA wanted extension of Sales Act 1990, and Income Tax Ordinance2001, to the ghee units falling in Fata/Pata to remove anomalies andensure a level playing field to the industry.

Fata/Pata was an attraction to ghee millers after exemption of taxes andduties which accounted for Rs 10 per kg and the number of ghee millsfunctioning in these areas have increased from two to six during the lastone year.

Another two dozen industrialists have purchased land to set up ghee millsin Fata/Pata basically to enjoy tax and duties exemption.

The PVMA office-bearers described tax exemption to Fata/Pata as a seriousblow to the rest of the industry and demanded of the government to removethe anomaly.

They came hard on the issue saying it was impossible for theindustrialists to carry on their business in a situation where Fata/Patawas enjoying an edge of Rs 10 per kg over other areas.

The PVMA representatives claimed that Fata/Pata units were producing 10time more than actual consumption of these areas and causing a loss of Rs2 billion per annum in terms of taxes and duties.

They suggested to bring the withholding tax on oil imported by theindustrialists to 2000-01 pre-budget level as it could encourageindustrial growth in the country.

The PVMA demanded that only Pakistan Standards and Quality ControlAuthority's licences be allowed to import edible oil. The industrialistsrejected a hard and fast rule for a hard and soft oil blend.

They believed that it needed extra processing which has nothing to do withthe quality but could push up ghee prices to hit the consumers who werealready paying higher prices.

The PVMA representatives said that reduction in duties and taxes could bethe best solution to cut down ghee and cooking oil prices and subsequentlyprovide a relief to the consumers.

The PVMA proposed that Customs duty on the imported tin plate should becharged on the value quoted in dollar per tonne in the metal bulletinresearch relevant to date of transaction verified by the association.

It suggested 20 percent sales tax on edible oils produced from theimported commercial oilseeds to provide a level playing field to theorganised industry.

Sheikh Abdul Razak demanded changes in the ordinance to bring importers ofedible oils at par with the importers of other raw material/intermediaryproducts to make withholding tax charged at the import stage as perprofit/loss situation.

He also demanded proportionate reduction in duty on oil import with theinternational prices.

The PVMA proposed that export of ghee cooking oil be allowed toAfghanistan as was a general practice in case of other eatables.