Imports of essentials see no rise, prices still high despite duty cuts

The import of essentials saw no significant rise over the past month following the duty cut by the government. Traders said markets remained stable and some goods saw price falls in the aftermath of the issuance of import permits and the reduction of duties and taxes, while consumers said prices were high with some goods seeing a slight rise.

The government issued permits for importing about 1.5 million tonnes of rice and lifted import duties and tariffs, but, according to the National Board of Revenue (NBR), only 15,000 tonnes of rice was imported.

Meanwhile, the state-run Trading Corporation of Bangladesh (TCB) said prices of coarse varieties of rice rose by at least Tk 2 per kg, and medium and fine rice by Tk 3-4 per kg in Dhaka over the past month.

Traders said the higher price of rice in exporting countries and dollar appreciation locally contributed to less import of rice. Dollar prices have risen by 40 per cent over the past two years, thus, the import of rice has not become profitable following the duty cut.

Chattogram-based Afsana Trading is one of the firms receiving the permit to import rice.

Afsana Trading owner and Chattogram Rice Traders Association general secretary Omar Azam told Prothom Alo that the import cost is about Tk 55 per kg of rice, but the price of coarse rice is Tk 52-53 at markets. Traders show less interest in import as to whether they would get the market price after importing the grains. Rice markets maintain stability due to offering import opportunities, but import deadlines must be raised.

The interim government took several initiatives to reduce prices after the ouster of the Awami League government in the face of student-people mass uprising.

One such initiative was the reduction of duty and taxes, which began in mid-October. The government reduced duties and taxes on rice, eggs, soybean oil, palm oil, sugar, onions, potatoes and dates.

The government earns Tk 85 billion to 100 billion in revenue from these products. Market analysts said only tax and duty cuts would not work, supply must increase to reduce prices.

Egg prices rose to Tk 170-180 per dozen in October. The government reduced the import tariff for eggs from 25 per cent to 5 per cent on 17 October. The duty cut will be in effect until 31 December. The government also issued import permits for 520 million eggs in a year, but, according to the NBR, traders imported only 1 million eggs so far.

Traders said the Department of Livestock Services issued a gazette on 22 October stating that the import of eggs will require certification on three diseases including microplasma and avian influenza from an ISO-certified Bangladeshi lab. Importers face the hassle of meeting the new criteria.

Tests can be conducted at the government-run Quality Control Laboratory in Savar, Dhaka or any private ISO-certified lab. It will take at least four days to complete a sample test.

Importers said it would take four to five days to submit samples and collect quarantine certificates since the arrival of eggs at the port. Import costs will also increase as an additional tariff has to be paid per truck waiting at land ports. Traders lost interest in egg imports because of all these.

Meanwhile, egg prices fell slightly to Tk 145 from Tk 150 per dozen. Eggs were sold for Tk 90-110 per dozen before prices started rising in March 2022.

Dhaka-based firm Hydroland Solution imports eggs. Its owner Anwar Hossain told Prothom Alo egg prices fell following the issues of import permits. If tests can be run at the ports, egg imports will rise, and people can avail of eggs at lower prices.

Taxes and import duties on soybean and palm oil were reduced twice on 17 October and 19 October to 5 per cent, thus, reducing taxes and duties on unrefined soybean and palm oil by Tk 10-11 per kg to Tk 7 per kg from Tk 17-18 a kg.

According to NBR data, traders released 65,000 tonnes of soybean and palm oil from the tank terminal of the Chattogram port on 1-23 November, and four more ships carrying 45,000 tonnes of oil also anchored at the port. There is currently a demand for 175,000 tonnes of edible oil per month in the country.

Regarding this, director of edible oil importing company TK Group, Shafiul Athar Taslim, told Prothom Alo that global edible oil prices are on the rise, but this additional price has been adjusted with the tax and duty reduction. Had there been no duty cut, the price would have been increased by Tk 13-14 per litre. Import was low due to uncertainty, and supply will increase in the coming days because of tax and duty cuts.

The government also deducted taxes and duties on sugar imports, reducing taxes and duties by about Tk 15-17 per kg to Tk 23 a kg from Tk 38-40 per kg.

Three companies – Meghna Group of Industries (MGI), City Group and Abdul Monem Sugar Refinery – imported 181,000 tonnes of sugar and marketed 50,000 tonnes of those between 17 October and 23 November. Traders said the situation of importing sugar is satisfactory.

Loose sugar, according to the TCB, is currently sold for Tk 125 per kg, which was Tk 130 per kg a month earlier. That means consumers enjoy partial benefits of the duty cuts.

The government cut taxes and duties on the imports of potatoes on 5 September, which will be in place until 30 November. As many as 40,000 tonnes of potatoes have been imported so far since the duty reduction. There is currently a demand for 800,000 tonnes of potatoes per month in the country. So, imported potatoes have a less significant impact on markets.

Prices of potatoes, according to the TCB, rose by Tk 10 per cent in a week with potatoes being sold for Tk 75-85 per kg.

At least 30 per cent of demand for onions is met from imports. Besides, imports of onions increase at the end of the year amid a fall in the supply of local varieties of onions. The government cut taxes and duties on onion imports in September and November.

According to the NBR, a little over 77,000 tonnes of onions were imported over the past month, while 61,000 tonnes of onions were imported in the corresponding period of the previous year.

Meanwhile, prices of imported onions fell to Tk 130 per kg from Tk 150 per kg a week ago and the price of local varieties of onions to Tk 80 per kg from Tk 90 per kg.

The Ramadan months will begin in March next. Traders move to import goods two to three months prior to Ramadan. So, they will start opening LCs (letters of credit) next month. Bangladesh Bank also relaxed the rules on LC opening. People concerned said if import initiatives are not taken now uncertainty may loom large over good supply during Ramadan.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue, told Prothom Alo when supply increases steps to reduce taxes and duties work. Importers do not bring goods when they cannot profit. When a few traders become importers in the markets, imports and prices depend on their wills.

Legal and institutional reform is necessary to increase supply. Traders must be brought under registration. Besides, awareness is necessary for the protection of consumer rights. All these are time-consuming, but the commencement should kick off now, he added.

* This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna