Sri Lanka sugar policy: Not so sweet for importers
View(s):Sri Lanka could face a shortage of sugar as a result of price controls imposed by the government on retail traders amidst fluctuations in world market prices, the depreciation of the rupee against the US dollar along with unfair trade practices of certain importers, sugar importers warned.
Some 5,000 tonnes of sugar is stuck at the Colombo Port due to the imposition of normal tax rate on sugar imports.
Representatives of the Sugar Importers Association have recently brought to the notice of National Economic Council (NCE) chaired by President Maithripala Sirisena about their concerns on controlling the price of imported sugar, a spokesman of the association said.
He also noted that maintaining a buffer stock of sugar imported at the old Customs duty rate by certain importers with inside information on an impending duty hike has compelled other importers to import sugar at high cost.
The NEC advised the Ministry of Finance and Consumer Affairs Authority to devise a proper mechanism to address the concerns of the sugar importers.
The association had requested the President to reduce the Customs duty imposed on sugar imports and it has been agreed to bring down the duty to Rs. 31 until the imported stocks get cleared from the Port.
In a letter to the President, eight importers alleged that three other sugar importers took advantage of their 40,000 metric tons of sugar imported at previous customs duty after the imposition of new tax recently.
They noted that these three sugar importers had stocked the sugar brought at a price of Rs. 91 per kg prior to the tax revision and gained a profit of Rs. 400 million by selling the stock at the government’s control price of Rs.100 per kg.
In view of the prices of Indian sugar coming down, the wholesale price of sugar cannot rise beyond Rs. 91 to 92 despite rupee depreciation even with the previous Special Commodity Levy of Rs. 31 per kg, he pointed out.
Outlining these details, the association, called on the Chairman of Consumer Affairs Authority (CAA) to reinstate sugar under the Special Commodity Levy Act imposing Rs.31 per kg for white sugar and Rs.34 for brown sugar.
The price of a metric ton of sugar in the Indian market was at US$ 340 and a sugar importer should have to pay Rs.44.50 tax as customs duty and Rs.58.50 when unloading a kilo of sugar from the port. Another Rs.3 had to be spent on transport and service tax.
At present when importing a kilo of sugar, the importer had to spend Rs.106 and they have to sell sugar as bulk under the government imposed control price, of Rs.92, incurring a loss of Rs. 14 per kg.
The retail price of a kilo of sugar will go up to Rs.130 and the wholesale price of a kilo of sugar will also go up to Rs.105.
He said the government has removed the special commodity levy of Rs. 31 on sugar and brought sugar imports under the normal tax structure compelling the importers to pay a higher import duty.
The Ministry of Finance stated that the price hike of sugar will not be permitted as the international price of sugar has been drastically reduced due to excess sugar in the world market.
The import cost of sugar imported to Sri Lanka from the sugar producing countries such as India, Thailand and Brazil has decreased to Rs 55 per kg of sugar from the previous Rs 75.
Accordingly, as per the new tax structure, effective from Thursday, the imported sugar per kilogram will be taxed at Rs. 42, under tariff, port charges and Nation Building Tax structures.
(BS)