Ministry of Food plans to propose lowering tariff to 5%.

It has been over a week since the government allowed private imports of rice with reduced tariffs to alleviate consumer discomfort from soaring local rice prices, yet traders have shown little interest in importing.

The primary concern remains the import cost, which exceeds Tk65 per kg of rice.

In response to the stagnant import activity, the Ministry of Food is set to request a further reduction of the import tariff to 5%. Officials plan to quickly submit a proposal letter to the National Board of Revenue (NBR) aimed at making tariffs more manageable and facilitating private imports.

Md Moniruzzaman, director of the Procurement Division of the Directorate General of Food, said, “Since rice imports are not happening despite the reduced tariffs, a proposal is being made to the NBR to further decrease it to 5% to ease private imports.”

In addition to promoting private imports, the food ministry is moving forward with plans to import 5 lakh tonnes of rice and 7 lakh tonnes of wheat through government channels.

Since rice imports are not happening despite the reduced tariffs, a proposal is being made to the NBR to further decrease it to 5% to ease private imports.

Md Moniruzzaman, director, Procurement Division of the Directorate General of Foo

Officials at the food and agriculture ministries have reported that approximately 11 lakh tonnes of rice production have been lost due to two rounds of flooding in several districts, including the southeast region and Mymensingh.

Traders have capitalised on this loss to repeatedly raise rice prices in the market, placing a burden on consumers. To address these challenges, the government is seeking to stabilise the local market through both private and government imports.

The food ministry had initially proposed reducing the total tax burden on rice imports from 62.5% to 5%. On 20 October, the NBR granted a total reduction of 35% at various levels, leaving the current tariff at 27.5%. The NBR estimated this reduction would decrease the import cost of rice by Tk14.50 per kg.

However, both rice importers and the food ministry have assessed that importing rice from India would still cost at least Tk65.92 per kg, while imports from Thailand would be Tk75.64 per kg. Factoring in transportation and other costs would push prices above local market rates, leading to the lack of interest from traders even after the tariff reductions.

An official at the food ministry told TBS, “A letter is being prepared to reduce the tariff to 5%, and it will be sent to the NBR soon.” This official added that without a tariff reduction, rice imports will not take place due to high global market prices.

On 20 October, the NBR announced a reduction in the total tax burden on rice imports, lowering import duty from 25% to 15%, reducing the regulatory duty from 25% to 5%, and eliminating the 5% advance tax.

Kauser Alam Khan, vice president of the Bangladesh Rice Merchant Association, said, “The price of good quality rice at the mill gate is currently Tk60. If the price is even higher when imported from abroad, no one will bring it in.

“Moreover, the Aman harvest will begin in a few days, which will naturally lower prices.”

He added, “Due to these complications, no one has shown interest in importing rice. The government is not only trying to facilitate private imports but has also initiated the process for government imports.”

The food ministry has received permission to import 5 lakh tonnes of rice for the current fiscal year, initially attempting to secure this through a tender process. If this approach fails, the government will resort to a government-to-government import strategy.

Simultaneously, the process for importing 7 lakh tonnes of wheat has also commenced.

According to the Trading Corporation of Bangladesh (TCB), the price of fine rice has gone up to Tk80, compared to Tk72 at the same time last year.

Medium-quality fine rice is now 9.35% more expensive than last year, with a maximum price of Tk62. In Dhaka markets, it has increased from Tk58-65 to Tk65-70 for consumers.

Additionally, the maximum price for coarse rice is Tk55, which is a 7% increase from last year, according to TCB data    

Published Date: October 29, 2024