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Unabated smuggling out of soyabean raises import bills

Smuggled sugar gluts market while local produce piles up

Star Economic Report
A bumper sugar production tn 1990-91 threaten* to aggra-vatc the financial problems of Bangladesh Sugar and Food Industrie* Corporation (BSFIC). The Corporation's sales of sugar have recorded a sharp decline while smuggled sugar from across the border continues to flood the market.
Domestic production by BSFIC units will be around 2.30 lakh tons — the record highest for a year in the country, according to BSF1C.
While production is at Its peak level, sale* by BSFIC have plummeted to a- record low. The off-take or sales of sugar stood at only 37,000 tons up to March 25. Cheaper smuggled supplies from India have priced out domesttcally produced sugar Smuggled sugar sells at Taka 24 a kg in the border belt areas while the retail price of BSFIC sugar is Taka 30 a kg. Unsold stocks thu* continue to pile up at BSFIC unit*. And If such stock* lie unsold for long, they will be damaged or become unfit for sate.
Food Ministry is also having problems with its sugar stock* for long because of lower offtake under rationing system for price disadvantage factor
Meanwhile. BSFIC Is already In financial straits because of huge accumulated stocks of unsold sugar. The Corporation is unable to clear it* due* to the sugarcane grower* who supplied their produce to the mills. Severe funding problems of the Corporation to meet Its current expenditure* will force larger borrowings by tt from the bank* with a huge interest burden on such funds.
The BSFIC's problems were reviewed on Monday at a high-level meeting of Inter-mlniste-rial officials at the Ministry of Finance with Finance and
Planning Minister Salfur Rahman tn the chair. The meeting reviewed the overall price sit uatton, prevailing In the coun try. and «>*o the supply post tion of essentials
The Minister asked the act Ing chairman of BSFIC, who was present at the meeting, to submit a detailed report ex
plaining the reasons why the corporation is unable to supply sugar at competitive prices. 1 Ic said the government would not like that the interests of consumers suffer because of any price distortions. If fiscal rearrangements or any other countervailing moves are needed to make the sugar industry competitive and cost efficient, the government is prepared to take such measures, he added.
The meeting noted that prices of most essentials had not registered any uptrend over the last one week.
Among others, Pripcipal Finance Secretary Korshed Alam, Food Secretary Ataul Huq. Deputy Governor of Bangladesh Bank Mahbubur Rahman and the Chairman of Trading Corporation of Bangladesh attended the meeting.
The meeting discussed in details the production situation. stock and import position of essential commodities. It noted that stock and supply position of food and other Items is satisfactory and there is no reason for price rise.
The minister directed the concerned agencies to evolve a more effective mechanism to monitor the prices of essentials and take steps, wherever necessary, to check any unwarranted rise in prices of essentials.
The meeting discussed the imports of some items like soyabean oil and pulses tn details. The discussions focussed on matters connected with possible smuggling of some imported items across the border.
The minister Instructed the concerned authorities to maintain a closer vigilance on soyabean Import operations.
A substantial volume of imported soyabean oil, both refined and crude is feared to have been smuggled out. Unabated smuggling has led to higher imports of the item, financed under the Wage Earners Scheme (WES).
Importers of crude and refined soyabean oil in first seven months of current fiscal 1990-91 totalled Taka 323 crore, the meeting was told. The figure in terms of opening of im-
port Letters of Credits (LCs) between July and January included Taka 183 crore for refined soyabean oil and Taka 140 crore for crude soyabean (CDSO).
The Finance and Planning Minister noted that the amount of Imports in terms of LC openings showed operations at an unusual level and certainly not unjustified by the prevailing consumption pattern and income level of the ordinary citizens. It is unbelievable that the whole Imported quantum of soyabea. would be for the domestic market, he observed.
The minister felt that some fiscal rearrangements in areas of tariff value or duty structure (Sales tax and customs duty rates) will be necessary to curb such unusual Imports.
The meeting was informed that refined soyabean oil Imports maintain an uptrend in July-December in 1990-91, despite higher duty structure on the same than that on the crude soyabean. There are about 30 soyabean refining units in the country. Imports of CDSO are now allowed up to 100 per cent of their capacity In place of earlier 300 per cent.
Meanwhile, the minister directed Bangladesh Bank to monitor import operations about different varieties of pulse.
LCs opened for imports*of pulses in July-January in fiscal 1990-91 totalled over Taka 80 crore.
Out of this amount, LCs worth Taka 50 crore were already settled, meaning payments being made. Though imports of pulse in first seven months of the current fiscal year are far short of last year’s Taka 300 crore level, most imports of the item so far are not common varieties like lentils. the meeting was told.
After the meeting, the Finance and Planning Minister visited different city markets. He was told by the traders that the prices of most essential commodities Including rice, wheat, sugar and meat are riot only stable but also have registered a downward trend.