Import of unlimited raw sugar by private sector: PSMA seeks to influence ECC

ISLAMABAD (October 08 2010): Pakistan Sugar Mills Association (PSMA) is reportedly attempting to influence the Economic Co-ordination Committee (ECC) of the cabinet to allow the private sector to import unlimited quantity of raw sugar to bridge the production demand gap, well-informed sources in Ministry of Industries and Production (MoI&P) told Business Recorder.However, the government is double minded as to whether total raw sugar import should be given in the hands of sugar mill owners, the sources added. Secretaries’ Committee, sources said, had recommended to the government to allow import of 0.7 million tons of raw sugar to refine in the sugar mills during the crushing season.Last week, one of the sugar mill owners told this scribe that he suggested to the Minister for Food and Agriculture (Minfa), Nazar Muhammad Gondal to assign the task of raw sugar import to mill owners so that they would be responsible for any artificial shortage or price hike next year. When contacted, the newly elected PSMA Chairman Javed Kayani said that the quantity the government wants to allow for import should be allocated only to PSMA.

“Raw sugar rates have gone up, due to the government’s belated decision, as commodity prices are driven by sentiments and speculative activity. The quantity which GoP wants to allow for import should be allocated to PSMA which would distribute on pro rata production basis to each mill. However this quota shall be interchangeable among the member mills. This would provide an opportunity to every mill to refine raw sugar during the crushing season,” Kayani said in reply to a question.Meanwhile, PSMA has also written a letter to the Deputy Chairman Planning Commission, Nadeemul Haq, who is the architect of free market mechanism and requested implementation on sugar policy approved by the federal cabinet last year.

“We appreciate ECC’s decision of removing 25 percent customs duty on raw sugar imports; this would ensure sugar at reasonable prices in the days to come. However, we are still awaiting imposition of ban on the export of gur (raw sugar) according to the decision taken by the Prime Minister of Pakistan in the Federal Cabinet,” said former Chairman PSMA in a letter written on September 28, 2010.PSMA is of the view that the following should be addressed at this stage for better results: (i) Determination of import quantity of raw sugar; as on September 30, 2010, TCP’s imports in process would accumulate sugar stocks to 689,005 tons; with expected production of 3.30-3.60 million tons of sugar during the next crushing season, the total consumption from October 1, 2010 to October 30, 2011 is expected to be 45.50 million tons (for 13 months), therefore, there is a need to import approximately 500,000 tons of raw sugar.

In case of any revision in the production of sugar in the country, the decision to import refined sugar should be taken after the closure of the season, because at that point of time, price of sugar in the international market is expected to be lower compared with the prevailing prices;(ii) raw sugar is an exclusive industrial raw material for the sugar industry, therefore, the quantity of 500,000 tons of raw sugar should be distributed among the sugar mills based on their past three years sugarcane crushing to ensure transparent distribution; and (ii) sugar industry in the Khyber Pakhtunkhawa is capable of producing up to 100,000 tons of sugar in the Peshawar valley, therefore, the Cabinet’s Decision to ban the export of gur (raw sugar) should be implemented in letter and sprit to enable the GoP to save $70 million and generate revenue of Rs 500 million from the production of the above said quantity.

At present, as there is no sales tax or any other tax on the commercial gur making, the massive profits to individuals in this trade are at the cost of exchequer. The permission to engage in tax free gur manufacturing and its lucrative exports to Afghanistan brings no foreign exchange earning to the GoP, contrarily, this facilitates smuggling of sugar in the guise of gur, and it is time to stop this in national interest – Brecorder