FBCCI demands a freeze on cooking oil VAT to cool prices

The top organisation of businesses in Bangladesh has demanded that the government suspend levying Value Added Tax, or VAT, on edible oil for at least three months to stabilise the market amid a supply crunch.

Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industries, or FBCCI, made the demand at a discussion with representatives of cooking oil businesses on Monday.

Jashim said the government can readjust subsidies or tax to tackle the situation. He said India had readjusted tax three times but Bangladesh has not done it yet.

The FBCCI sat with Finance Minister AHM Mustafa Kamal and National Board of Revenue Chairman Abu Hena Md Rahmatul Muneem recently, the business leader said.

“They'd told us during the budget that they would take Tk 11 in VAT for every litre of edible oil, but they are taking Tk 30 to Tk 33. We asked them why they are doing so.”

Citing the setbacks caused by the coronavirus pandemic, he said, “Shipping costs have gone up. The supply chain is destroyed. So I strongly demand that the government suspend VAT for at least three months."

Jashim however admitted some businesses were manipulating the market. He called for action against them by the associations of businesses alongside the government.

After the government turned down the businesses’ proposal to raise edible oil prices recently, soybean oil went off the shelves in Dhaka and retail prices have been on the boil.

The government acted against some retailers, who alleged big companies and importers were manipulating the market.

Jashim also said the importers who had brought oil at lower prices one or two months ago now want to sell the products on the international market again as global prices shot up amid Russia’s invasion of Ukraine.

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“The month of Ramadan is around the corner. People will suffer if the businesses continue to do so. Please help the people. Businesses in other countries cut prices during festivals but the opposite happens in our country.”

He threatened that he would ask the government to stockpile oil itself.

Bangladesh Trade and Tariff Commission accounts show the country imported more than 2.7 million tonnes of edible oil in 2021 and continued the imports against an annual demand of 2 million tonnes. So, the government says, there should be sufficient oil now.

Taslim Shahriar, senior assistant general manager of Meghna Group, claimed oil prices have soared on the international market by 61 percent in the past year while in Bangladesh the prices increased by 21 percent.

His claim infuriated Jashim. “You're counting the average on today’s global rate, but you don’t have the oil sold on the international market today,” he pointed out.

“Please don’t do injustice to the government and the people of the country.”

Haji Md Golam Mawla, president of Bangladesh Edible Oil Wholesalers’ Association, blamed the importers and mills for mismanagement leading to the supply crunch.

“Our trucks wait at the mill gates for five days and we've to pay the truckers for this. Prices go up when we include this additional transport cost.”

He demanded action by the government to fix the supply chain instead of conducting drives against the wholesalers.

But Biswajit Saha, a director at City Group, however, claimed the mills are not hampering supply.