The trade authorities are considering a Malaysian request that Pakistan cuts its import duty on palm oil by about 20 percent, a senior official said on Thursday.
Ismail Qureshi, Secretary Ministry of Food and Agriculture, said the government received a request to cut the import duty during a visit by Malaysian Prime Minister Abdullah Ahmad Badawi this month.
"We exchanged a requests-and-offers list to be considered before we enter into a free-trade agreement between the two countries, and a duty cut on palm oil imports was part of the list given by the Malaysian government," Qureshi told Reuters.
He said the government was discussing the request with all stakeholders and would only decide after consulting all parties involved in the edible oil trade.
"It will take some time to take a decision that suits everyone, especially our farmers," he said.
Pakistan charges a fixed 9,500 rupees a tonne as regulatory and customs duty on palm oil imports, apart from a 15 percent sales tax.
Similarly, 9,550 rupees per tonne duty on crude palm oil import is charged besides a 15 percent sales tax. But refineries are allowed to import crude palm oil against a duty of 9,000 rupees per tonne.
A senior official at the Ministry of Commerce said the government was likely to cut the import duty by 10 percent as pressure from local refineries, apart from the Malaysian government, was also mounting.
The main edible oil buyers have planned to set up four new refineries with a total capacity of 2,200 tonnes a day. "Refineries want a cut in customs duty on imports of crude palm oil because of its high prices in the international market," said the commerce official.
"There are chances of closure of a few refineries if the international prices remain high and if the government fails to rescue them by cutting the import duty."
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