Bangladesh to Cut Import Duty on Edible Oil

Bangladesh will cut its import duty on edible oils in a bid to stabilise domestic prices amid soaring global food costs, a commerce ministry official said on February 15, 2011. "The government has decided to reduce import duty on edible oil to 10 percent from 15 percent earlier," the official said, adding that the measure would take effect soon, but without giving details.

In 2010, Bangladesh imported 1.38 million tonnes of edible oil, of which 1.015 million tonnes was palm oil, according to Oil World. The country buys palm oil from Indonesia and Malaysia and soybean oil from Brazil and Argentina. On February 10, palm oil prices touched 3,967 ringgit a tonne, a peak not seen since March 2008 on concerns that seasonally heavy rains have stalled harvesting in top producers Indonesia and Malaysia.

Analysts said demand for edible oils this year is likely to fall with spiralling prices in the impoverished delta nation of 150 million people. "Our market is very price sensitive. In the past we had seen that demand for edible oil dropped by 10 percent due to lower consumption as prices reached beyond buying capacity," said A.K.M. Fakhrul Alam, Malaysian Palm Oil Council's regional manager for Bangladesh, Nepal and Myanmar.

"The duty cut would have little impact in the domestic markets considering the high international costs," he told Reuters. Separately, the central bank has asked all banks to charge a maximum interest rate of 12 percent on loans used to import essential commodities such as edible oil, sugar, pulses, onion and fruits. The rate of 12 percent on imports of essentials had been fixed in May 2010, but some banks still charged more than 12 percent, the central bank said in a statement.