Government reduces palm oil import levy amidst industry pressure
View(s):Heeding to pressure exerted by top players in the industry, the Finance Ministry has brought down the special commodity levy for palm oil to Rs.90 from Rs.110.
The recent reduction of the commodity levy for palm oil was aimed at promoting value added palm oil exports from Sri Lanka, officials said, adding that at least two key palm oil companies in the island are processing crude oil for the export market.
A decline in coconut oil production has resulted in more palm oil imports which are a substitute for coconut oil, industry source said. Coconut oil production declined around 45 per cent year-on-year (YoY) to around 45,000 metric tons in 2014 while palm oil imports increased by 41 per cent YoY to 89,959 metric tons, Finance Ministry data revealed.
The government has increased the special commodity levy on palm oil earlier to protect the coconut industry and provide a level playing field for domestic oil seed processors.
The recent reduction of the commodity levy on palm oil imports through a special gazette notification was a result of the authorities yielding to pressure of a few vested interests, a government official, who did not wish to be named, told the Business Tmes.
He noted that some palm oil companies import crude oil in large volumes and re-export it after refining the oil making huge profits.
On the other hand the country is losing tax revenue as result of the sudden reduction of the commodity levy, he said.
Sri Lanka imports 80,000 metric tons of palm oil annually at the cost of Rs. 14 billion. Palm oil usage is on the increase as the price of coconut oil is rising in Sri Lanka.