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According to the specifics, the government now imposes 2% ACD, 2% withholding tax, and 17% sales tax on crude oil, palm stearin, RBD palm oil, and RBM palm olein imported from Indonesia and Malaysia.

According to the National Tariff Policy 2019-24 (NTP), all suggestions for tariff levy, revision, or removal must be assessed at the Tariff Policy Centre and approved by the Tariff Policy Board before being submitted to the Cabinet or Parliament for consideration.

According to reports, the Indonesian government unilaterally decided to prohibit the export of palm oil beginning April 28, 2022, causing supply disruptions. Pakistan is reliant on the import of palm oil from Indonesia, which supplies more than 85 percent of the country"s palm oil.

While the Indonesian government has abolished the restriction on palm oil exports as of May 23, 2022, it has also put conditions on exporters, including ensuring a 33 percent supply to the domestic market and obtaining an export permission. The aforementioned circumstances are causing delays in the shipping of palm oil from Indonesia.

The other country from which palm oil is imported is Malaysia, where prices are higher than in Indonesia due to lesser production. It should be noted that under their separate FTA/PTAs, Indonesia and Malaysia have a palm oil concessionary tariff.

The business sector has addressed the Ministry of Commerce with a suggestion to alleviate the current situation and assure enough inventories of edible palm oil by extending some duty benefits to palm oil imported from Malaysia under the ETA.

The Ministry of Industries and Production has also recommended granting urgent concessionary tariff relief to help importers of palm oil from countries other than Indonesia. The issue of growing edible oil costs and supply line disruption is often highlighted at meetings of the PM Task Force on Palm Oil Supply.

In addition, the Ministry of Commerce has taken the appropriate efforts to mobilise trade finance officers in Indonesia and Malaysia to follow up with host governments in order to secure orders for Pakistani importers.

In light of the foregoing, it is proposed to eliminate the 7% additional customs duty on palm oil imports (including crude, palm, palm stearin, ROB Palm, and RDB Palm Olein) for shipments arriving in Pakistan by June 20, 2022 from all sources other than Indonesia, in order to promote importers to bring palm oil into Pakistan as soon as possible.

It should be noted, however, that such discriminatory intervention strategies against the principle of equal treatment are not in accordance with WTO rules, but Indonesia"s unilateral export ban, which is in violation of WTO rules, may result in a palm oil shortage by mid-June 2022 if imports from alternate sources are not made immediately. Due to the force majeure scenario, a temporary tariff relief mechanism is being recommended to help offset the cost differential of importing palm oil from countries other than Indonesia.

The Tariff Policy Board is chaired by the Minister of Commerce, and because he is abroad of the nation on official business, the Tariff Policy Board meeting cannot be convened due to a lack of time and diminishing palm oil supply.

The problem is being promptly referred to the Cabinet"s ECC in the country. The summary was sent to the Ministry of Finance and the Federal Board of Revenue, with the request that they make their comments on the plan during the ECC of Cabinet meeting.

For shipments originating from all sources except Indonesia, the ECC approved reducing two percent additional customs charges on imports of palm oil for the period 10-20 June 2022, subject to confirmation by the federal cabinet.

Meanwhile, Miftah Ismail, the Federal Minister of Finance and Revenue, chaired over a committee meeting on Edible Oil Availability at Finance Division on Thursday.

The Committee was informed that the country has a sufficient supply of edible oil. The future requirements for edible oil, as well as the import of edible oil to bridge the supply-demand gap, were also highlighted. Moreover, the discussion focused on the implications of importing edible oil on foreign exchange reserves.

It has been reported that the price of edible oil is growing around the world, which will have a substantial impact on Pakistan"s trade bill. In the face of global supply chain pressures, Federal Minister Rana Tanveer Hussain also offered a viable solution to increase local production of Canola oil seeds for import replacement and to ensure the commodity"s availability.

The Finance Minister has requested that the process for importing edible oil from Indonesia and Malaysia be expedited in order to assure a steady supply to customers and to keep the price of edible oil from rising. It was also ordered that the necessary efforts be taken to improve local output in order to reduce the impact on foreign exchange reserves.