Local sugar refiners urged the government to keep the letter of credit (LC) margin at a lower level for sugar import to ensure its uninterrupted supply during the upcoming month of Ramadan next year.
The Bangladesh Sugar Refiners Association (BSRA) --a platform representing five sugar producers in Bangladesh who altogether meet 98% of the local demand -- in a letter proposed to take necessary steps for importing raw sugar at 10% LC margin through the four state-run banks --Sonali, Janata, Agrani and Rupali, sources said.
The association said that the private sector banks cannot open necessary LCs for sugar import despite paying the required amount of money.
Earlier, they could open LCs for sugar import on a bank-customer relation basis.
In 2024 so far, the amount of raw sugar imported is about 36% less than in 2023 and about 51% less than 2022, according to the BSRA.
Lower volume of sugar has been imported in the current year due to reluctance to open LCs by commercial banks because of the dollar crisis.
Besides, the increase in the price of raw sugar on the international market, the war between Russia and Ukraine and the Palestine-Israel conflict have also had a negative impact on international trade, they said.
A massive amount of sugar is required to meet the demand during Ramadan.
During Ramadan, the demand for sugar increases about 2.5 times compared to all other months of the year.
In view of the rising demand during Ramadan, it is essential to take proper measures now for the import of raw sugar to ensure adequate stock of the sweetener, read the letter.
Raw sugar is imported to Bangladesh from Brazil, which is a time-consuming matter, taking at least 45 days.
They must consider there needs to be sufficient time required to refine and market sugar.
The association added importing a full ship of raw sugar (around 55,000 tonnes) requires about Tk500 crore (dollar equivalent).
Along with that, about Tk175 crore duty has to be paid for the release of such a huge amount of sugar.
In total, Tk675 crore has to be paid for one shipload of imported raw sugar to reach the factory.
Providing such a large amount of money in the current economic condition is also difficult and almost impossible for an importer, read the letter.
Bangladesh’s annual sugar demand is estimated to be between 2.0 and 2.2 million tonnes.
To meet this demand, around 2.2-2.4 million tonnes of raw sugar is imported annually.
Currently, over 98% of domestic sugar demand is met by private sugar mills while state-owned mills contribute only 1%-2%.
The BSRA proposal has been sent to the Bangladesh Trade and Tariff commission (BTTC) to give opinion.
Last month, the National Board of Revenue (NBR) halved the existing regulatory duty on sugar imports, reducing it to 15% from 30%.
