DHAKA (Reuters) - Bangladesh will lower tax on rice imports in a bid to cool record-high local prices amid dwindling state reserves, the country’s commerce minister said on Tuesday.
Domestic rice prices reached an all-time high in May after flash floods hit local output and state rice stocks plunged to 10-year lows.
“We have decided to reduce the import duty to 10 percent from the current 28 percent,” Commerce Minister Tofail Ahmed told reporters.
The price of rice will come down by 6 taka per kg as a result of the tax change, the minister said.
High demand from Bangladesh, the world’s fourth-biggest rice producer, could underpin prices in major exporters such as Vietnam, Thailand and India.
Bangladesh is set to import 200,000 tonnes of white rice at $430 a tonne and 50,000 tonnes of parboiled rice at $470 a tonne from Vietnam in a government-to-government deal, said Ataur Rahman, additional secretary at the food ministry.
The rice will be shipped in 60 days, with the first consignment expected to arrive in 15 days, Rahman told Reuters last week.
The rates are sharply higher than what it is paying for through tenders. Bangladesh is buying 50,000 tonnes of white rice at $406.48 a tonne and 100,000 tonnes of parboiled rice at $427.85 and $445.11 a tonne through tenders.
The government is also in talks with Thailand and India to import rice to replenish reserves.
Separately, Bangladesh’s central bank has ordered banks to allow traders to import rice without any deposit against letters of credit.
Traders and officials say Bangladesh could emerge as a major importer of rice this year. It was ranked as the fourth-largest importer by the U.S. Department of Agriculture in 2011.
The Bangladesh government has not imported rice since then, although private traders have done so, mostly from India.
Bangladesh produces around 34 million tonnes of rice annually but uses almost all its production to feed its population of 160 million. It often requires imports to cope with shortages caused by floods or droughts.
($1 = 81 taka)
Reporting by Ruma Paul; editing by Alexander Smith