Edible Cooking Oil Association of Malawi (Ecoam) has insisted that the 16.5 percent value added tax (VAT) levied on the product has contributed to the price increase on the market.
In an interview on Friday, Capital Oil Refining Industries (Cori) executive director Ameen Karim, whose firm is a member of Ecoam, said besides the VAT, global crude oil prices have also gone up.
Figures show that between June 16 2020 and April 23 (last Friday), crude palm oil price has increased by 68.9 percent from $780 (about K617 000) per tonne to $1 318 (about K1 million) per tonne whereas crude soya oil price has increased by 77.8 percent from $825 (K652 000) per tonne to $1 470 (K1.1 million) per tonne.
Said Karim: “The prices of crude oil have gone up all over the world and all countries that import crude oil have been affected.
“But in Malawi, the difference is the 16.5 percent VAT, which has created an unfair advantage to neighbouring countries such as Mozambique where there is no VAT on cooking oil.”
He said because of the rise in cooking oil prices on the local market, smuggling has gone up by about 50 percent as people prefer buying cheap unfortified cooking oil from Mozambique.
“Our sales demand has dropped by 50 percent as customers are now flocking to buy cheap cooking oil, which is mostly smuggled in the country. We will keep on speaking and fighting till our plea is heard because we have invested a lot in this industry and we need to see a positive outcome.”
To illustrate the impact, Karim said they used to sell 4 000 tonnes of cooking oil, but now the sales have dropped by almost half to around 2 200 tonnes.
“The VAT is more or less killing the industry and the creation of jobs,” he said, adding that VAT levied on sales of cooking oil has gone up to K518 million per month as March this year from around K250 million per month in mid-June 2020.
Speaking at a news conference in Blantyre on Wednesday, Consumers Association of Malawi (Cama) and the Malawi Revenue Authority (MRA) faulted cooking oil manufacturers for imposing exorbitant prices on the product in the name of VAT.
Cama executive director John Kapito in an interview said the cooking oil manufacturers have misled Malawians by claiming price increases were on account of VAT yet evidence on the ground shows otherwise.
On his part, MRA head of corporate affairs Steve Kapoloma said manufacturers should be truthful with information, arguing that the price of cooking oil, which has gone up by about 60 percent, has increased beyond VAT.