Saudi slashes customs tariffs

FOOD CRISIS: Saudi Arabia has slashed tariffs for 180 basic goods in an attempt to secure affordable commodities for its citizens. (Getty Images)

Saudi Arabia's cabinet agreed on Monday to slash customs tariffs on almost 200 products in an effort to limit the effect of a looming global food shortage and tackle record inflation.

The discounts on import taxes, set to come into force from Tuesday, range between 15-20% and cover foodstuffs, building materials and consumer goods.

“The new decision also covers several products - including frozen chicken, eggs, vegetable oil, macaroni, milk, juices and canned food - that were previously imported after paying a tariff of 20%,” Saleh Al-Khulaiwi, director general of customs, told Saudi daily Arab News. “Tariffs for these items have been reduced to 5%."

He said the revised tariffs would also be applied to bottled water, soap, sanitary pads, napkins, tissue papers and detergents, as well as paints, plastic pipes, wood, electric wire, pre-cast building blocks and fertilisers.

Around 664 products - mostly foodstuffs, medicine, educational tools, IT materials and animal fodder - are already exempt from import taxes, Al-Khulaiwi said.

The price of everything from basic goods to building materials to commodities have soared across the Gulf due to a global supply crunch and the falling value of the US dollar, to which most Gulf states have their currency pegged.

Saudi’s Trade Ministry announced in January that prices of food products, which account for the largest chunk of Saudi families’ spending, may rise by up to 30% in 2008 due to a drop in global supplies and the weakness in the dollar.

Inflation in Saudi Arabia surged to a 27-year high of 8.7% in February, with rents surging 18%, followed by food costs which jumped 13%, according to data from the central department of statistics.

Lower than expected harvests in major grain producing countries such as the Philippines, Vietnam and India have led to panic in some countries that their will not be adequate supply to feed growing populations.

Adding to concerns, major rice producing nations have slash exports to combat domestic inflation and food shortages.

Vietnam, the world's second-largest rice exporter after Thailand, announced on Friday it would cut exports by 22%, while India said the same day it has hiked the minimum price for rice exports to $1,000 a tonne, preventing all but the most expensive grades of rice from being exported.

Vietnam and India's announcements come just days after Cambodia said it was banning all private sector rice exports, and as Egypt bars rice exports from April 1.

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