Federal Board of Revenue (FBR) is likely to impose 20 per cent regulatory duty on coated duplex board and sack kraft paper, Profit learnt on Wednesday. Sources disclosed that on the direction of the Prime Minister House, FBR has proposed the prime minister’s advisor on finance and revenue to allow imposition of 20 per cent regulatory duty on both paper products. Official note made available to Profit indicates that the Pakistan Pulp Paper and Board Mills Association (PPPBMA) submitted a representation wherein it had been requested that regulatory duty of 20 per cent may be levied on import of coated duplex board and sack kraft paper for providing the local industry a level playing field in the wake of cheaper imports of these products.
It shows that the PPPBMA in its representation pointed out that local manufacturing of these items has decreased substantially since June, 2011 after removal of regulatory duty, which resulted in that the domestic industry is fighting for its survival due to cheaper imports and higher cost of local inputs, including electricity, gas, etc.
The PPPBMA claims that many local manufacturers have closed down their operations, rendering hundreds of workers jobless. The country is wasting precious foreign exchange by importing huge quantities of these items, while domestic industry uses indigenous raw materials. FBR in its note pointed out that the annual domestic demand for sack kraft paper is 50,000 tonnes and manufacturing capacity of local industry is around 40,000 tonnes, which has drastically dropped, catering only for 14 per cent of the domestic requirement. Presently, only one local manufacturer of sack kraft paper, namely, M/S Flying Kraft Paper Mills is partially operational. The remaining units have closed down and same is issue for coated duplex board where imports have increased manifold at the expense of local production.
Federal Board of Revenue is of the view that increasing tariffs of gas and electricity and withdrawal of regulatory duty in June, 2011 have pushed the domestic industry on the verge of closure. For reviving the local production and substituting imports, levy of regulatory duty on these items may be contemplated, FBR recommends. The FBR estimates that by imposing regulator duty the country could generate additional revenue of Rs150 million per month at present level of imports.
Highlighting the historic background, the FBR has indicated that 15 per cent regulatory duty was imposed on import of coated duplex board and sack kraft paper in February, 2009, to protect local industry; but was withdrawn in the same month on the representation of paper bags manufacturers. However, the regulatory duty was again levied, but at the lower rate of five per cent in June, 2009 on commercial imports only.
It further highlights that in federal budget 2011-12, the regulatory duty was removed on all items except luxury goods. Resultantly, only customs duty is leviable on the statutory rates of 15 per cent on sack kraft paper and 25 per cent on coated duplex board. Hence the request for levy of regulatory duty at the rate of 20 per cent on these two items. Sources disclosed that Prime Minister’s PSO Kushnood Lashari is pursuing the case along with Qamar Momin of Flying Paper Mills. FBR Chairman Mumtaz Haider Rizvi has moved the note to Finance Ministry that might take a couple of days in getting go ahead after which FBR will issue SRO.
