MUSHTAQ GHUMMAN
ISLAMABAD (March 04 2010): Local
polypropylene (PE) industry has opposed a
project-specific incentive by Ministry of
Industries and Production (MoIP) which
entails increase in customs duty by 10
percent to facilitate one project, official
sources told Business Recorder.
"We are surprised to learn that the MoIP in
the Letter of Intent (LoI) issued to a
company, that plans to set up a
polypropylene (PP) and poly ethylene (PE)
manufacturing plant at Karachi, has
recommended increase in the customs duty on
import of PP & PE granules by 10 percent,"
said Iskandar Khan, Chairman of local PE
manufacturers association, in a letter to
the Minister for Industries and Production,
Hazar Khan Bijarani. The Economic
Co-ordination Committee (ECC) of the Cabinet
in
its next meeting will be reconsidering the
already scrapped project on the
recommendations of MoIP.
There are 200 PP units operating all over
Pakistan, and an increase in customs duty
would not only challenge the viability of
the local PP industry but will also have
direct negative impact on production costs
of industry that packs its products in PP
sacks ie rice, wheat, flour, sugar, POULTRY
feed, fertiliser, cement and others which,
in turn, will trigger inflation, the
association said.
The irony, sources said, is that while the
rest of the world is closing down PP and PE
units as they are not feasible, in
Pakistan, such a unit has not only been
approved but is being provided tariff
protection at the cost of local PP industry.
Local PP industry is suffering because of
high cost of doing business on account of
scheduled and unscheduled power failures,
and high interest rates.
"An increase in tariff would render our
production uncompetitive in the
international market leading to lower
exports of PP
bags and international PP producers with low
cost of doing business will take over our
domestic market," Iskandar said. "We
certainly object to the establishment of PP
and PE plant in Pakistan and giving
unit-specific incentives. However, we have
no
objection if a new unit operates in a
competitive environment, without disturbing
the current tax structure," he added.
Copyright Business Recorder, 2010
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