Pakistani paper merchants group urges country's Federal Board of Revenue to correct anomalies in customs duties on imported paper and paperboard; tariffs burden Pakistan's printing, packaging sectors, making them uncompetitive globally, says group

Debra Garcia

Pakistan , January 19, 2014 (Balochistan Times) – Chairman, All Pakistan Paper Merchants Association (APPMA) Muhammad Saleem Memon urged the Chairman Federal Board of Revenue (FBR) to rectify the tariff anomalies and save an industry, which can earn substantial foreign exchange for Pakistan while decreasing the import bill of Pakistan.

In a letter to the Chairman FBR, he said the industry has the potential to offer employment to a substantial population and can contribute substantially to the growth in GDP of the country and make it a giant of the printing industry in the world. He referred to a recent meeting of KCCI members with Federal Minister of Finance Ishaq Dar where he advises us to write to you with regards to the anomalies in the customs tariff and their retif1cation.

He said at present the customs duties on paper and paper board in large sheets and rolls (raw materials) under PCI Chapter No 48 stand at 20 percent, sales tax 17 percent and withholding tax 5% on imported paper, which is used for printing of text books, the Quran, magazines and other books, etc. Resultantly the burden upon the printing Industry at import stage alone amounts to 47.42 percent. Whereas, the finished product under PCI heading No 4901.9100 to 4903.0000 (printed publications) is being imported at ZERO rated customs duty, sales tax and withholding tax, which creates a chaotic tariff anomaly to extreme detriment of the printing industry.

It must kindly be noted that the printing industry and downstream industry importing paper and paperboard in the form of raw material for conversion, cutting, trimming, printing, binding into copies, books and magazines, etc, are subjected to 20 percent customs duties and other taxes whereas printed materials are subjected to ZERO rated customs duty. Resultantly, tariff and tax anomalies have resulted in shutting down of 50 percent of the printing and packaging industry and plus this sector is declining further to a verge of extinction.

Pakistan on account of the tariff anomalies has suffered the following substantial losses:

--- Renowned international publishers OXFORD University Press (OUP) despite of having printing house in Pakistan have shifted their orders to other countries and instead of printing domestically and exporting OUP is importing printed materials from other countries Into Pakistan.

--- Pakistan was once a major exporter of printed Holy Quran to over 60 countries. The exports of Printed Holy Quran have declined to almost zero and instead Pakistan is importing printed Holy Quran from Indonesia and Malaysia.

--- Pakistan was once a supplier of multi-billion dollars' worth of printed materials to the multinational, American and European Giants such as "WAL-MART" - "TARGET" - "TESCO" - "ASOA" which have now diverted their orders to other regional countries with 0-5% customs duties and low taxation rates on paper.

--- Once, almost all the Urdu literature and religious books around the globe were printed and exported by Pakistan: and accounted for as a major revenue source. Utterly religious books were exported substantially to major universities of USA, UK, Russia, Malaysia, UAE and other European countries; these orders have altogether vanished and have been shifted to either China or Malaysia and UAE.

--- The local investors have been driven to Middle East, Bangladesh, UAE or completely closed down.

--- The investment in this sector has declined significantly and only specialized print houses exist whereas book publishers are continuously going out of business and selling off their machinery as scrap.

--- SRO 670 encourages import of finished product and discourages domestic production which adds to the Import bill, which at present is at USD 40.932 billion as compared to US $36.551 b1llion in the year 2012-13, showing an increase of over 11.99%: This is attributable to the continuing increase in demand of printed materials especially books and educational materials, domestically and in the absence of local quality printing the import bill will continue to rise.

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