The customs duty imposed on import of raw material and finished goods originating from Malaysia and Thailand stands at 16 per cent while under the Free Trade Agreement (FTA) with Sri Lanka, it is zero rated. The industry mostly uses imported medium density fibre (MDF) boards of varying degrees and textures, mould MDF door skins, laminated MDF for office and household furniture, veneered MDF for high end use, computer numerical control (CNC) router MDF, ultraviolet high gloss MDF and paper overlay MDF.
Besides, meeting huge domestic demand, the industry also has the potential to export value-added wood products to Middle East as well as Africa but has been pushed to the brink of total collapse due to the customs duty anomaly. According to M. Bilal Jafrani, former chairman All Pakistan Particle Board Manufacturers Association (APPBMA), the discrepancy in customs duty has deprived the industry from much-needed raw materials.
Since imports of all categories of MDFs, including finished goods from Sri Lanka are zero rated, the industry fails to compete or produce value-added wooden products for exports, he said. The main sources of MDF boards are Malaysia and Thailand but since the government has entered into an FTA with Sri Lanka, the product was included in the agreement.
"As a result of this, many importers take the route of Sri Lanka for imports to avail zero rated duty. This has flooded the local market with cheap, duty free MDF boards," he added. Karachi Timber Merchants Group (KTMG) chairman Mr Suleman Soomro told that the issue has been taken up to the highest level and even put up before the Federal Board of Revenue, Ministry of Commerce and Competition Commission of Pakistan (CCP) but to no avail. He also urged the government to remove the customs duty on import of raw materials such as MDF boards and simultaneously impose up to 20pc on import of finished goods.
Mr Soomro categorically said the woodworks industry is a cottage industry and engages skilled and semi-skilled work force across the country. Pakistan is largely dependent on imported timber in any shape due to negative forestation at 1.8pc as against minimum requirement of 10pc by the United Nations, he said. Contrary to this, the Far East has absolute and comparative advantage in the region for the production of MDF boards due to tropical weather and vast sustainable plantation methods, he added.
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