The chairman of the Pakistan Yarn Merchants Association (Sindh-Balochistan Zone), Danish Hanif, has rejected the proposal to impose 5 percent regulatory duty (RD) on import of synthetic filament yarn of polyester. He urged the government to save Pakistan's polyester filament fabric industry from total collapse. He said that duty on polyester filament yarn, which is the basic raw material for the fabrics industry, was already higher, and therefore another 5 percent RD was unjustified.
He said that on top of the abovementioned problem, there is an ongoing anti-dumping duty investigation by the National Tariff Commission (NTC) and the preliminary findings came out to be 6.23 percent (on average) on Chinese Polyester Filament /Synthetic Yarn (PFY). Therefore, the total impact on the import on PFY will be CD 12 percent + RD 5percent (Proposed) + 6.23 percent anti-dumping duty = 23.23 percent, whereas the finished polyester filament fabric will have CD 16 percent + RD 5 percent = 21 percent. Therefore, the tariff on imported polyester filament fabric will be cheaper than its basic raw material ie, polyester filament yarn, he said. This will be a total disaster for SME sector of the looms in Pakistan and it will lead to huge unemployment.
Danish Hanif pointed out that Pakistan started PFY manufacturing at the same time as Thailand, Indonesia, Malaysia and India, whereas China started it a decade later on similar plants. In due course, all these countries moved to the direct spinning process and kept increasing their capacities as well as modernising them by replacing texturing machines, providing a full range of products domestically and internationally at competitive prices.
On the other hand, the two Pakistani units producing 58,000MT in 2002 have remained at the same production capacity, with third-one of them having very small production and they still depend on import of pet chips. "Is it justified to put RD to protect 2 or 3 industries vs 500,000 people? These 2 or 3 industries give employment to only 1,500 families vs 200,000 families of the SME sector," he added.
He said that there is no justification for higher customs duty and imposition of RD when the domestic production is only at 25% of the total domestic requirement with limited range of products. As you can see from the above polyester chain except PFY, all the other industries are paying custom duty in single digit without any RD imposed.
If corporate entities like spinning mills and the packaging industry can survive only at 7 percent and 8.5 percent CD, respectively, how can the SME sector of polyester fabric sustain 12 percent CD, along with 5 percent RD and a hanging sword of anti-dumping duties (6.23 percent expected to be levied in July 2017), he asked. It would be like a mass massacre for the SME sector of polyester fabric loom industry, he added.
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