Local polypropylene industry opposes project-specific incentive to new unit

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.