KARACHI: The All Pakistan Paper Merchants Association (APPMA) has proposed to Federal Finance Minister 10% customs duty on H.S code 48 and requested to abolish 7% additional customs duty in the federal budget for 2021-22 to boost export business and promote cheap education in the country.
APPMA’s Senior Vice Chairman Muhammad Anis Noor Muhammad in a statement on Thursday pointed out that global prices of the soft wood pulp used to make paper and paperboard are exceptionally increased by 65 percent and noted that the reason for the price rise was the “inorganic price increases in market pulps, as well as chemicals, utility cost, coal, waste paper, other direct/indirect materials, exchange rate and shipping freight”.
In the past few months, it observed that increased prices make a direct impact on the products’ costing. These price increases in raw materials have a global footprint and impacted almost every paper supplier across the globe, the association added.
“Besides the raw material and fuel costs, the harsh ocean freight is one of the reasons for the price increase. Moreover, short availability of containers and vessels, compounded by congestion at leading ports across South Asia, add to the complication,” the APPMA stated.
The association opined that the price increase in paper and paperboard is just the beginning as raw material is one of the key cost drivers for paper.
“This is because it constitutes 60-65 percent of the total cost of production. We estimate that the price of paper and paperboard will increase at a compound annual rate of 1.2% to reach 112.9 points over the five years through 2020-21. Extreme surge in pulp price make coated and uncoated paper and paperboard costlier by 65 to 70%,” the association maintained.
The APPMA noted that the worldwide paper and paperboard price increase badly affects the printing and packaging industry and educational sectors of Pakistan. The paper and paperboard imported by the printing and packaging industry is charged with the highest rate of customs duty, additional customs duty and other taxes which make local printing and packaging subside extremely.
It pointed out that additional abnormal import tax persists on paper, as there is no duty on basic raw materials i.e. pulp (H.S Code 47), and nominal duty on finished goods i.e. printed books, literary materials (HS Code 49); however in semi-finished goods (H.S Code 48) i.e. paper and paperboard there is a 64% aggregate duty taxes add-on.
APPMA further stated that the continuation of an unbalanced tariff and the fact that other regional countries have managed to establish equally well-organized printing units has led to increasing imports of books prescribed in Pakistan’s schools and colleges, from Malaysia, Singapore, Indonesia, and China, which were once printed locally.
“The unhelpful policy of our government only benefits the handful of paper mills, but restricts the growth of over 15000 printing units in Pakistan. Pakistan with the lowest literacy rate keeps the highest rate of duties and taxes on paper (raw material),” it added.
The APPMA stated that international printing and packaging industries derive benefits from the US$900 billion export market, mainly consumed by Singapore, Malaysia, China and UAE. Despite the fact that our printing industry is far cheaper, extreme customs duty, additional customs duty and anomalous taxes are the major factors which prevent us from entering the US$900 billion export market.
The association stated that federal government recognized coated paper and paperboard (HS Code 4810) as raw material and charge 2% WHT but despicably charge 5.5% WHT on uncoated Woodfree paper (HS Code 4802) in large sheets and jumbo rolls, which it termed a sheer anomaly/irregularity and requested the government to recognize paper as a raw material and impose 2% WHT on chapter 48.
It urged the federal government to put in place a policy of reform and rationalize the tariff act, accord paper and paperboard (raw materials) the same treatment as the printed materials and let the printing industry enter the $900 billion plus export market, facilitate the printing industry in raising its employment and further assist the printing industry in regaining its export competence, while fulfilling the domestic need for cheap and quality printing on fine quality imported paper and paperboard.
The APPMA proposed that if the government is keen on maintaining duty free imports of printed materials, then it must allow the printing industry a level-playing field in order to compete with the imported printed materials.
Copyright Business Recorder, 2021
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