The import of BOPET film at a concessionary duty of 5 per cent is not only causing billions of rupees loss to the national exchequer and draining out foreign exchange reserves of the country, it would ultimately kill the Rs 8 billion investment made in the two BOPET film production projects as recently as 2012.
According to stakeholders here the Federal Board of Revenue is reportedly considering reversion of the concessionary duty on BOPET film, which was provided due to lack of local manufacturing in the past.
It is learnt that recently ECC did not agree to the proposal of partial (1/3rd) withdrawal of concessionary duty on BOPET film import as it was not in line with duties on other packaging films and did not fully support the local pioneer industry of BOPET film. Now a committee has been formed to discuss this issue and put forth the facts of the case.
The salient facts, stakeholders said are as follows:
There are three films, BoPP, CPP and BOPET, which are used in combination with each other for packaging film. The duty on all three films is 20 per cent (while anti dumping duties are also applied on BOPP). As per SRO 565, the duty on BOPET film was allowed at concessionary rate of 5 per cent in the year 2006 when there was no local production in Pakistan whereas effective duty on BOPP film still remains @ 20 per cent. BOPP is produced in Pakistan for the last 10 years while BOPET was so far not produced in Pakistan.
Two projects for the local production of BOPET film have been recently set up and are in production for the last one year with sufficient capacity to cater to the domestic demand of all varieties of BOPET film. The two projects are estimated to have been set up at a cost of Rs 8 billion combined (US $80 million). At the time of establishment of the projects FBR view was that only when local manufacturing of BOPET film commences, additional concession on imported BOPET film will be removed and effective duty will revert to 20 per cent as per statutory duty in tariff, as in the case of CPP and BOPP films.
However, stakeholders said the concession has not been withdrawn till date. Converters continue to import BOPET film at a concessionary duty of 5 per cent, causing billions of rupees loss to the national exchequer and drain of foreign exchange reserves of the country. In addition, local investment to the tune of Rs 8 billion (US $80 million) made as recently as 2012 is being threatened due to the influx of imported BOPET film at a time when such size of investment in non-power industrial sector is difficult to come in Pakistan. Powerful converters as well as manufacturers of competing films are behind the move to push local BOPET manufacturers towards bankruptcy.
The Engineering Develop-ment Board, Ministry of Industries has verified that BOPET film is being manufactured locally since second half of 2012.The competing imports BOPET film among other countries is produced by two Indian groups in UAE whereby the BOPET film can reach Pakistan within 3 days and if done so at concessionary rate of 5 per cent duty will push the Pakistan BOPET film manufacturers towards bankruptcy.
The intermediate raw material as well as basic raw material is also produced in Pakistan. The promotion of imports at concessionary rate will circumvent and hurt the entire chain of industries as well as unnecessarily drain the foreign exchange reserves of the country, they said.
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