Chairman of Pakistan Soap Manufacturers Association (PSMA) Tanvir Ahmad Sufi has condemned the imposition of regulatory duty on import of 144 new products and increase in the duty on existing 202 items in order to curtail rising trade deficit of the country. He said the products that face regulatory duties are fruits, vegetables, juices, shampoos, shavers, microwave oven, tea maker, food processing machine, vehicles, sports products and some items belonging to women make up kits, etc.
He said detergent powder for laundry, detergents for dish washing and other related items will also be affected badly. He further said regulatory duty has increased on 28 items of the vegetable products group while machinery and vehicles and associated transport equipment's products groups have witnessed soaring duty on 34 and 56 items, respectively. Duty has also been increased on 56 items of the chemical or allied industries' products group.
He said that based on the previous studies, it has been empirically proved that the imposition of regulatory duties does not result into curtailment of import bill. He said that fall in the value of imports is mainly associated with the depreciation of rupee and lower GDP growth, which both are however not in favour of economy of Pakistan.
"There is a need to boost exports through value-addition, product and market diversification, et cetera, instead of imposing regulatory duty to curtail trade deficit," he proposed. PSMA chairman said that the move to raise regulatory duty on 346 tariff lines is not expected to make a big dent on US$ 48.5 billion import bill that the country recorded last year but the government has expressed hope to generate additional revenues by doing so.
He said that on the other hand, imposition of regulatory duty on all types of imported cars, including the hybrid vehicles could affect the new investments in the auto-sector. He said that the decision to enhance regulatory duty on cars is against the spirit of the automobile policy, approved by the federal cabinet. He said that there is another matter of great concern for industry, as well. Although the main reason for imposition of Regulatory Duty was given to discourage import of luxury items. But some industrial raw materials are also included in the list.
Tanvir Sufi cited that Sulphonic acid is main raw material for use in manufacturing of various detergent products such as detergent powder for laundry purposes, dish wash detergents and other such products. He said the immediate effect of this increase in duty is that local manufacturers have increased their prices. He said that open market price of this essential raw material has increased by about Rs 15 per kilogram. He said that as per latest figure available: Total consumption of Linear Alkyl Benzene Sulphonic Acid (LABSA) (October, 2016 to September, 2017) is about 46,252 m. ton whereas local manufacturers are producing around about 28,800 m. ton. Balance quantity that is imported per annum to meet the needs of industry is about 12,000 m. ton
PSMA chairman said that local industry is given protection while ITP value for imported material is fixed at higher slab. He said that secondly, raw materials Alkyl Linear Benzene & Sulphur used in manufacturing of Sulphonic Acid are imported at zero rate duty.
"All these huge favours provide more than due protection to local industry. But, the worst thing is that they are also getting benefit of black market price which have increased due to imposition of regulatory duty," he said, adding that it would increase the volume of smuggling in the country, as the increase in regulatory duty gives cushion to the grey market in proportion of 10% to 60%. Sufi said that this will increase the hundi and hawala system as the smuggling of goods to be financed through non-banking channels. The higher regulatory duty on the import of appliances, including refrigerators and air conditioners, will not have a significant impact on domestic manufacturers because imports account for less than 5% of local sales.
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