Chapters 48 and 49 of PCT: printing industry seeks removal of tariff anomaly

27 Apr, 2013

The domestic printing industry has proposed the Federal Board of Revenue (FBR) to remove tariff anomaly in the Chapter 48 and 49 of the Pakistan Customs Tariff (PCT) in Budget (2013-14) to check huge difference in duty on the import of paper used for books printing and finished product (printed publications).
It is learnt here on Friday that the Pakistan Association of Printing and Graphics Arts has drafted its budget proposals for 2013-14. According to the association, Pakistan currently stands at the highest rates of customs duties on imports of paper and paperboard in the world, whereas, the developing countries and developed countries stand at 0-5 percent rate of customs duties on the same.
Pakistan Customs Tariff levies 20 - 25 percent customs duty, 16 percent sales tax and 5 percent withholding tax on the import of paper which is used for printing text books, other books and magazines; and on paperboard used as a hard and soft-cover of the printed material. Whereas the finished product (printed publications) is being imported on 0 percent customs duty, sales tax and withholding tax. The Chapter 48 and 49 of the Pakistan Customs Tariff (PCT) gas created this anomaly/irregularity. The industry is heavily dependent on import of paper, paperboard and printing paper. Paperboard is used in packaging of numerous consumer and industrial products, such as, pharmaceuticals, food items, shoes, auto parts, electric appliances, etc. Another end-use of paperboard is graphic printing.
Once tariffs are rationalised and a stringent trade policy is adopted to facilitate the printing industry of Pakistan, it is an imperative reaction that all the investment that has departed from Pakistan, is likely to return ten folds and with significant chances of exponential increments over the future, sources said.
Printing industry is a labour intensive industry and would require a substantial labour force to be working in the printing houses across Pakistan. With the government's patronage of the sector, coupled with increased investments, the number of employed in this sector is likely to cross 1.8 million people by 2020.
An estimated Rs 11 billion per annum would be the increase in government revenues, should the tariff and tax structure as proposed herein is adopted through the 2013-14 Federal Budget. The estimate provided is likely to go up with the increased investment and increased employment in the printing industry.
Printing Industry was one of our major sectors which was importing low value raw materials and exporting high value finished products. Pakistan's current export bill constitutes of low value agricultural goods and Pakistan's import bill consists primarily of high value finished products. The printing industry, if resuscitated can tilt the balance from export of low value products to an export of high value finished products, thereby, increasing the inflow of precious foreign exchange, it said.
The association said that the printing industry of Pakistan would be able to print and produce high quality low cost books, text books, exercise books, writing materials and stationary which would in turn decrease the cost of attending educational institutions and encourage the school enrolment rate. Once the local Printing Industry is revived, it would be able to meet the domestic demand for printed materials and would subsequently be export efficient as well. This would essentially mean that Pakistan would only be importing low value raw materials and would be exporting high value finished products.
The association said that many renowned international publishers had their printing houses in Pakistan for years due to its cost effectiveness which have also shifted their orders to other countries.
Pakistan was once a huge supplier of printed materials to multi-billion dollar chain stores such as "Wal-Mart", "Target", and "Tesco." These international chains used to source their packaging from Pakistan due its optimum quality and price affordability, however, their custom is now being diverted to other regional countries.
The investment in this sector has declined significantly and only specialised print houses exist whereas book publishers are continuously going out of business and selling off their machinery as scrap. The anomalous tariffs have resulted in a decline in affordability of education due to exponential increase in the prices of books and writing materials, association added.

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