Growing smuggling of ceramics from Iran and their reduced tariffs on import from China pose a 'serious' threat to the survival of local tile manufacturing sector, industry sources said on Saturday. Talking to Business Recorder, officials of Pakistan Ceramic Tiles Manufacturers Association (PCTMA) said that the government also needed to correct the valuation on tile imports.
They demanded of the government to end smuggling of ceramics and porcelain tiles from Iran, increase their import trade price (ITP), besides placing an anti-dumping duty on imported ones to help the local industry survive amid several economic challenges.
They said the flooding Chinese tiles on an already reduced ITP under the Pak-China free trade agreement had helped grow their imports to ravage the manufacturing sector that employs at least 60,000 people across the country. Pakistan imported 15 million square meters of such tiles from China just last year, posing a serious threat to the local producers as there are fears the import is likely to surge in coming years.
China manufactures 5,200 million square meters of tiles and exports 584 million square meters annually, they said, adding that a liberal import regime would ultimately push the local makers to a closure with a billion rupees loss. They asked the government to exclude tiles from FTA list of imports during negotiation with China. Showing displeasure over the government's policy, they said that instead of scaling up the ITP fixed first in 2010, it reduced the tariff in 2015.
"Making ceramic and porcelain tiles part of FTA with China shows the ignorance of the policy makers about the potential of the local industry that has invested Rs 40 billion so far," they said. The tile production capacity in Pakistan is over 60 million square meters while capacity utilisation is far below due to influx of smuggled tiles and abnormally low ITPs. A study carried out by the National Tariff Commission also indicated that there is a serious injury to the local industry and dumping duty should be placed on tiles from China," they said.
They said that a majority of the raw material required to make production tiles was widely available in Pakistan that helped the country build up foreign exchange, besides creating jobs. They asked the government to implement corrective valuation and a change in its ITP structure forthwith. "The cost of production is rapidly rising in China and their minimum wages are three times higher than Pakistan. Under this scenario it seems illogical that the prices of tiles could go down in China whereas the ITPs of Chinese tiles have reduced from $4.57 per square meter in 2011 to $2.51 in 2013," they said.
Despite wages, transportation and energy costs surged in China and other countries, they said that the government 'surprisingly' reduced the ITPs. "The ITP for Iran was fixed in March 2014 while further 20 percent discount on ITP was given on Iranian and Middle Eastern tiles in December last," they said.
Under-invoicing and mis-declaration of imported tiles is already huge, they said, adding that the low ITPs were adding to the problems of the local industry. "A large gap between the original price and ITPs of different sizes of ceramic and porcelain tiles is inflicting a huge revenue losses not only on the local industry but on the government as well," they said.
"Last year, a major manufacturer from the ceramic industry had to shut down its plant due to losses. So the time has come that strict measures should be taken to address these issues which are playing havoc with an industry that provides livelihood to thousands of families," they said.