Driving local industry: Tile producers complain over ‘unfair price of imports’

Want correct valuation of imports; say revenue of government being dented due to smuggling.


Our Correspondent March 01, 2015
China produces 5,200 million square metres of tiles yearly of which 584 million are exported.

KARACHI:


Pakistan Ceramic Tiles Manufacturers Association (PCTMA) has urged the government to immediately remove the anomalies in Import Trade Price (ITP) for imported tiles to save the local industry.


“Imported tiles are coming into the country at low rates at a time when ITPs have been reduced which is adversely affecting the local industry,” an official said, while talking to the media on the current issues of the local industry.

“We do not want undue favours from the government. What we demand is just the logical implementation of correct valuation in tile imports,” he stressed.

He said majority of the raw materials necessary for the production of tiles is available in Pakistan and the industry is providing direct jobs and business opportunities to over 10,000 people.

Local industry officials argue that the price of the process of production like transportation and energy has increased during 2010 to 2015 but the government has reduced ITPs for tiles. For instance, the ITP for Iranian tiles was fixed in March 2014 but it was reduced by 20% in December 2014 that is giving a hard time to the local industry.

At the time when under invoicing and mis-declaration of imported tiles is already rampant, low ITPs are adding to the woes of the local industry. A large gap between the original price and ITPs of different sizes of ceramic and porcelain tiles is inflicting huge revenue losses not only on the local industry but the government as well in form of revenues.

“Last year, a major manufacturer of ceramic tiles had to shut down its plant due to losses. This is why the industry wants the government to take strict action to address rampant smuggling that is killing the industry,” another official added.

Furthermore, the influx of Chinese tiles, for which ITPs are already low under free trade agreement (FTA), has further encouraged imports, which is another blow to the local tile manufacturers.

China produces 5,200 million square metres of tiles yearly of which 584 million are exported.

Last year, Pakistan imported 15 million square metres tiles from China, which is one-fourth of the total installed capacity of the local industry. Therefore, the local industry has urged the government to exclude tiles from FTA with China which is being renegotiated.

The spokesman of the association said that the product tiles were placed in “No Concession” category while signing FTA with China on the request of the local industry but unfortunately few Pakistan Customs Tariff (PCTs) relating to tiles were inadvertently included in category-IV.

Due to this discrimination and erroneous treatment, tiles importers took full undue advantage and circumvented duties and taxes during the last six years. This backdoor is still open and importers are routing most of their imports through PCTs which appear on the concessional category of FTA.

He said the cost of production is rapidly rising in China and their minimum wages are three times higher than Pakistan. In this scenario, it seems illogical that the prices of tiles could go down there whereas the ITPs of Chinese tiles in Pakistan have reduced from $4.57 per square metre in 2011 to $2.51 in 2013.

Local tile makers believe that making ceramic and porcelain tiles part of FTA with China shows the ignorance of policymakers about the potential of the local industry that has invested Rs40 billion so far.

The tile production capacity in Pakistan is over 60 million square metres while capacity utilisation is far below its potential due to the influx of smuggled tiles and abnormally low ITPs.

The spokesman appreciated the Ministry of Commerce for taking input of the industry while negotiating the second phase of FTA with China and expressed hope that it would take appropriate action to protect the local tile manufacturers.

Published in The Express Tribune, March 1st, 2015.

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COMMENTS (2)

Silent Conqueror | 9 years ago | Reply Local tiles lack in quality but have prices higher than the imported ones which are also better in quality. Same is the case with every other industry in Pakistan.
whitesky | 9 years ago | Reply lobbying with the government. Local producers are inefficient.
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