Ontex seeks tax incentives for foreign investors

Asks govt to cut duties on import of raw material, technology

KARACHI: Ontex Pakistan has urged the government to focus on reducing customs duties on the import of raw material, machinery and technology instead of finished goods as this will promote more investment in the country.

“Foreign investors that have established manufacturing operations in Pakistan should be supported through incentives such as reduction in customs duties on raw material and machinery. Tax incentives should also be considered for export-oriented manufacturers,” Haroon Rashid, General Manager of Ontex Pakistan, said while briefing a group of journalists during a visit to the company’s plant on Wednesday.



He emphasised that duties on the import of finished products should not be brought down, which would serve as a disincentive to shifting manufacturing units to Pakistan and would contribute to the country’s already large and growing trade gap.

If government policies remained favourable for investment, Rashid said Ontex would look to expand its domestic manufacturing capability for exports to regional markets as well.

Ontex Pakistan has invested over $18 million over the past five years in its Pakistan operations. The company says it is the first multinational in the category of baby diapers that has established a manufacturing facility in Pakistan.

“Pakistan is a key market for Ontex and our success here in recent years now positions us to consider making Pakistan an export hub for regional countries,” he remarked.

In 2016, Ontex contributed around Rs1 billion to the national exchequer in the form of taxes. In the first half of 2017, it has contributed over Rs600 million in taxes.

“With favourable circumstances, we believe our future tax contribution can enhance significantly,” said Rashid. “By investing in technology transfer and manufacturing at international quality levels, Ontex exemplifies the type of foreign direct investment that Pakistan can most benefit from.”

He believed that Pakistan’s large population and growing consumer understanding of the benefits of hygienic products for babies offered a wide potential consumer base for diapers.

Increase in household incomes, growing urban middle class, increasing awareness of child hygiene and health and consumer acceptance of quality branded products were the key trends in recent years, he noted.



Accordingly, annual sales growth for the entire diaper industry should remain strong in double digits.

The diaper market in Pakistan is growing at a rapid pace with the mainstream segment or tier-1 (premium) contributing approximately 60% and tier-2 (discounted) segment roughly 40% to the market.

The discounted diaper segment mainly includes low-quality imported Chinese diapers.

Ontex is a global producer of disposable personal hygiene solutions for babies, women and adults with presence in more than 110 countries and 19 manufacturing sites strategically located across Europe, North Africa, Asia-Pacific and Americas.

Established in 2011, Ontex Pakistan invested in a state-of-the-art diaper manufacturing plant at the Port Qasim Industrial Area in Karachi. It manufactures a baby diaper brand (Canbebe) to serve Pakistan and regional export markets.

Published in The Express Tribune, July 29^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.