High duties on paper spark crisis

Printing industry on verge of disaster as paper prices soar up to 200%

KARACHI:

Printing industry stakeholders and paper importers are facing a paper crisis due to heavy duties imposed on paper imports.

They have expressed concern over the high paper prices that have put the entire printing industry on the verge of disaster.

In an appeal to Prime Minister Shehbaz Sharif and Finance Minister Miftah Ismail, All Pakistan Paper Merchants Association’s former vice chairman Abid Nisar, who is also the Karachi Chamber of Commerce and Industry’s (KCCI) former chairman of the Import and Anti-Smuggling Sub-committee, demanded that the government reduce import duties and take urgent measures to save the printing industry from disaster.

Nisar also demanded the suspension of duty-free import of printed books and printed material from abroad so that the printing industry, which is Pakistan’s second largest, could be saved. “Else the situation will put jobs of millions of people at risk.”

“A majority of businesses, including the paper industry, are facing difficulties in doing business due to the high cost of raw material, exorbitant freight charges and duties at the import stage,” Arif Habib Limited Head of Research Tahir Abbas told The Express Tribune.

“Duties can be rationalised with mutual consent of the government and the paper industry, however, duty-free import is not possible given the elevated revenue target of the government for fiscal year 2022-23.”

Nisar pointed out that a severe paper crisis had erupted across the country due to high taxes on the imported paper, significant devaluation of the rupee, soaring dollar, and profiteering by the local paper mills. “As a result, the prices of paper are skyrocketing.”

“Due to a sharp rise in the value of the dollar, paper import deals have become a losing proposition as the delivery of imported raw material usually takes three months. Rupee devaluation has caused a considerable increase in the dollar exchange rate in Pakistan.”

Arif Habib Commodities CEO Ahsan Mehanti said the duty on imports needed to be rationalised for the growth of small and medium enterprises (SMEs) and creating employment opportunities in the industry.

“Large-scale manufacturing (LSM) industry growth is in double digits owing to the protection provided for the big industries. SME sector also needs low import duties to promote exports and local consumption.”

Nisar pointed out that the importers played an important role in meeting the production demand of the printing industry. However, profiteering by the local paper mills pushed paper prices higher by up to 200%.

Keeping the current situation in view, according to Nisar, the printing of textbooks has become impossible and these may not be available in markets. “Even if they are available, the cost will be beyond the purchasing power of the common man.” In a digitalised environment, “corporate circles and SMEs are avoiding paper printing,” Union of Small and Medium Enterprises (UNISAME) President Zulfikar Thaver told The Express Tribune.

“Less attractive packaging is one of the reasons for Pakistan’s stagnant export growth as the packaging and printing industries are not coming up with handsome packaging. We have requested the government to reduce the import duties on packing material too,” he said.

“Goods in attractive packaging easily enter the global market and attract buyers, but we are lagging behind,” he said. “However, once the foreign exchange problem is addressed, we will raise our voice in their support. We have asked the government to frame an industrial policy for paper, chemical and petroleum products.”

Nisar was concerned about the imposition of about 70% duty on the imported paper, raw material for printing books and printed material.

“There is 20% duty on paper imports, 17% sales tax, 20% customs duty, 29% anti-dumping duty and 6% additional duty; these have been further increased for FY23,” he said.

Nisar appealed to the PM and finance minister to reduce the import duty to save Pakistan’s printing industry and paper importers from disaster.

He also requested the suspension of duty exemption for the import of printed books and printed material and called for imposing the duty so that the prices of paper could be reduced in the country and the local industry could continue running by providing employment to millions of people.­­

Published in The Express Tribune, June 29^th, 2022.

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