ISLAMABAD, April 12: National Tariff Commission chairman Dr Faizullah Khilji, while chairing a public hearing for tariff protection here on Monday, advised the local industry to learn to survive in an environment increasingly less protective.
The hearing was held in response to a request from the industry producing woven polypropylene valve sacks (WPP valve sacks) for reduction in customs duty on its raw material, that is, PP granules, from 20 per cent to 5 per cent.
Noting that the industry in Pakistan had been living in a very protected environment, Dr Khilji pointed out that the tariff rates had already been reduced from 125 per cent to 25 per cent and these were likely to come down further.
Pakistan was not alone in this trend, he pointed out. During the hearing, representatives of the paper sack industry contended that they were the competitors of WPP valve sacks in the market, the custom duty on their raw material, that is, kraft paper, too should be meted the same treatment in the matter of any reduction in tariff.
The sole user of these WPP and paper bags is the cement industry. A representative of the cement industry stated that as the demand for cement was growing at the rate of 10-15 per cent per annum, the demand for these bags had gone up in Pakistan. Seventy per cent of the demand was being fulfilled by imports.
He also informed the meeting that the cement industry based its decision on whether to use paper bag or WPP bag on considerations only of price. The WPP valve sack industry had based its demand on the argument that the tariff on finished WPP sacks was 25pc, thus leaving a differential of only 5pc with the imported raw material. It was, therefore, difficult for it to compete against the imported material.
Nevertheless, it was noted that the proportion of WPP valve sacks in the volume of import was only 7pc. Such a small fraction could hardly be deemed to pose any significant challenge to the local industry.
The NTC chairman observed that any consideration of the industry's request would also take into view the fact that the raw material of both paper sacks and WPP valve sacks constituted a high percentage of the finished product.
