KARACHI: Cheaper arrival of foreign tiles, thanks to low import trade price (ITP) regime in place from 2010, is hurting the local industry.

A spokesman of Pakistan Ceramic Tiles Manufacturers Association (PCTMA) on Saturday asked the government to increase the ITP to support the local manufacturers. “We demand removal of an anomaly for imported tiles and logical implementation of correct valuation,” he asserted.

Talking to media he said raw material for local production of tiles was available which can save precious foreign exchange on its import, besides the sector would be creating jobs and business opportunities.

All the cost indicators — wages, transportation and energy etc — are increasing in China and other countries, but surprisingly the ITPs in Pakistan had been decreased.

The ITP for Iran was fixed in March 2014 while further 20 per cent discount was given on Iranian and Middle Eastern tiles in December 2014, the spokesman lamented. China produces 5,200 million square metres of tiles yearly of which 584 million square metres are exported.

As under-invoicing and mis-declaration of imported tiles is rampant, the 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 causing huge revenue losses not only on the local industry but the government as well, he explained.

He said the influx of Chinese tiles, on which already lower ITPs were fixed by the government under the Free Trade Agreement (FTA), had encouraged their imports.

“Last year 15 million tiles were imported from China. The government should exclude the tiles from the FTA list with China which is being re-negotiated,” he requested.

Tiles were placed in “No Concession” category while signing FTA with China on the request of the local industry, but unfortunately few PCTs relating to tiles were inadvertently included in Category-IV.

Tiles importers took full undue advantage and circumvented duties and taxes during last five years. This backdoor is still open and the importers are routing most of their imports through PCTs which appear on the concessional category of the FTA.

He said 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 metre in 2011 to $2.51 in 2013.”

Making ceramic and porcelain tiles part of FTA reflects ignorance of policy-makers about the potential of the local industry, which has invested Rs40 billion in BMR so far.

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

A study done by the National Tariff Commission also indicated that there is serious injury to the local industry and dumping duty should be placed on tiles from China.

Published in Dawn March 1st , 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play