KARACHI: With the imposition of regulatory duties on 731 import items, the country can potentially save up to $2 billion a year besides generating additional revenue, analysts said on Tuesday.

The Federal Board of Revenue (FBR) notified updated regulatory duties on non-essential items to curtail the import bill.

The Economic Coordination Committee (ECC) of the cabinet gave its approval last week for the imposition of additional duties on non-essential imports.

Stakeholders take exception to the categorisation of home appliances as ‘luxury items’

“As per our analysis, 331 new items have been notified while 307 items are subject to a higher regulatory duty in the range of 5-30 per cent,” Topline Securities said in a research report.

Key items in the notification are mobile sets, automobiles, furnace oil, ceiling fans, rubber for tyres, betel nuts, air conditioners, refrigerators and ceramics.

The higher regulatory duty on the import of appliances, including refrigerators and air conditioners, will not have a significant impact on domestic manufacturers because imports account for less than 5pc of local sales. Furthermore, there is no change as far as major steel-sector items are concerned.

“It may be too early to assess the exact impact of the regulatory duty on Pakistan’s total imports. But it is likely to have some meaningful impact. As per initial estimates, the above measure may help curtail annual imports by $1-2bn besides generating additional taxes,” it said.

Another report by IIS Research highlighted a major change in the regulatory duty on imported automobiles. The government has increased the regulatory duty on completely built units (CBUs) by 10-20pc.

“We believe this will bode well for local assemblers... there is strong auto demand on the back of economic growth and cheap auto financing,” said the report.

The regulatory duty on dairy products, steel and most apparel items has largely remained unchanged while that on electronic items, such as water dispensers and freezers, has gone up, said the report.

Meanwhile, Pakistan Electronic Manufacturers Association Chairman Muhammad Farooq Naseem said in a statement that the government imposed the regulatory duty without consulting stakeholders.

“If the imposition of this duty was inevitable, relevant authorities should have rationalised the (number of) items, the percentage of duty should have been cascaded, and adequate time for industries to hedge their exposure and manage their inventories should have been given,” he said.

Mr Naseem said electronic goods and home appliances, such as refrigerators, air conditioners and television sets, are not classified as luxury items internationally. “Our products are classified as consumer durables, a necessity in the context of modern lifestyle — urban or rural,” he added.

He said such products are sold throughout Pakistan — from up-market urban centres for the elite to small towns and villages. Including these products in the list of luxury items is incorrect and erroneous, he said.

Published in Dawn, October 18th, 2017

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