KARACHI, June 7: The government is expected to reduce import duty on PET plastic resin, a raw material used for making PET grade bottles, to five per cent from 10 per cent in the budget for 2007-08.

Furthermore, the import duty on PET bottles will also be reduced to 20 per cent from 25 per cent, a source close to the Ministry of Industries told Dawn on Thursday.

The ministry has suggested the new customs duty structures to the Central Board of Revenue (CBR). It is of the view that the manufacturers of bottle grade PET resin have already benefited from the tariff protection for considerable time and it is now feasible to reduce the level of protection. The proposal has been forwarded after consultation with stakeholders and the Engineering Development Board (EDB).

However, a manufacturer of PET resin who requested anonymity told Dawn that a vested influential lobby was behind this move for reducing the import duty which would ultimately result in closure of the local industry.

He said that the local industry produced 110,000 tons of PET resin annually of which 40-45 per cent was consumed locally while remaining exported to various countries. “Multinational companies like Pepsi, Coca Cola, Nestle etc., are the customers of the local industry,” he added.

He said that the manufacturers of PET bottles had been facing no problem in procuring the raw material (PET resin) from the local industry. “We don’t understand the logic behind the ministry of industries proposal for cutting import duty on PET resin,” he remarked.

Giving an example, he said that customs duty or the protection level on PET grade resin and PVC resin, which is also produced locally, was presently same at 10 per cent. In case of PVC resin, 95 per cent of total local capacity was utilised to cater the local market. Still there was a gap between demand and supply which was met through imports of nearly 30,000 tons.

The customs duty on PVC resin had been maintained at such a level since the last 10 years which gave enough protection to the local manufacturers to compete with international suppliers, he added.