KARACHI, Nov 9: No foreign investment has been received in building and industrial paint sector for years, and multinational companies have not expanded their operations due to high rate of infringement of Intellectual Property Rights (IPR), market sources said.

These companies face problems in marketing their products and maintain that their profit margin has suffered due to unbridled counterfeiting.

Despite boom in the construction sector, paints making companies have not introduced new products for fear of counterfeiting.

The sources believe that abnormal rise in prices of paints is great attraction for counterfeiters, who produce imitation of famous paints to dodge buyers.

The main reason is that no high technology is required, and what is required is mixing certain chemicals at a set ratio at the room temperature. Thus counterfeiters make a dent to the sale of paint manufacturers in the formal sector.

The sources in paint industry believe that paints produced in the informal sector could be injurious to health.

The imitators, they said, avoid mixing expensive chemicals that make them safe for use in houses.

The main centre of counterfeiting of branded paints is Lahore where several factories were raided by Pakistan Intellectual Property Solutions. The firm also raided a printing press producing false labels.

In Karachi, Shershah is known for counterfeiting of paints activity.

The counterfeiters not only damage sales of the original companies paying tax but also evade tax revenue to the government, which could be in millions.

According to cautious estimates, the share of counterfeiting in paints is 25 to 30 per cent in the market.

The imitation of a product ‘Robin Blue’ used as whitener in cloth washing reached an alarming level of 100 per cent, which forced the multi-national manufacturer to wind up operation selling the franchise to a local company.

The Afghan Transit Trade is one of the major source of counterfeit foreign manufactured consumer goods (FMCGs), such as soaps, cosmetics, toothpastes, etc.

The products imported duty-free and despatched to Kabul stage a comeback in Pakistan through illegal means, the market sources said.