Domestic manufacturers concerned over reduction in tariffs

The News - International, Pakistan

Domestic manufacturers concerned over reduction in tariffs

By Mansoor Ahmad

13 May 2012

LAHORE: Domestic manufacturers are having nightmares as the tariffs of imported finished goods from South Asian Free Trade Agreement (SAFTA) member countries would come down to five percent from the next fiscal year, while the duties on raw materials used to produce same products remain much higher, an official said on Saturday.

“We have reconciled with the idea of free trade and beyond with India, but the government should at least provide level-playing field to the local manufacturers,” said Anjum Nisar, former president of the Lahore Chamber of Commerce and Industry (LCCI) and a leading chemical manufacturer.

After thaw in ties with India the government of Pakistan has indicated that the SAFTA deal on trade between SAARC countries would be fully implemented, he said, adding that under that agreement the maximum tariff on imports from SAFTA member countries would be reduced to five percent only.

The dilemma that the local manufacturers face is that some of their raw materials are subject to 10-15 percent import duty, said Nisar, and regretted that the government planners are not prepared to even listen to the point of view of the domestic manufacturers.

“It is not possible for the local industry to compete with Indian finished goods if they import the raw materials used to produce that product at two to three times higher duty.”

Deputy chairman of the Planning Commission during his meeting with the domestic industry representatives in Islamabad called them as rent seekers, he said.

“He continued exchanging SMS with someone during the meeting, which lasted for two hours, showing his lack of interest about the issues faced by the domestic manufacturers, he said.

Syed Nabeel Hashmi, chairman of Pakistan Association of Auto Parts and Accessories Manufacturers, said that all domestic manufacturers are not rent seekers. The government has shielded the rent seekers from the onslaught of Indian imports by keeping the items they manufacture in the ‘sensitive list’, he added.

He said unhindered import of 5,999 items has been allowed from India and 1,209 items are placed in the negative list are likely to be removed from this list by the end of December. However, he said, 1,143 items are placed in the sensitive list that will stay for a long time and include products and raw materials manufactured by big corporate houses.

The genuine grievances of the domestic industry should be addressed, he said. “No where in the world the domestic industry is subject to higher duties than the imported goods,” said Nisar, adding that the industry representatives simply desire that instead of adopting a rigid attitude, the planners should examine the list of raw materials that are placed in the higher duty slab then their finished products and fairly adjust the duty structure.

Iftikhar Malik, former president of the Federation of Pakistan Chambers of Commerce and Industry, said that the businessmen favour trade with India, but the industry certainly deserves a little protection from imported goods.

Under the current tariff regime, it is the other way around as importers are protected against domestically produced products, he added.

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