Monday, June 28, 2010

Pakistan PSF manufacturers and APTMA are squabbling over PSF import duty

Two major business organizations in Pakistan are now fighting over the import tariffs of Polyester Staple Fiber (PSF).

All Pakistan Textile Mills Association (APTMA) is asking the government to remove the 4.5% import duty on the import of PSF as raw material for it makes their products less competitive in the international market.

According to APTMA’s statement, there is zero percent duty on the import of

PSF- blended-yarn while textile mill owners have to pay 4.5% import duty on PSF. This is a serious “tariff anomaly” and should be rationalized.

On the contrary, domestic manufacturers of PSF are telling the government not to cut the tariff on PSF for it would hurt the local industry. A leading PSF manufacturer in Pakistan said that the APTMA’s claim of importing PSF-blended-yarn at zero duty is “incorrect and baseless.”

He said that the importer of PSF-blended-yarn has to pay nine percent duty.

Pakistani PSF manufacturers said that the textile mill owners can import PSF at zero duty under the DTRE scheme. As a result, they can price their products competitively.

However, this has affected the local PSF producers. This low duty is one of the main reasons behind the failure of Dewan Salman Fibres, one of the largest PSF producers of the country.

Production of PSF is a highly capital oriented business because PSF is manufactured from crude oil through a series complex chemical process and requires lots of expensive machineries.

Hence, it is very much important that government improvise tariffs on importing PSF. Neighboring countries such as India, China, Korea, Taiwan etc have tariffs on PSF imports.

Pakistan is facing an acute shortage PSF and after the closure of Dewan Salman Fibre it further increased which also drove up the price of PSF in the local market by 30%. Because of this textile mill owners are importing PSF paying only 4.5% duty instead of paying 30% more.

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