Coated duplex board, sack kraft paper: FBR likely to impose 20 percent regulatory duty on import

Federal Board of Revenue (FBR) is likely to impose a 20 per cent Regulatory Duty (RD) on import of coated duplex board and sack kraft paper to help revive local industry, well informed sources told the Business Recorder. Insiders claim that some senior officials and Flying Kraft Paper Mills are following the case vigorously.
"FBR has sought permission from Federal Minister for Finance and Revenue Hafeez Shaikh for imposition of 20 percent RD on import of coated duplex board and sack kraft paper," the sources added. Official documents of FBR available with the Business Recorder reveal that Pakistan Pulp Paper & Board Mills Association (PPPBMA) requested that Regulatory Duty (RD) at 20 per cent should be levied on import of coated duplex board and sack kraft paper for providing the local industry a level playing field in the wake of cheaper imports.
RD at 15 per cent was imposed on import of coated duplex board and sack kraft paper in February, 2009 to protect the local industry, but was withdrawn in the same month on the presentation of paper bags manufacturers. However, RD was again levied but at the lower rate of 5 per cent in June 2009 on commercial imports only.
In the budget for the FY 2011-12 the RD was removed on all items except luxury goods. Resultantly, only customs duty is leviable on the statutory rates of 15 per cent on sack kraft paper and 25 per cent on coated duplex board. Hence, the request for levy of RD at 20 per cent on these two items.
FBR in its case argues that M/s PPPBMA have based their request on the following grounds: (i) local manufacturing of these items has decreased substantially since June 2011, when RD was removed, the domestic industry is fighting for survival due to cheaper imports and higher cost of local inputs (electricity and gas etc); (ii) many of the local manufacturers have closed down their operations, rendering hundreds of workers jobless; and (iii) domestic industry uses indigenous raw material while massive imports are causing loss of valuable foreign exchange.
FBR has examined the request of the Association. The annual domestic demand for sack kraft paper is 50,000 tons. Manufacturing capacity of the local industry is around 40,000 tons which has drastically dropped catering only for 14 per cent of the domestic requirement. Presently, only one local manufacturer of sack kraft paper, namely M/s Flying Kraft Paper Mills (Pvt) Limited is partially operational. The remaining units have closed down and the same is the issue with coated duplex board where imports have increased manifold at the expense of local production.
The sources said this position was indicative of the fact that increasing tariff of gas and electricity on the one hand and withdrawal of RD in June 2011 on the other had driven domestic industry to the verge of closure. FBR argues that for revival of local production and substituting imports, levy of RD on these items should be contemplated. This will also generate additional revenue of about Rs 150 million per month at present level of imports.