960423

Increase in duty

on polyester raw

material opposed

ANWAR RAJANI

KARACHI: All the filament yarn manufacturers in Pakistan will right away pull down their shutters if the government goes ahead with its proposal to enhance the import duty on polyester chips and resins which is the raw material of filament yarn.

The Chairman of Filament Yarn Manufacturers Association (FYMA), Razak Haji Mohammad Bengali, said in Karachi on Tuesday, that the government proposed to enhance the Customs duty on the raw material of filament yarn which would cripple the industry.

Talking to Business Recorder, he said that some vested interests were urging the government to go ahead with the proposal for increase in duty on polyester chips from the existing rate of 20 percent to 30 percent. With this increase, the entire industry, already facing heavy losses, would not be able to operate for a single day, he added.

There are 20 filament yarn manufacturing units with a designed capacity of 95,000 tons per annum. At present, the production is about 70,000 tons which meets the total requirement of art silk industry. This industry has also entered the export market.

Razak Bengali said that the export would pick up after the government fixed the rate of duty drawback rebate.

According to him, the government also proposed to enhance the duty on polyester staple fibre from 20 percent to 30 percent.

He said the government had reduced the rate of duty on the import of the raw material in the last budget and the industry had thus started limping towards normalcy. He said there were four parties concerned with yarn and the polyester fibre. These are APTMA, filament yarn manufacturers, polyester fibre group and art silk industry. Razak Bengali said that the government should consult the parties concerned and then decide the matter. The decision should not harm one party and favour the other, he added.

Majority of the polyester filament yarn manufacturing industry, which is based on imported polyester chips, have lost more than 50 percent of the share capital due to continuous losses for more than two years and the shares on the stock markets of these companies are also quoted at lower than 50 percent of its face value, he said.

The prices of imported polyester chips, polyester staple fibre and PTA/MEG are gradually showing a declining trend. Although the prices of polyester chips have attained a declining trend and are now behaving in the vicinity of US$ 1200-1250 per metric tonne but still no appreciable benefit in the form of Customs duty has not been passed on to the industry for the reasons that the prices assessed by the PSI companies; Cotecna & SGS, are still on the higher side and the Customs duty levied even till today is in the vicinity of US$ 1450-1550 pmt, Bengali said.

He said, as the government is contemplating to impose general sales tax (GST) at this stage for all the industries, which is not advisable and feasible to bring about any change in the duty structure on anyone of the raw materials without taking APTMA, FYMA (Pak), Polyester Staple Fibre Manufacturing Group and other allied groups into confidence.

It is of the opinion that since polyester filament yarn is subject to Sales Tax on both at the import stage and manufacturing stage it should not be subject to Central Excise Duty (CED), which at present is Rs 2.50 per kilogram. The items which are subject to dual taxation, i.e. Sales Tax and CED, should be placed under one tax system: either Sales Tax or CED. As such it is the opinion of FYMA (Pak) that CED levied on polyester filament yarn may be withdrawn, he added.