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Wednesday, June 19, 2024

Competing forces stand in way of eliminating regulatory duty on man-made fabric

Pakistan’s Tariff Policy Board remains indecisive on withdrawing the 5 percent regulatory duty on the import of man-made fabric due to the competing business interests, as  government consider ways to reduce the cost of doing business.

Sources said under the chairmanship of Commerce Minister Jam Kamal, the Tariff Policy Board had held multiple rounds of discussions on the proposal to withdraw the 5 percent regulatory duty on the import of polyester filament yarn. Although the majority of board members were in favour of withdrawing the duty, the board has not yet made a final decision, they added.

The 5 percent regulatory duty had been imposed on the import of polyester filament yarn despite 80 percent shortage of raw material in the local market. This raises questions over the use of regulatory duty. The Tariff Policy Board is again scheduled to meet before the budget to make a decision. Sources said that during the last session, some board members suggested that a compromise should be struck by cutting the regulatory duty by half to 2.5 percent.

However, there is a need for complete abolition of the duty as the local manufacturers do not have the capacity to produce 460,000 tons annually for consumption by the local industries. Pakistan has long been providing protection to the local industries in various sectors at the expense of consumers as well as exports.

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