PAPER & PRINTING INDUSTRY
Offers enormous export potentials
By AMANULLAH BASHAR
July 01 - 07, 2002
The enormous export potentials of the paper and printing industry remains an untapped treasure in Pakistan. Over the years, the industry has attained a height where it is serving and adequately meeting the entire paper and printing needs of the industry including the multinational companies. The pharmaceutical and other multi-national companies working in Pakistan are fully satisfied with the quality of services, the paper and the printing industry is providing to them. The industry has proved its worth not only within the country but also carved a respectable place all around the world and supplying quality printed products to Far Eastern Countries, Middle East, European as well as the United States.
The credibility of this industry is reflected in the fact that when foreign visitors were avoiding to visit this part of the world following terrorist attacks at French Engineers in Karachi, participants from over 25 countries visited the International exhibition "PRINTPAK 2002" recently held at Expo Centre in Karachi.
According to Ghias Ahmed Peerzada, Chairman, Pakistan Association of Printing and Graphic Arts Industry (PAPGAI), Pakistan printing industry has achieved a status which is recognized all over the world. The local industry is becoming a reliable source for printing quality labels for garment industry for the developed world. Taiwan industry is getting the job transfer labels done from Pakistan. Pakistan industry has earned a reputation in printing of aluminum processing for which the most modern machines are being used by a large number of companies in the country.
It is however surprising that despite having a strong industrial and technical base, this industry has been neglected in the country and so far no database is available regarding performance of the industry. According to scattered information the industry is earning around $6-8 million in exports, however there no authentic information is available in this respect. The industry is highly job oriented and provides jobs to millions of the people. It has the potential to make a noticeable change in the export scenario of the country, provided the industry is facilitated with proper guidelines and marketing support from the relevant government quarters.
Elaborating the situation, Peerzada said that the industry has not only its own export base, it also plays a vital support role in all the exports of Pakistan. Every item of export from the country needs an aesthetically designed and printed package creates and conveys an image of the country as well as of the product.
From textiles to cosmetics and from pharmaceuticals to food items, everything needs a helping hand from the printing industry. The paper and printing industry is of the view that the government, as well as the Export Promotion Bureau and the Board of Investment must take concrete steps to tap this untapped export treasure exists in the paper and printing and graphic arts industry.
However, the printing and graphic arts industry is confronted with a number of problems today as the industry struggles to get them resolved by raising issues at different forums and suggesting possible solutions.
Issues relating to taxes and duties are the highest concern to the industry.
The duty rebate, for example, available to the printing industry, ranging from 5 per cent to 15 per cent, is not sufficient enough for this vast sector which caters to the needs of nearly all the industries of Pakistan. The printing industry pays around 80 per cent as taxes and duties on its raw materials, including paper and ink, imported from around the world.
Such wildly high taxes and duties on the import of paper, ink and allied products coupled with insufficient duty rebates leave the printing and graphic arts industry gasping for breath.
The taxes and rebate paradox forces the printing and graphic arts industry to swim against the stream. Pakistan, unfortunately, does not produce high quality paper to fulfil the country's printing requirement. The industry has to depend on imports together with high rate of duties, which make our finished products almost unacceptable to the highly competitive international markets. Ghias Ahmad Peerzada, Chairman, PAPGAI terms the situation suicidal for the printing industry which has tremendous untapped export potential. "We have everything with us, he said. In terms of quality printing we can meet any challenge offered from anywhere of the international market."
The paper and printing industry has achieved the expertise along with modern technology of the highest repute. However the high cost of imported raw material renders the industry abandon the game even before going for a kickoff.
The industry is confident that with the proper encouragement on the part of the government, Pakistan's printing industry can conquer the international market in the United States, Europe and the Middle East, thus earning a good name for the country as well as lots of foreign exchange.
The customs tariff has always been an issue of concern for the industry.
Salman S. Siddiqui, a leading businessman in paper and paper board both in the import and export business says that it is amazing that in the customs regime the paper imported into Pakistan is being treated as the finished product.
Salman who is running his family business in paper and paper board for the last 50 years under the name of Hamdam Paper Mart, said that everybody knows that the paper is used for making different products as a raw material but in Pakistan it is termed as a finished product hence the importer has to pay the full import duty on import of the paper.
While the facility of duty drawback is also not available to the manufacturers of the paper products. The imported paper must be declared as a semi-finished product at the customs stage. Dr. Hafeez Pasha in his report had classified all products into three categories. Finished products, semi-finished products and raw materials. Although imported paper is technically, a raw material for the printing industry, the industry is prepared to accept it as a semi-finished paper as a finished product, which means a higher rate of customs duty on it.
It is interesting to note that in a country like Pakistan, where imported books, newspaper and magazines are exempted from customs duty, the paper and paperboard is included in the category with the highest rate of taxes and duties.
Abid Nisar, Vice Chairman of All Pakistan Paper Merchants Association, says that literacy rate in Pakistan at its lowest level. The policy makers in their statements always pay great importance for education, but practically, all the basic needs for which such as books and copies and other material required for education has been subjected to the highest rate of custom duty. We cannot produce quality books within the country mainly because of high cost of paper. The education sector has to rely on imported books and the so-called modern schools charge exorbitant prices for imported books prescribed for various standards in our education system.
Abid Nisar, who is the Chief Executive of Allied Business Corporation, suggests that if the tariff rates in this sector are reduced, it would certainly help in lowering the prices of local reading materials and increasing exports of high quality finished products.
Salman Siddiqui and Abid Nisar while discussing the problems faced by the paper sector said that in the current import policy, import of Stock Lots of Paper and Paper Board is not allowed. The imposition of this conditionality does not seem quite realistic. The concept of Stock in the case of Paper and Paper board does not exist in its real sense. Because Paper like any other product, paper does not have any expiry. Therefore imposition of this restriction becomes meaningless.
The CBR defines the stock of lot of paper and paper board as, any lot of paper and paper board which constitute various sizes and grammage and/ or has passed certain age or has deteriorated in term of quality is termed as Stock lot.
The above definition does not apply to paper and paper board. Primarily because, the mills do not make uniform and paper sizes, but produce normally in big jumbo rolls conforming to the size of their machines to achieve maximum economy. Then these rolls are processed to adjust to the buyers and required sizes. In this process, certain side run/small roll is formed which are also categorized as prime quality. However, due to small sizes these are cheaper than prime size stock. This stock is not inferior or substandard in any sense.
As far as the expiry of paper is concerned, it was mentioned that it does not have any expiry date like other edible items. The old books and publications aging back over 100 years are still available and the paper used in it remains perfectly intact over these years.
Now when Paper & Paper Board is imported in different sizes and grams, the customs examiner exercise their discretionary powers and declare this prime quality stock as stock lot. This frozen evaluation unnecessarily penalizes the genuine importer and exposes them to undue harassment and pave way to corruption.
It is therefore proposed that a suitable amendment/recommendation should be made to that import of paper and & paper board is allowed unrestricted. Thereby, only two categories in import of paper and paper board should stay i.e. prime or waste, any other classification should cease to exist.
Waste paper is primarily imported for pulping or as a raw material for producing certain recycled items. The import duty on waste paper currently is 10 per cent as compared to 30 per cent on paper and paper board. This provides a big leeway to the unscrupulous element to take advantage, and hurt the genuine importer significantly.
Therefore, proper procedures should be adopted to stop this official smuggling. Further, it is also recommended that, the rate of duty on wastage paper should be brought at par with the duty on Prime Paper and Paper Board.
Local manufacturers of coated paper & paperboard has to pay excise duty at two stages. Firstly at manufacturing stage. Secondly at converting/ coating stage. Many units of converters are currently non-functional due to this compound excise duty. If converting units are also brought at par with similar converting units of corrugated carton's manufacturer, who is exempted, from CED and only pay at source i.e. at purchase stage from local paper mills. If this anomaly is removed the following products will get official patronage, carbon-less paper, thermal paper, daizo/ammonia paper, silicons paper, stencil paper, art paper, Carbon paper and sticker.
Ceiling of sales tax should be brought down to 10 per cent.
Sales tax return should be filed in three months for importers instead of one month.
There should be 1 per cent extra Sales Tax on sale to Non-registered persons instead of 3 per cent.
PAYMENT OF INVOICES BY CHEQUE
It is proposed to totally abolish this condition, this is mainly to facilitate the purchasers from upcountry who are unable to conform to this term to pay in cross cheques.
WITHHOLDING TAX ON BANK DRAFT
To give the local banks a chance to flourish, it is suggested that withholding tax on bank drafts should be abolished. Foreign banks do their transaction online and by "Hundi" system and thus do not charge any withholding tax on bank drafts.
Peerzada while highlighting the efforts being made by the printing industry said that industry is striving hard to get proper representation in the forum entrusted with the responsibility of formulating the new Press Ordinance.
Currently, the printer is held responsible for all published material along with the publisher and the editor.
PAPGAI believes that the actual responsibility of publishing any printed material lies with the publisher and the editor only. The printer, with limited resources and non-availability of editorial staff, is not professionally competent enough to check the editorial contents of the material brought for printing. Hence the printing industry needs a respite from such colonial laws. The printing industry desires the new Press Ordinance to be more realistic and well defined in establishing the responsibilities of the publisher and the editor, who share such responsibility in all the developed countries under their prevalent laws.
Proper representation of PAPGAI in the formulation of a new Press Ordinance could lessen the burden of the Printing industry in this regard. PAPGAI also wants to make the procedure of submission of a Declaration to the government by a printer, a lot easier.
The printing industry of Pakistan is the second largest labor oriented industry in the country and as technology brings new changes in all walks of life, the printing industry also feels the need for a modern, sophisticated training institute for thousands of the workers spread across the country.
Today, 70 per cent of the paper imported in Pakistan comes from Indonesia. Indonesia has given open incentives to its paper industry, which resulted in tremendous growth in their exports. If Indonesia can support its paper industry to become a major exporter why should not Pakistan allow incentives to its paper and printing industry to play its due role and exploit the available openings in the world market. Another area, which invites immediate attention of the government, is the promotion of recycling of paper throughout the country. The entire developed world has adopted recycling for environmental purposes.
Taking pride in the results achieved by the recently concluded PRINTPAK 2002, Peerzada said that as the largest ever show of printing and graphic arts PRINTPAK 2002 unfolded the enormous potentials of the paper and printing industry has for generating economic activity at a massive scale in the country.
The Pakistan Association of Printing and Graphic Arts Industry (PAPGAI) continues to struggle for the country's printing and graphic arts industry, which is the second largest industry in terms of work force in Pakistan.
Giving the background of the paper and printing exhibition which has become an international feature of Pakistan, Ghias Ahmad Peerzada, told PAGE that it was in 1950 that the Karachi Printers Association (KPA) was formed in the then federal capital. Later on, the association was reorganized on an all-Pakistan basis after 9 years and named PAPGAI, with its head office in Lahore and Zonal offices in Karachi and the then East Pakistan in Dhaka.
It was recognized by the Ministry of Commerce, and affiliated with the Federation of Pakistan Chambers of Commerce and Industry.
During the last five decades, PAPGAI has proved to be the true representative body of the printing industry, working hard for promoting the printing and graphic arts and watching interest of the industry.
In 1967, PAPGAI organized an exhibition and a seminar in Karachi Arts Council. The first PRINTPAK exhibition was held in 1990. The occasion proved to be a great success. Around 50 exhibitors participated in the exhibition. The quality of products continued to gain its height and Pakistan was gradually introduced around the world as a quality producer in the printed and packaging products. Again, the PRINTPAK with a 2-year gap was held in 1992 and 1994 and due to some local circumstances was held in 1997. All these occasions proved to be a success story of the paper and printing industry of Pakistan.
Peerzada said that the 5th exhibition was scheduled to be held in 2000 but due to unavoidable circumstances, the vent had to be delayed for a few months. Later, it was decided to hold the exhibition in October 2001. As preparations for the exhibition were underway, the World Trade Centre was attacked by then terrorist on September 11 bringing all economic activities to a standstill consequently, the PAPGAI was compelled to postpone the exhibition for a few more months.
The Chairman of PAPGAI Ghias Ahmad Peerzada and the Chairman of PRINTPAK 2002 Owais Mirza Jamil finally succeeded in holding the biggest ever printing and graphic arts event at the Karachi Expo Centre.
The results achieved by the exhibition are encouraging and a number of inquiries and even export orders in different disciplines of the printing arts have been received from different countries.