Increase in gas tariff to hit industry

LAHORE  -  The local industrial sector has pleaded the government to withdraw increase in gas price as it will make locally produced products uncompetitive in local and global markets and will lead to thousands of jobs losses.

All Pakistan Ceramic Tiles Manufacturers Association (APCTMA) spokesman said tile industry is in the revival phase and expecting relief measures from government against the difficulties of rising energy prices, high tax rates, extremely low Import Trade Price (ITP) of imported tiles from China in addition to massive inflow of smuggled tiles from Iran.

"As we understand gas price for general industrial and captive power plants has been increased by 30 pc from Rs600 to Rs780 per mmbtu. This announcement will have negative impact on direct and indirect employment of over 50,000 in the local tiles industry and It will stall the growth in construction sector which is booming on the back of rapid urbanization and other construction activities of large malls, office buildings and apartments across the country thus making all the efforts of employment generation a futile exercise."

He said that gas tariff increase will also halt all the expansion and investment projects of the industry which will also hurt the transfer of technology and creating skilled labour base and vendor industry in the country. The industry intends to invest in capacity enhancement, to further increase its production in order to meet demand, if the government supports the local industry.

He said that industry has already been hit by huge influx of smuggled tiles and imports at lower valuation, which capture approximately over 40 percent of the country's tile market of nearly Rs. 80 billion while domestic manufacturers continue to suffer owing to their higher production costs and uneven competition from cheaper imported products. Increase in gas prices will badly hamper the sales and profitability of local tile industry and will further intensify the share of imported tiles.

Regional Chairman of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Ch. Arfan Yousaf, has proposed that increase in customs duty on more than 5,000 items and in regulatory duty of over 900 items should have been levied only on luxury items and not on imported raw materials and capital goods which are not produced locally.

In his reaction to the amended Finance Bill 2018 for remaining months of the financial year, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) vice president urged that corrective measures may be taken against the smuggling of those items to safeguard the local industry against the influx of smuggled items.

He said that the massive increase in the gas tariff would hurt the exports as it would the jack-up cost of doing business manifold and expel the Pakistani products from the international export market. Such anti-business measures would hamper the growth of the manufacturing sector, he added.

He termed it a moderate budget as it would generate additional revenue for the cash-starved country for economic recovery.

However, he argued that the reduction in public sector development programme from Rs725 billion to Rs475 billion would hurt the development of infrastructure projects, a pre-requisite of industrialization.

In his mixed reaction, he also appreciated the government moves to ensure uninterrupted supply of fertilizer to the farmers at an affordable rate for which a subsidy of Rs 6 to 7 billion has also been approved. Arfan hailed the decision of the government to absorb the impact increase in petroleum levy from Rs185 billion to Rs300 billion and not passing the same to the masses.


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