KARACHI: The importers of Medium Density Fiberboard (MDF) have demanded from the government to reduce the import duty on raw MDF from 17 per cent to 5 per cent to protect commercial importers who are selling this imported product to small workshops, carpenters, joineries, and the value-added industry of Pakistan.
A number of MDF importers are purchasing such material from Malaysia, Thailand, and Indonesia to meet the local demand, but they have to pay an accumulated tax of about 55 per cent which includes customs duties and other taxes. While the same MDF is being imported from Sri Lanka at 0 per cent duty so the accumulated expenses are 35 per cent in shape of sales tax and withholding taxes under the Free Trade Agreement (FTA). The huge gap of 20% in customs duty is inequality, unfair and unjust.
A group of local MDF’s manufacturers of KPK are lobbying against the commercial MDF importers of Malaysia, Thailand and Indonesia for higher customs tariff, and customs duty during the upcoming budget. They also want to impose Regulatory Duty (RD) through the SRO. They have also approached the National Tariff Commission (NTC) to discourage the import of such material from these countries by imposing RD.
One of the importers said, “if the government authorities start an investigation against the MDF importers from Sri Lanka, it will find a number of irregularities. The local manufacturers MDF are also importing such MDF from time to time from other countries.
The importers elaborated that the FTA along with Sri Lanka was hurting businesses. Those importing the same products from other countries like Malaysia, Indonesia and Thailand have to pay about 20 per cent higher costs in the head of customs duties. How can commercial importers compete with the local cartel or associated companies importing same product from Sri Lanka?
He said that the cartel, which only includes an association of companies in Pakistan, had been importing MDF from M/s Merbok of Sri Lanka with a complete importing monopoly on the only factory producing MDF in Sri Lanka.
The importers of the MDF have demanded from the government to reduce the duty of raw MDF to 5 per cent for commercial importers and value addition industries as MDF is a semi-finished good. They further claimed that a level playing field should be provided to the importers of raw MDF from source with or without FTA, and no single country should be given preference of zero-rated duty.
They further claimed that the manufacturers of MDF from Khyber Pakhtoonkhwa (KPK) are also lobbying to enhance the duties in the federal budget for past two to three years. Now they have approached NTC to impose RD on such MDF imports. The importers of MDF other than Sri Lanka are paying duties up to 20 per cent higher and the importers are not happy with these additional taxes which they find discriminatory.
They further highlight that there are a number of value-added industries in Pakistan and since they use MDF as their raw material, any issues in the imports of MDF could result in massive unemployment in this sector, which would be harmful to multiple industries.
