Prudent chemical policy can reduce import bill by 18%

by index360

LAHORE: Pakistan has been importing chemicals worth $14 billion which is 18% of the total imports and second biggest after fuel imports.

“A prudent chemical industry policy can help import substitution through indigenous production and save foreign exchange,” highlighted in a panel discussion at Pakistan’s first chemical expo in Lahore.

The panel comprised Zafar Mehmood, CEO Nimir group of companies, Jahangir Piracha, Chairman PCMA and CEO Engro Polymer & Chemicals Ltd., Taimur Dawood, Mian M. Adrees, Chairman & CEO Sitara Chemical Group, Arshaduddin Ahmed, Vice President Chemicals & Agri Sciences ICI Pakistan Ltd., Robina Ather, Chairperson National Tariff Commission, Usman Latif, Global Account Manager of Aspen Tech., Ismail Sattar, and Dr. Adeel Anwar, Asst. Prof UET Lahore.

The panel stated that the fundamental problem in our overall structure is we have lack of value addition, thus imports need to be categorized under imports for basic consumption, imports for local value addition and imports for exports.

It was emphasized that imports for exports should be facilitated and the government should prefer industrialization over trade with providing 5 to 10 year plans.

“The current year’s 11-month imports are standing at $72 billion which will go to $80 billion for the year,” said Zafar, adding that the chemical industry touches 96% of all industries hence the focus should be on reliance on indigenous raw material.

He added that there is a need for a policy to support local production of chemicals as it would lead to savings of foreign exchange.

Chairman PCMA Jahangir Piracha was of the view that chemicals cover everything from APIs to fertilizers therefore Pakistan needs direction for import substitution.

Chairman ATS Group of Industries Anjum Nisar said that we are not exploiting our natural indigenous resources though it is quite clear that industries will flourish only when it is viable to invest.

The panel also discussed why exports are not increasing at par with imports and a possible reason is that utilities are expensive which make local industries uncompetitive.

“Cost of doing business is ever increasing and conventional ways of exports along with limited value addition are hampering exports,” the panel reasoned.

Panelist said that minerals that are exported at the value of just $4000 can be refined and sold as value added chemicals for more than $20000.

Chairman Descon Group Taimur Dawood said that the chemical industry does not have excess capacity to export. “Tariff rationalization is a big issue and the government will have to give a consistent and predictable policy for the chemical industry to grow.”

In this regard, a panelist pointed out that lack of long term planning and vision is the biggest issue hampering the growth of the local chemical industry.

“Earlier, the industry was encouraged to borrow at low rates and just a couple of years later the government imposed a super tax. This left the investor in lurch and he was unable to do anything,” he added.

Chief Executive Officer of Tufail Group of Industries Zubair Tufail said that 80% of raw material imported is used for local consumption.

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