Manufacturers seek government protection for home appliances

LAHORE: The Pakistan Electronics Manufacturers Association (PEMA) has called on the government to protect the domestic industry from smuggling and under-invoicing by banning the import of electronic goods under Afghan transit trade or by increasing customs duties.

The association also urged the government to reduce duties and taxes on raw materials important for the manufacture of electronic products.

PEMA said the government must protect the domestic industry from smuggling and under-invoicing, as these exact a heavy toll that could undo the $200 million investment made in the sector over the past five years. last years.

PEMA President Muhammad Farooq Naseem, in his first media interaction from the association’s platform, called on Friday to reduce duties and taxes on raw materials and increase them on imported components, especially those that were produced locally. In addition, incentives should be given to exporters and measures should be taken to promote locally produced household appliances in regional and African markets.

At retail prices, the home appliance industry was valued at Rs 350 billion, contributing about Rs 125 billion to the national treasury – Rs 60 billion as sales tax, Rs 15 billion in income tax and 50 billion rupees in customs duties and other levies. However, the industry was suffering from a revenue crunch due to stalled refunds of nearly Rs 40 billion from the Federal Board of Revenue (FBR) over the past three and a half years, Naseem added.

PEMA supported the FBR documentation campaign and requested to expedite the addition of a sales channel in the tax net with point-of-sale terminals to ensure tax compliance on market transactions and the release of refunds business tax bill pending for the past 40 months.

He also asked to synchronize China’s trade data with PRAL to eliminate under-invoicing and misrepresentation in all segments.

Naseem believed the FATF restrictions were proving a boon in disguise to the appliance industry “because they minimized smuggling, under-invoicing and shut down gray channels”.

This has certainly increased the demand for locally made home appliances as it has become very difficult for those using underhanded methods to conduct financial transactions, he added.

“Since 2018, the local manufacturing industry has matched the opportunity created after the FATF restrictions. It has invested millions of dollars in improving local production and component manufacturing. This has created many new jobs, increased added value, and thus “import substitution”. New plans for re-exporting products to regional markets and other downstream projects are on the cards,” Naseem revealed.

PEMA estimates that there were around 5,000 stores operated by around 2,500 dealers and establishments across Pakistan that sold electronics. The total number of people directly employed by PEMA members, suppliers who manufacture parts and components, technicians who provide after-sales services, salespersons in stores and others who were part of the entire PEMA ecosystem has been estimated at around 100,000 people.

He observed that the increase in product prices in China, the huge increase in shipping costs from China to Pakistan, the FATF laws limiting payments through gray channels, the inclusion of household appliances in the appendix III sales tax and now the government’s desire to incorporate market transactions into the ambit tax has helped the industry grow.

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