ISLAMABAD: The government is likely to impose ban or levy regulatory duty on export of pet flakes (scrape of wasted pet bottles). Sources told Tax Review on Wednesday that the Federal Board of Revenue (FBR) and Ministry of Commerce were seriously considering a proposal to take some measures for checking export of the commodity in the upcoming trade policy.

The proposal is to ban or impose 50 percent regulatory duty on export of pet flakes. Stakeholders have agreed to take measures to protect the local industry particularly joint ventures operating in Pakistan. Details revealed that some businessmen had been engaged in the export of the said commodity as a scrape to China, earning a very small amount of foreign exchange. On the other hand, local manufacturers were importing the Polyester Staple Fibre (made by this scrape) from the same country and subsequently spending a handsome foreign exchange, they added.

Sources said that a first ever plant of its nature had been imported from China with the same techniques which was producing the polyester fibre of spinning grade and the same was being supplied on 20 per cent cheaper rates as compare to the other manufactures/importers to the local industry. The joint ventures are also planning to install other plants of the same capacity to meet the maximum requirements of local spinning industry.

In this way investors will not only bring foreign investment in Pakistan but also strengthen the economy by providing the employment opportunities, producing the polyester fibre from scrape and supplying it on cheaper rates to textile sector for further value addition.

Polyester Staple Fiber made by pet flakes reduces the cost of production of value added commodities of the manufacturers. Whereas, China is using the same techniques of recycling the scrapes as raw material to strengthen its economy.

Some exporters are exporting pet flakes to foreign countries to earn profits despite the fact that its quantity could not fulfil requirements of the local industry. Due to shortage of this commodity, there are apprehensions that the joint ventures would shift their capital to other developing nations.

Approximately 40-60 per cent recycling units had already closed their productions due to non-availability of raw materials (scrapes) or its availability on very high price in local market.

On the other hand, the government reduced customs duty on import of polyester staple fibre in last budget, which will result in closure of the local manufacturing units. Keeping in view the situation, the FBR and Commerce Ministry are likely to take steps to discourage export of this item for the consumption by the local industry.