Mon. Sep 23rd, 2019

Pakistan to launch CPEC cigarette brand for export to China

Aftab Ahmed

Islamabad: Pakistan plans to launch CPEC brand of cigarette aimed at exporting to China under US$ 1 billion package approved by China.

The Chinese government had approved US$ 1 billion export package for Pakistan. Under this package, Pakistan was to export sugar, rice and cotton yarn. Under this package, 300,000 metric tons rice, 200,000 MT sugar and 350 000 metric tons cotton yarn were to be exported to China.

However, following rising demand of cotton yarn in Pakistan, All Pakistan Textile Mills Association (APTAMA) has shown reluctance to export cotton yarn to China. However, agreements regarding sugar and rice had been finalized with sugar and rice exporters. However, deal of cotton yarn had not been finalized due to reluctance of textile millers. The ministry of commerce is discussing this issue with All Pakistan Textile Mills Association (APTAMA). The demand of cotton yarn will increase due to tariff concessions on 313 items under FTA-2.Therefore, APTAMA is reluctant to avail this package. The package will be valid By December 2019.

Officials told Newztodays.com that government of Pakistan was working on including some other items like tobacco cigarette in this package. China has market of 22 billion cigarettes and Pakistan wants to tap some portion of Chinese market under export package, officials said adding that a Chinese company had shown interest in launching CPEC brand of cigarette with Pakistani cigarette companies. Officials said that it would also help increase revenue from local cigarette industry after its export to China.

There are two multinational companies working in Pakistan with a market share of around 60%.The local cigarette companies have about 40% market share. However, farmers have been protesting against the monopoly of cigarette companies. The export of cigarette to China would ensure better returns for the farmers in Pakistan. This will also help increase export volumes that had dropped during previous government of PML-N.

The two multinational companies claim to contribute Rs89 billion in excise duties and taxes during fiscal year 2017-18.It makes 98% of the cigarette excise revenue. The tobacco industry in Pakistan faces a critical challenge with the wide presence of non-tax paid cigarettes, which reached a record high market share of over 41% during fiscal year 2016-17. The primary source of these non-tax paid cigarettes is locally manufactured tax-evaded cigarettes, which were selling at a price gap of almost 170% versus the tax-paid legal cigarettes in 2016-17.

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