Woes of the printing industry: Need for duty cuts, cheap newsprint, incentives

By Zubeida Mustafa

THE TWO major problems facing the printing industry in Pakistan are the high cost of production and the poor quality of service provided. Identifying these two factors which determine the state of the industry today, Mr Ahmad Mirza Jamil, the outgoing Chairman of the Pakistan Association of Printing and Graphic Arts Industry (PAPGAI), points out that if the industry is surviving in the country it is because printers are operating in a seller’s market. The dismally low literacy rate, the poor reading habits of the people and the scarcity of low-priced books and literature are key indicators of the state of the publishing and printing industries in Pakistan.It is not surprising to find these industries in a poor state.

In a society where education is at a discount, the elements which go into the making of education also tend to be ignored. As compared with the publishing sector, printing is better off because it caters to multifarious needs other than those of the publishers and stationers. The printer gets a substantial part of his business from the orders he receives for the printing of labels, cartons, pharmaceutical literature (which the majority of consumers cannot read), invitation and greeting cards and calendars. There is urgent need to look into the problems of the printing industry not only to promote the cause of education and literacy. But also because printing is one of the major industries in the country.

According to Mr Jamil, it employs nearly 300,000 people and is the second largest industry in terms of manpower employment after textiles. In Karachi alone there are some 3,000 printing units. If nothing else, the size of the industry itself warrants that it be given due attention.

 A service industry

Printing is essentially a service industry, says Mr Mirza Jamil. But unlike other services, nearly 70 to 85 per cent of the sales proceed go towards meeting the cost of raw material. Hence it is difficult for a printer to reduce costs unless he is provided paper, ink, box board, graphic films and other such items at lower prices.

Mr Jamil feels that the government’s policies have not been very helpful in this respect. Import duties and sales tax on the raw material used in printing are exorbitantly high and, with the gradual appreciation of foreign currencies vis-a-vis the Pakistani rupee after its delinking from the dollar, the landed cost of imported machinery, paper and other raw material, as also the duties and taxes levied have shot up immensely.

Giving a few instances, Mr Jamil points out that in June 1981, the import duty on printer’s ink was 40 per cent on the c&f value. Over and above this there was a sales tax of 10 per cent which meant an actual tax of 54 per cent on the c&f value. In January 1982 the sales tax stood at 20 per cent and an import surcharge of 5 per cent had also been imposed. As a result the actual taxes went up to 73 per cent on the c&f value.

Tax burden

 In January 1983 a year after the delinking of the rupee when a dollar was valued at Rs 13, the duties and taxes on ink in effect amounted to 95 per cent on the c&f value as it was in January 1982 — an increase of 76 per cent over the June 1981 rates. Board grey on which there is an import duty of 50 per cent, a sales tax of 10 per cent and a surcharge of 5 per cent, now yields revenues amounting to 91 per cent of its cost in June 1981. The taxes on machinery and spare parts amount to 76.7 per cent, on graphic films to 58.5 per cent on printing plates to 76.7 per cent and on paper board to 46- 120 per cent depending on the c&f price of paper. In view of the fact that the cost of paper alone makes up a substantial part of the cost of the finished product (70 per cent in the case of books), the heavy imports on this item used in printing has not helped the cause of the industry.

We have been retrogressing. In the early fifties, printing machines could be imported free of import duties. Today they carry an import duty of 40 per cent, a sales tax of 10 per cent and a surcharge of 5 per cent. Under present conditions, the local manufacture of raw material for the printing industry also has not helped. Thus 75 per cent of the printing ink used in the country is locally manufactured and it is given preference because it is readily available. But it is more expensive than the imported stuff because the import duty, sales tax and excise duty on the ingredients of the locally manufactured ink are so high that it costs more than the imported ink.

Similarly, the locally produced paper is unsatisfactory in quality and in spite of the heavy duty on imported paper, the local paper cannot really compete in price with the imported one.

 A damaging device

A damaging move taken by the Government was the imposition of sales tax on some d products in June 1981. This was done through the device of rescinding the Government notification of June 1951 which dealt with sales tax exemption. A new notification was issued which listed a few items such as account books, exercise books, maps, charts, stationery, cartons and calendars on which exemption was to be granted. All other goods were subject to sales tax. Since all the raw material used by the industry is already subjected to sales tax, such tax on the finished product virtually amounts to double taxation.

Mr Jamil notes that it is next to impossible for the printing industry to claim refund of sales tax, since the evidence of the sales tax paid on the raw material cannot be produced. Few printers import their own raw material. On a representation made by PAPGAI in October 1982, however, the government agreed to maintain the status quo in the matter of sales tax on finished products until a final decision is taken.

Mr Jamil hopes that the 1981 notification will be withdrawn. The other problem faced by the industry is the absence of quality. This Mr Mirza Jamil feels is to be attributed primarily to the scarcity of trained personnel and the absence of competition. Although services account for barely 15 to 30 per cent of the cost of printing, it is the key factor in determining the quality of the finished product.

Training in skills

 Mr Jamil compares the printing technician to the artist. Just as the quality of an artist’s drawing can either enhance the worth of a piece of paper or reduce it to scrap, similarly the printer’s skill determines the worth of a printed piece of paper. And yet Pakistan has no up-to-date training school for printers. The only facility available is at Lahore, but here Mr Jamil complains obsolete machinery is used to train students in outdated techniques.

Repeated representation by PAPGAI to the government to open training centres in up-to-date methods have produced no response. As a result, most big presses provide on-the-job training to their technicians. But according to the outgoing Chairman of PAPGAI, this has proved to be a costly process. The trainees initially lack the knowledge and skill to handle the machinery so that breakage and wear and tear are much more than normal. Moreover, the “Dubai Chalo” trend has hit the printing industry as much as other sectors and the most slcilled and best trained technicians tend to migrate to the Middle East.

How to improve quality?

 How can quality be improved? Mirza Jamil suggests that the Government should help to establish training schools for printers. The import of printing plants should be allowed free of duty so that those who wish to train technicians are not discouraged by the high cost of the machinery. PAPGAI itself has started a free correspondence course to train technicians. This will certainly help but will not suffice. Increasing competition can help to improve quality says Mr Mirza Jamil.

Although many printers would not agree, he insists that operating in a seller’s market the printing industry can get away with shoddy work. If the cost of machinery and raw material were to be considerably reduced, it would provide the incentive to new entrepreneurs to enter the field, thus giving rise to the much needed competition necessary for efficiency and quality. This would also create the compulsion for those in the printing industry to introduce modern management techniques and use the appropriate equipment for a particular job, which is not the case at present.

 Suggestions

 The outgoing Chairman of PAPGAI has specific recommendations to make. A commission should be set up to investigate the state of the printing industry and to fix standards of production. The levies on printing machinery and raw material be reduced or eliminated altogether. Facilities be organised for the training o{ technical hands. And finally, to encourage educational publishing, newsprint be imported duty-free for books and special printing machine be imported for the printing of textbooks.

Unless the printing industry is promoted as a low-cost concern, inexpensive books and reading material cannot be made available to the people. And when the tools of learning are beyond the reach of the common man, literacy and education tend to become the privilege of a few. The case for promoting the cause of low-cost and quality printing is a strong one.

If PAPGAI has failed to make an impression on the government it is not surprising. It does not constitute a powerful lobby since its present membership is just a fraction of the total number of printing • plants in the country. Since many of the printing presses are small concerns, they tend to be so occupied with their own management and operation that they have no inclination to participate in PAPGAI activities.

Source: Dawn, February 27, 1983

 

Woes of the printing industry: Need for duty cuts, cheap newsprint, incentives

By Zubeida Mustafa

THE TWO major problems facing the printing industry in Pakistan are the high cost of production and the poor quality of service provided. Identifying these two factors which determine the state of the industry today, Mr Ahmad Mirza Jamil, the outgoing Chairman of the Pakistan Association of Printing and Graphic Arts Industry (PAPGAI) points out that if the industry is surviving in the country it is because printers are operating in a seller’s market. The dismally low literacy rate, the poor reading habits of the people and the scarcity of low-priced books and literature are key indicators of the state of the publishing and printing industries in Pakistan.

It is not surprising to find these industries in a poor state. In a society where education is at a discount, the elements which go into the making of education also tend to be ignored. As compared with the publishing sector, printing is better off because it c to multifarious needs other than those of the publishers and stationers. The printer gets a substantial part of his business from the orders he receives for the printing of labels, cartons, pharmaceutical literature (which the majority of consumers cannot read), invitation and greeting cards and calendars. There is urgent need to look into the Continue reading “Woes of the printing industry: Need for duty cuts, cheap newsprint, incentives”