An Overview of Pakistan’s Plastics Industry

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An Overview of Pakistan's Plastics Industry

Plastics industry in Pakistan is one of the oldest in the country and its existence can be traced out even in the year 1947 when Pakistan came into being. Obviously, at that time, the industry was ill-organised and progressed in a haphazard manner producing low quality toys and household utensils on hand molding machines. Whatever the quantity of those machines was, they were small in number and all set in Lahore, an important commercial centre of Punjab till date. The period from 1965-1975 was notably the turning point, where the use of plastics was seen rising to a leading force in the country, with a sizeable base.

The plastics industry in Pakistan has taken great strides in quest for its success. Today plastics material constitutes as the fourth largest item of imports and this sector alone contributes significantly to the national exchequer in different heads. The industry is growing at an annual average of 15% and in the process of development it has surpassed all other industrial sectors. The per capita consumption in the country has also shown an upward trend during the last 15 years [except post 9/11 events and standoff with India]. Today the domestic consumption of plastics stands at 2.7 kgs, far less than the international average, yet Pakistan is the second largest domestic market in South East Asia after India. With the 175 million strong population of Pakistan growing at an annual rate of 2.2%, coupled with new foreign and local investment and the government policy advocating use of PP woven bags for industrial packaging, it is expected that the per capita consumption of plastics is like to increase to 4.0 kgs by 2007. Till the early years of 1990s, the customs duty on plastics raw material was on unrealistically higher side of about 110 % which has been gradually brought down to the current level of 20%.

There is a tremendous scope for expansion in the plastics sector. As mentioned above the per capita consumption of plastics as compared with the neighboring and other regional countries, is still low, but again this low consumption level indicates that there is a lot of potential for this industry. For instance, the usage of plastics in auto industry has reversed the consumption trend. With due attention to enhance the productivity and improving quality through innovative technique, the exports of plastics auto parts, which was virtually unheard of in recent years, has become an export industry in Pakistan.

Undeniably, had it not been for the import of second hand machinery and cheap labour, the plastics industry in Pakistan would have long vanished. Ironically, the second biggest factor that hampered the development of local plastics industry was a ban on import of brand new plastic machines. The government imposed the ban on plastics machinery for the reason that all of the raw material used for manufacturing of plastics goods was imported and the machinery may be misused. After long year, the plastics manufacturers succeeded in convincing the government that the plastics machines can manufacture plastics goods and nothing else, and hence the possibility of their being misused for purpose other than the plastics manufacturing is minimal. Other reason for the slow growth of this industry was the NRI (Non Refundable Item) policy (imposed by the government) on plastics machinery, at a time when no injection molding plastics machine was being produce domestically. The ban on new plastics machines was lifted in 1984, but very few new machines of modern technology made their way into Pakistan by way of imports during the next 10 years. However, since then, the industry has taken giant steps in bringing the quality of local products at par with the international standards.

Presently there are 6000 plastics processors in Pakistan. The entire industry is self-financed and SME. The industry contributes around Rupees 8 billion annually to the national exchequer by way of custom duty, sales tax and income tax. Major concentration of plastics processors whether they are injection, blow, extrusion, woven or tubular films manufacturers, is in and around the industrial hubs of Karachi, Lahore, Gujranwala, Peshawar, Faisalabad, Hyderabad , Rawalpindi, Gadoon and Hattar.

The industry can be divided into two sector i.e organized and unorganized. Organized sector, with about 600-650 units, is capable of producing quality about 600-700 units, is capable of producing quality products. The unorganized sector produces low quality and cheap products. Despite this, the unorganized sector has grown faster than the organized sector in the past15 years.

Currently there are four plants in Pakistan producing international quality plastics raw material. Surplus production of these plants in being exported. All of them are located within the limits of Karachi.

Concept of international plastics exhibitions in Pakistan is relatively new. The first plastics exhibition was held last year May. With more exhibitors coming to Pakistan in a second plastics exhibition within a year, the plastics industry in Pakistan surely has a lot to show and gain from the international plastics players.

Vital Signs

Major Raw Material Producers (operating)	4
Processing Units	6,000
Employment Direct / Indirect	470,000
Investments (domestic)	Rs. 23.671 Bn
Investment (foreign)	Investment (foreign)	49%
Capacity Utilization	95.4%
Raw Material Produced (approx)	253,000 (metric tons)
Raw Material Consumed	450,000 (metric tons)
Export value (approx)	Rs.56,369,000
Export Growth	35% average
Revenue to Government (approx)	Rs.800 crores (Rs.8 bln)
Contribution to Total Exports	0.277%