The prices of publications are set to increase following the government's decision to amend the 1996 Customs Duties Order bringing into effect a seven percent import duty on uncoated publishing and writing paper.

In a government's gazette distributed to those associated with the paper industry, the Ministry of Finance created an order for these previously untaxed goods to be subjected to the seven percent duty effective July 29 this year.

Exercising power conferred by subsection 11(1) of the Customs Act 1967, Deputy Finance Minister Dr Ng Yen Yen signed the amendment on July 21.

However, the move irked paper trader FL Heng, who criticised the government for making the amendment "in the quiet" and not tabling it in the forthcoming budget on Sept 19.

"Is the government afraid to let the public know that it is imposing an import duty for this essential item during the budget because it will attract too much attention?" he asked in a letter to Prime Minister Abdullah Ahmad Badawi, a copy of which was obtained by malaysiakini .

In the letter, dated Aug 22, Heng questioned the government's motive in re-introducing the duty which, according to him, was "scrapped 20 years ago".

He said the move would affect those in the printing, publishing and paper converting industries.

Uncoated paper or 'unfinished paper' is used largely for printed materials especially educational books, brochures and photocopy paper as opposed to coated paper which are used mainly for magazines.

Another entrepreneur in the printing and publications market who wished to remain anonymous, said the price of papers across the board in the country have gone up between eight to 10 percent in the past few weeks.

Who is benefiting?

Contacted today, Heng explained how consumers will be affected by the move and also highlighted a confusion in the new rule.

"When paper which originates from non-Asean countries like Europe or Japan are brought in, it is taxed even though it may come through an Asean country like Singapore. As a result of this rule paper from Indonesia and Thailand are being exempted from the duty," he said.

He added that these two countries in particular will benefit enormously from the government's move.

So will Malaysian paper producers, whom he said, are not able to cater for the large local demand leading the country to import at least 200,000 metric tonnes of paper a year.

Heng, who has been in the industry for 10 years, said this could encourage "more haze from Indonesia's rampant forest burning while it flogs off the paper to Malaysia as it is unable to export it to Europe or the United States because of environmental policies".

"Is the government aware that by imposing import duty on these uncoated printing and writing paper it will result in closures of many paper product converters in Malaysia as they will not be able to compete with neighbouring countries," he added.

Heng said Malaysia, which is in bilateral trade with exporters of uncoated paper as the country itself exports higher quality paper products and printed materials, runs the risk of 'offending' those countries.

"Who is really benefiting from this move? Are there certain quarters gaining from this whom the government knows of? It's certainly not the consumers," he stressed.

Officials from the Finance Ministry when contacted declined to comment on the matter.