ISLAMABAD (APP) – Economic Coordination Committee (ECC) of the Cabinet, chaired by Prime Minister Shahid Khaqan Abbasi Wednesday approved the extension of Prime Minister’s Export Package for the next three years.
The package aims at improving competitiveness of the textile and non-textile export sector to continue the export growth in the coming financial years.
The PM’s Export Package was initially approved in January 2017 for a period of 18 months, till June 2018. The Package has vitally contributed towards the turnaround in exports in FY 2018 which had been continuously declining since 2014.
During the first ten months of the current financial year, the exports had registered an increase of 14% compared with the corresponding period of the previous year. It has contributed additional US$ 2.3 billion foreign exchange earnings during this period. The additional gains are estimated to be around US$ 2.7 billion by the end of the financial year 2017-18.
In order to maintain the growth momentum in exports, the ECC of the Cabinet has extended the Package for the next three years. In order to improve competitiveness and incentivize investment in export-oriented production, the Drawback of Local Taxes and Levies (DLTL) has been extended, on the same terms and conditions, for the commercial and manufacturer exporters.
The zero rating of textile machinery imports and withdrawal of duty on man-made fiber other than polyester has been continued. Besides, in order to encourage more non-traditional sectors, electric fans, electrical appliances, electricity equipment and cables, transport equipment including motor bikes, sports bags, leather products such as; leather wallets, auto-parts, stationery, furniture, fresh fruits and vegetables, meat and meat preparations including poultry, juices and syrups have also been included in the package.
The export package approved by the ECC is in addition to the three other relief measures announced by the government for the export sector; in the recent budget the government has included packaging material in the zero-rating regime for sales tax in respect of the five export-oriented sectors like textile, leather, sports goods, surgical goods and carpets; the federal government has extended the duration of Rs3 per unit subsidy under Industrial Support Package for another three months; and the import duty on 255 out of 484 items of raw material and machinery proposed by the Ministry of Commerce has been reduced during the Budget 2018-19.
The extension of the PM’s Export Package for the value-added and non-traditional products and non-traditional markets for a period of three years will provide predictability to local and foreign investors to invest in export-oriented production capacities.
These components of the exports package are estimated to provide competitiveness benefits of around Rs65 billion annually (including Rs41 billion in Drawback of Local Taxes and Levies) to the export sector.
The meeting also discussed the issue of sub-standard CNG cylinders/kits, flourishing roadside CNG conversions by unskilled workers and enforcement of inspection/testing of CNG Vehicle cylinders and kits.
The ECC decided to relax ban on import of CNG cylinders and kits; to allow authorized dealers to import CNG cylinders/Kits and to reduce custom duties on imported kits and cylinders.
The ECC also permitted Inter State Gas System (Pvt) Limited to construct pipeline connecting the LNG re-gasification terminal at Sonmiani named Bahria Foundation LNG Terminal Project to Nawabshah. The pipeline would be capable of transporting 700 to 1,200 MMCFD high pressure regassified Liquefied Natural Gas which shall further be transported to the north of the country.
The project will play a key role in mitigating energy crises and creating job opportunities.
A proposal of petroleum division for adjustment of margin on LNG to mitigate higher incidence of tax on LNG was accepted by the meeting.
The ECC also allowed Pakistan LNG Limited (PLL) to use the existing GoP guarantee of US$ 150 million for issuance of Letter of Credit/Standby Letter of Credit facility. The facility would enable PLL to procure LNG on mid to long-term basis.
In order to incentivize pioneer industries in the country, the ECC also approved amendment in Section 19 of the Customs Act 1969, Sales Tax Act 1990 and Income Tax Ordinance 2001 for providing enabling legislation to extend incentives under the Pioneer Industry Policy.