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Rice exporters want WT relief extended up to 50 kgs pack

JAVED MEHMOOD

ISLAMABAD: Rice exporters have demanded of the government to further extend relief in the payment of withholding tax on the export of packed and branded rice up to 50 kgs, it was learnt.

Currently, the government has allowed exemption in the levy of withholding tax from one percent to 0.5 percent on the export of packed and branded rice in order to promote value addition in the external trade of rice from Pakistan.

This relief had been allowed on the packed and branded rice up to five kgs, while the Rice Exporters Association of Pakistan (REAP) has asked the Ministry of Commerce to enhance this limit up to 50 kgs so that they could enter into overseas markets in a big way.

Sources said that the MoC has agreed to this demand of the rice exporters and assured their association that this relief would be provided in the next Trade Policy for 2000-2001.

The ministry for the first time, allowed 50 percent exemption in the payment of withholding tax on the export of rice in the Trade Policy for 1999-2000.

This policy was aimed at the introduction of export of packed rice with brand names and it had proved a very useful strategy.

REAP Chairman Shahzad Ali Malik, when contacted, told Business Recorder that Pakistan has started marketing packed and branded rice (from one kg to 20 kgs) in the international market.

He disclosed that his firm has exported packed and branded basmati rice to Oman, Kuwait, the United Arab Emirates (UAE) and Bahrain and it plans to further explore more markets in the Gulf and the UAE.

Shahzad Malik pointed out that packed and branded basmati rice is attracting up to $900 per tonne as against $485-$700 previous price of bulk supply of rice.

If the government allowed tax relief up to 50 kgs it will go a long way in promoting value addition in the rice sector and to earn much more foreign exchange in the days ahead, said the REAP chairman.

He pointed out that Guard Agricultural Research and Services Private Limited is the only rice exporting firm in Pakistan that had attracted the highest -$800 per tonne - average per unit/tonne price of basmati rice, during the last financial year 1998-1999, due to value addition in rice.

He urged the local exporters of rice and the government to divert their efforts towards the export of packed and branded rice to generate much more foreign exchange than exporting rice in bulk at throwaway price.

Current statistics show that the export of rice increased by 7.35 percent in the first seven months of this fiscal. The country exported 933,103 tonnes of rice to generate $279.921 million (Rs 14.479 billion) during July-January, 1999-2000, as against 869,956 tonnes, valuing $260.76 million (Rs 13.021 billion) in the same period in 1998-99.

Quantity-wise, the rice export increased by 7.26 percent, 11.20 percent in value in rupee and 7.35 percent in dollar term in seven months.

The Ministry of Commerce had set the export target of rice at $600 million for the current fiscal that seems achievable due to bumper production of rice.