20000303

IFC fears unfair competition

from St-exempted

cement units

ISLAMABAD: The International Finance Corporation (IFC) has advised the Pakistan Government to ensure that Sales Tax imposition on cement does not create unfair market conditions for the cement manufacturers who are not exempted from Sales Tax.

According to informed sources a delegation of IFC, a subsidiary of the World Bank, recently held meeting with officials of the Ministry of Finance and urged that imposition of Sales Tax should be made equitable so that non-exempted units are not faced with unfair competition.

IFC has financed three cement units in the country Ñ DG Khan Cement, Maple Leaf Cement and Fauji Cement.

The Ministry of Finance has already proposed that exempted units should be selling cement at lower prices. Other manufacturers fear that this would drive them out of the market. These units are capable of meeting almost half the quantity of the total demand of cement in the country. The IFC's returns on investment will be jeopardised if units financed by it face uncertain market situation.

The Ministry of Finance is in a fix to find an equitable solution to the issue as cement manufacturers of the country are divided into two clear groups on the issue of Sales Tax. The sources said that the high powered committee formed by the Minister of Finance under Secretary General Finance Moeen Afzal had failed to resolve the matter amicably.

The sources said that the cement manufacturers advocating imposition of Sales Tax in fact wanted to gain windfall profits by exploiting exemption on Sales Tax granted to these units under dubious and manipulated SROs, issued at the behest of previous political governments.

They said in fact an investigation must be carried out by the National Accountability Bureau to assess why SROs were changed arbitrarily and who were the beneficiaries.ÑPPI