960414

No GST on goods

made for export

only, says Farooqui

IQBAL MIRZA

KARACHI: General Sales Tax will not be imposed on items which are manufactured exclusively for exports.

This assurance was given by Salman Farooqui, Federal Commerce Secretary, at a meeting with industrialists and businessmen organised by the Federation of Pakistan Chambers of Commerce and Industry, to discuss issues relating to the formulation of trade policy 1996-97 at Hotel Pearl Continental here on Sunday afternoon.

At the outset the Commerce Secretary assured the participants that Government desired to formulate the trade policy for a period of ten years to ensure continuity and build up confidence of the business community.

In this connection an international consultant, A. L. Halliday of Canada, has been appointed to advise on this subject. Halliday is an expert on trade with India and specialises on matters relating to WTO, SAARC, Opec and India.

He has advised that seminars on the above subjects be organised in different cities to educate people, particularly business class about various issues and problems which may arise in dealing with these organisations and countries.

Salman Farooqui took the opportunity to assure the business community that Government had no desire to disturb the functioning of FPCCI in any way. The appointment of administrator was also not being considered, he said.

He expressed confidence in the present leadership of FPCCI and said that it was in the right hands. He also assured the business leaders that Government was in no way interested in interfering in the affairs of FPCCI, as the government believe that Senator Ilyas Bilour, who enjoyed the confidence of the business community, was the right person to head the FPCCI.

On the duty drawback payment, the Commerce Secretary expressed his dismay that it should have taken place through the banks but there had been no progress in this direction.

Regarding the exports of fruits, he said that previously PIA enjoyed the monopoly of lifting fruits but now any shipping line could enter the field of exports of fruits.

Salman Farooqui also announced that the European Commission had expressed its willingness to finance the opening of Pakistani Export Promotion Centres in European and other counties. He suggested that the FPCCI should take interest in the project so that these centres could be established in places like Tokyo, Singapore, Hong Kong, UK, USA and Germany, etc.

To the delight of the business community he announced that the possession of the Exhibition Ground opposite Hasan Centre had been finally acquired and construction work in this connection had started at the exhibition grounds. Next year at this period of time an international exhibition will be at this place as well as in Lahore where arrangements are being made to acquire necessary land for this purpose. He described the year 1997 as the exhibition year for Pakistan.

He regretted that fish export was not upto the mark and advised the concerned quarters to streamline fish export which in his words was "shameful" at the moment.

Salman Farooqui assured the audience that trade with India would not be opened till "you give us OK".

The meeting was attended by over 70 businessmen, industrialists and bureaucrats, including Senator Ilyas Bilour, President, FPCCI, Iftikhar Ali Malik and Mehmud Ahmed, Vice-Presidents, FPCCI, Haji Shafiq-ur-Rehman, President, Chamber of Commerce and Industry, Karachi, Chairman TCP and officials from the Ministry of Commerce.

Earlier, Senator Ilyas Bilour, President, FPCCI had raised the following points for the consideration of the Commerce Secretary and discussions at the meeting:

LEVY OF GST ON EXPORTS RELATED PRODUCTS: The CBR plans to withdraw all standard Sales Tax rebate rate SROs on exports and to pay rebate only after the exporters furnish proof of payment of Sales Tax at earlier stages of production. The "weaving sector" is un-organised, mostly. The exporters of cloth and garments will not be able to claim Sales Tax rebate. It will affect exports badly.

PRESHIPMENT INSPECTION OF EXPORTS: If the intention of the Government is to check quality, I think it is not required.

If the Government wants to ensure that duty drawback is not demanded excessively. I think something else may be done.

Exports will be badly affected.

PAYMENT OF DUTY DRAWBACK CLAIMS: It is really unfortunate that despite the assurance of the Prime Minister the payment of duty drawback claims through Banks has not yet been started. This will create more problems for the exporters.

EXPORT OF FRUITS & VEGETABLES: Pakistan is blessed with such climate where all kinds and varieties of fruits and vegetables can be grown round the year.

This is one field which has lot of potential for exports, which is not being exploited at all. There is lack of technical knowledge at the growers level regarding selection of quality seeds, soil, water management, lack of cooling facilities to remove field heat and maximise shelf life, lack of grading and cold storage facilities, inadequate transportation from farm to port or airport and insufficient handling facility at port.

All these problems and shortcomings need to be removed to boost exports. The Ministry of Commerce will have to co-ordinate with the relevant Ministry and Provincial departments in this regard.

EXPORT DUTY ON VEGETABLES: Levy of export duty on export of vegetables like onions, chillies, potatoes, tomatoes should be avoided so as to boost their export and increase their production. If due to export the domestic prices of these items increase, it will give incentive to agriculturists to grow more next year.

EXPORT HOUSES: Some incentive like tax relief needs to be provided to exporters setting up offices and warehouses abroad to boost exports.

OPEN BOND MANUFACTURING: CBR has banned export of goods manufactured under Open Bond Manufacturing Scheme through land route. This is a very negative approach to the promotion of exports. If CBR feels that the facility is being misused, the proper way would be to plug loop-holes in the rules instead of putting a complete ban.

EXPORT OF FISH: A Unido expert who recently visited Karachi Fish Harbour and the fish processing plants was disappointed to see the unhygienic conditions there and feared that if corrective measures were not taken immediately the importing countries may suspend import of the items from Pakistan. Ministry of Commerce may set up a task force comprising representatives of EPB, the industry, fish harbour authorities and concerned Ministry and Provincial departments to improve the conditions.

MFN STATUS TO INDIA: Under WTO Pakistan is bound to give Most Favoured Nation (MFN) status to India. But before giving this status we must determine the incentives/subsidies India is giving to its industry and exports. Without giving equal incentives to the domestic industry, our manufactured goods, particularly Engineering goods cannot compete with Indian products.

Steel, which is the basic raw material, is available in India as your goodself aware. We should have such an steel policy so that Engineering Industry may only face the Indian products. No question of competition.

TRADE WITH ECO & SAARC COUNTRIES: We may lay down procedures for the implementation of tariff arrangement among ECO and Saarc countries. We understand that their implementation is not taking place, and we must look into the matter in a positive way so that we should not lose much.