ECC allows sugar export, but defers decisions on CPEC and circular debt
Rollover of Rs47 billion circular debt, tax exemptions on key project among pending issues
PHOTO: AFP
ISLAMABAD:
The government allowed on Tuesday export of an additional 300,000 tons of sugar but again put off decisions on crucial matters like fate of the Rs47-billion circular debt and tax exemptions for a China-Pakistan Economic Corridor (CPEC) project.
The Economic Coordination Committee (ECC) of the Cabinet approved the export of 300,000 tons of sugar, in addition to the export quantity already approved, according to an official handout of the finance ministry.
It added that the decision was taken keeping in view the recommendations of the Inter-Ministerial Committee (IMC) constituted by the prime minister and the Sugar Advisory Board.
The IMC, however, had proposed to allow the export of 600,000 tons on the basis that the country had 1.475 million metric tons surplus stock from the last sugarcane crushing season.
China leads as Pakistan sees FDI of $2.41b in 2016-17, up 5%
The export quota for each sugar mill would be approved and monitored by the State Bank of Pakistan (SBP) on a first-come-first-served basis, said the finance ministry. The exporters will be bound to export the commodity within two months. However, in the past such limits were always relaxed on one pretext or the other.
The export will be in addition to 425,000 tons sugar that the ECC had earlier allowed to export. Out of this quantity, the ECC has determined quotas for 391,000 tons and 348,000 tons has already been exported.
The Pakistan Sugar Mills Association - representative body of the millers - has long been advocating the export of sugar to settle dues of farmers and clear the ‘glut of the commodity’ from the domestic market.
The decision to allow export of sugar often results in an increase in the price of the commodity in the local market, although the Ministry of Commerce claimed in the summary to the ECC that the prices actually dropped 11% since December last year. It quoted Rs56.30 per kg sugar price in the summary - a rate one cannot find in the retail market. In the retail market, sugar is available in the range of Rs62 to Rs65 per kg.
The ECC also approved exemption from value-added tax as required under a provision of a proposed agreement between Pakistan and Belarus on Industrial, Scientific and Technical Cooperation. Once the agreement is signed, both governments will mutually exempt value-added tax when importing goods supplied on cooperation basis, as well as goods supplied under grant-in-aid.
Deferred matters
The ECC did not take a decision on the Ministry of Water and Power’s proposal to rollover Rs47 billion circular debt obtained in the past to clear dues of the power producers and oil and gas marketing companies. This debt is currently parked in a holding company and the government is paying an interest on the total debt estimated at over Rs400 billion. This is in addition to Rs400 billion flow of the circular debt.
The Ministry of Water and Power had sought the ECC to refinance this debt on the grounds that this will reduce the cost of borrowing by over Rs900 million per annum.
The ECC once again deferred a summary that had been moved to grant unprecedented level of tax exemptions to $2.1 billion worth 660-kilovolt high-voltage direct-current (HVDC) Matiari-Lahore transmission line project.
PBIF chief calls for cottage industrial zones along CPEC route
The exemptions, if approved, could kill many local industries besides causing billions of rupees losses to the exchequer.
The $2.1 billion worth 660-kilovolt high-voltage direct-current (HVDC) Matiari-Lahore transmission line project is being developed by China Electric Power Equipment and Technology Company under CPEC.
The Ministry of Water and Power is seeking exemptions from all types of income taxes, sales tax and customs duties including goods that are locally produced and can be supplied for completion of the transmission line project. The ministry demanded that profits and gains derived by a domestic company from transmission line project should be exempted from standard corporate income tax for a period of 10 years. The Matiari transmission line project should also be exempted from 1.25% minimum income tax and 17% alternate corporate income tax for a period of ten years.
The withholding taxes on import of plant and machinery and specialised vehicles should also be exempted for 10 years.
However, the most alarming clause was that even the materials that are locally available should also be exempted from customs duties.
The ECC also did not take a decision on a summary that Aviation Division moved to allow it to operate two grounded aircraft for Hajj operations. These aircraft have already completed their airworthiness life.
Published in The Express Tribune, July 19th, 2017.
The government allowed on Tuesday export of an additional 300,000 tons of sugar but again put off decisions on crucial matters like fate of the Rs47-billion circular debt and tax exemptions for a China-Pakistan Economic Corridor (CPEC) project.
The Economic Coordination Committee (ECC) of the Cabinet approved the export of 300,000 tons of sugar, in addition to the export quantity already approved, according to an official handout of the finance ministry.
It added that the decision was taken keeping in view the recommendations of the Inter-Ministerial Committee (IMC) constituted by the prime minister and the Sugar Advisory Board.
The IMC, however, had proposed to allow the export of 600,000 tons on the basis that the country had 1.475 million metric tons surplus stock from the last sugarcane crushing season.
China leads as Pakistan sees FDI of $2.41b in 2016-17, up 5%
The export quota for each sugar mill would be approved and monitored by the State Bank of Pakistan (SBP) on a first-come-first-served basis, said the finance ministry. The exporters will be bound to export the commodity within two months. However, in the past such limits were always relaxed on one pretext or the other.
The export will be in addition to 425,000 tons sugar that the ECC had earlier allowed to export. Out of this quantity, the ECC has determined quotas for 391,000 tons and 348,000 tons has already been exported.
The Pakistan Sugar Mills Association - representative body of the millers - has long been advocating the export of sugar to settle dues of farmers and clear the ‘glut of the commodity’ from the domestic market.
The decision to allow export of sugar often results in an increase in the price of the commodity in the local market, although the Ministry of Commerce claimed in the summary to the ECC that the prices actually dropped 11% since December last year. It quoted Rs56.30 per kg sugar price in the summary - a rate one cannot find in the retail market. In the retail market, sugar is available in the range of Rs62 to Rs65 per kg.
The ECC also approved exemption from value-added tax as required under a provision of a proposed agreement between Pakistan and Belarus on Industrial, Scientific and Technical Cooperation. Once the agreement is signed, both governments will mutually exempt value-added tax when importing goods supplied on cooperation basis, as well as goods supplied under grant-in-aid.
Deferred matters
The ECC did not take a decision on the Ministry of Water and Power’s proposal to rollover Rs47 billion circular debt obtained in the past to clear dues of the power producers and oil and gas marketing companies. This debt is currently parked in a holding company and the government is paying an interest on the total debt estimated at over Rs400 billion. This is in addition to Rs400 billion flow of the circular debt.
The Ministry of Water and Power had sought the ECC to refinance this debt on the grounds that this will reduce the cost of borrowing by over Rs900 million per annum.
The ECC once again deferred a summary that had been moved to grant unprecedented level of tax exemptions to $2.1 billion worth 660-kilovolt high-voltage direct-current (HVDC) Matiari-Lahore transmission line project.
PBIF chief calls for cottage industrial zones along CPEC route
The exemptions, if approved, could kill many local industries besides causing billions of rupees losses to the exchequer.
The $2.1 billion worth 660-kilovolt high-voltage direct-current (HVDC) Matiari-Lahore transmission line project is being developed by China Electric Power Equipment and Technology Company under CPEC.
The Ministry of Water and Power is seeking exemptions from all types of income taxes, sales tax and customs duties including goods that are locally produced and can be supplied for completion of the transmission line project. The ministry demanded that profits and gains derived by a domestic company from transmission line project should be exempted from standard corporate income tax for a period of 10 years. The Matiari transmission line project should also be exempted from 1.25% minimum income tax and 17% alternate corporate income tax for a period of ten years.
The withholding taxes on import of plant and machinery and specialised vehicles should also be exempted for 10 years.
However, the most alarming clause was that even the materials that are locally available should also be exempted from customs duties.
The ECC also did not take a decision on a summary that Aviation Division moved to allow it to operate two grounded aircraft for Hajj operations. These aircraft have already completed their airworthiness life.
Published in The Express Tribune, July 19th, 2017.