ISLAMABAD: The government has approved the replacement of the sponsor of 300-megawatt Gwadar power plant of the China-Pakistan Economic Corridor (CPEC) and has agreed on re-introducing non-tariff barriers for the import of used cars.
Headed by Finance Minister Asad Umar, the Economic Coordination Committee (ECC) of the cabinet on Tuesday also approved major changes to import and export policies, allowing the import of certain goods from India for export-oriented units.
The ECC allowed the import of used electric vehicles up to five-year-old under the personal baggage, transfer of residence and gift schemes meant for overseas Pakistanis.
It allowed the replacement of the sponsor of Gwadar power plant. In March 2017, the ECC had approved the award of the power plant to China Communication Construction Company (CCCC). It also issued the Letter of Intent to CCCC as the sole sponsor of the project in May 2017.
But the Chinese side informed Pakistan that the CCCC, being a public listed company on capital markets in China, was encountering time-consuming difficulties and complexities in getting requisite approvals for investment in the project. Accordingly, it requested Pakistan that CCCC may be substituted with its holding company China Communications Construction Group (CCCG) through its wholly owned subsidiary investment arm CCCC Industrial Investment Holding Company Limited (CIHC). The Private Power Infrastructure Board, last Friday, allowed the substitution of CCCC with CCCG through its subsidiary, subject to the approval of the ECC.
The ECC re-introduced certain restrictions on the import of used cars after one year in a bid to curb their imports. It approved the Commerce Division’s proposal that duty and taxes on all imported vehicles in new and used condition under the personal baggage or gift scheme would be paid out of the foreign exchange arranged by Pakistani nationals themselves or the local recipient supported by a bank encashment certificate, showing the conversion of foreign remittance into local currency.
Under the import policy order, the import of used vehicles is allowed only to overseas Pakistanis but this scheme is being misused by the dealers. In October 2017, the then government had also placed the condition of payments of duty and taxes will be paid out of foreign exchange arranged by Pakistani nationals or the local recipients. But this led to a situation where over 6,000 vehicles were stranded at the ports. But in February last year, the ECC waived off these conditions.
Only 5% of the used vehicles are imported by bona fide overseas Pakistanis, according to the Commerce Division.
The commerce ministry on Tuesday issued the notification to give effect to the decision. According to the notification, the remittance for payment of duties shall originate from the account of Pakistani national sending the vehicle from abroad. The remittance shall either be received in the account of Pakistani national sending the vehicle or in account of his family member.
Amendments to export policy order
The ECC approved regulatory amendments in the Export Policy Order 2016 and Import Policy Order 2016 as proposed by the Commerce Division aimed at increasing ease of doing business. Earlier, in May 2018, the last government had made changes in import and export policies.
The ECC allowed re-export of imported goods to those who supply part of shipment from domestic production and the remaining part by sourcing from other countries. Similarly, it allowed re-exporting imported goods without payment of duties in case where the source of entire shipment is from a third country and reshipping parts of shipment from Pakistan to the foreign buyers.
The ECC also waived off the condition of foreign exchange arrival for export of goods for humanitarian purposes to all destinations by the relief organisations subject to the provision of encashment certificate of foreign exchange from the authorized dealers.
The ECC allowed exporting PVC and PMC materials to Afghanistan by excluding it from the negative List. It also gave sales tax concessions on export of these items to the neighbouring country.
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The ECC deferred a proposal to allow export-cum-reimport of hunting arms and ammunition by Pakistani hunters visiting abroad. The ECC also did not accept the proposal to lift a complete ban on export of sugar, which currently exported with prior permission of the ECC.
The ECC also did not accept the commerce ministry proposal of abolishing the condition of No Objection Certificate for export of dual-purpose technologies, material and equipment. The exports of these goods are currently subject to NOC from Ministry of Foreign Affairs under the Export Control on Goods, Technologies, Material and Equipment related to Nuclear and Biological Weapons and their Delivery Systems Act, 2004. The Ministry of Commerce is of the view that that NOC should be replaced with licensing regime to align it with the law.
The ECC also allowed re-export of imported pulses after value addition and decided to lift the ban that had been imposed to stabilise the prices.
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Import policy order
The ECC approved to make 10 more changes in the import regime. It allowed replacing the pictorial warning on cigarette packets with the words “smoking is injurious to health”.
The ECC allowed the export-oriented units to import raw materials from India that are currently banned under the negative list. It also allowed import of restricted items to export-oriented units. So far the import of restricted items and raw materials from India is allowed to the export houses, manufacturing bond and temporary importation schemes.
The ECC exempted the processed food products and non-food products from certification requirements. These certificates work as non-tariff barriers. However, the processed food will still be subject to quality standards specified by the Pakistan Standards and Quality Control Authority.
The ECC also allowed the pre inspection of up to 15 years old machinery import. The ECC took the decision after the prime minister refused to condone the condition on case to case basis. The ECC accorded approval for withdrawal of customs duty, additional customs duty and sales tax on import of cotton effective February 1 till June 30, 2019 to ensure sufficient supply of cotton.
Published in The Express Tribune, January 16th, 2019.
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