Ban on luxury goods import relaxed

ECC allows buying 200,000 metric tons of wheat at $407.5 per ton price


Shahbaz Rana July 29, 2022

ISLAMABAD:

 

The federal government on Thursday lifted the ban on import of goods with the exception of fully assembled cars, mobile phones, and home appliances, while it also allowed importing 200,000 metric tons of wheat at $407.5 per ton price.

The Economic Coordination Committee (ECC) of the Cabinet that took these decisions also authorised the foreign ministry to engage with a Chinese company for compensating its employees who died in the Dasu bus attack after the Chinese government refused to accept the $11.6 million proposed compensation.

In an official handout, the Ministry of Finance stated that the Ministry of Water Resources submitted a summary on compensation package for the Chinese casualties at Dasu hydropower project.

“The ECC decided that the amount of compensation and goodwill package will remain the same as per the ECC’s earlier decision dated January 21, 2022 ($11.6 million) and approved disbursement of the compensation and goodwill amount directly to the company M/s China Gezhouba Group International Engineering Co Ltd (CGGC) through the Ministry of Foreign Affairs.”

Earlier, the ECC had approved making the payment to the Chinese government through Pakistan’s embassy in Beijing.

Pakistan had transferred the money to its embassy but the Chinese government refused to accept it on the grounds that the payment should be directly made to the company that is working on the Dasu hydropower project, the ECC was informed.

“As a rule, the Chinese government does not directly receive or transfer compensation from foreign parties and as CGGC –the contractor at Dasu hydropower power project, is a state-owned enterprise, it is suggested that Pakistan communicates with Gezhouba Group directly,” the Chinese government informed Pakistan.

Now, it has been decided that the Ministry of Foreign Affairs through Pakistan’s embassy in Beijing will engage with CGGC in Beijing and disburse the compensation amount of $11.6 million directly to the company.
Pakistan decided to make the payment despite the fact that there was no legal or contractual obligation on the government.

The Dasu hydropower project is funded by the World Bank and does not fall in the scope of the China-Pakistan Economic Corridor (CPEC). The 4,320 megawatts Dasu hydropower project is being constructed by the CGGC with funding from the World Bank. Four Pakistani nationals had also died in the attack.

Import ban

The ECC approved lifting the two-month old ban on the import of goods except completely built cars, mobile phones and home appliances, according to the decision.

In the light of the fact that imports substantially reduced due to consistent efforts of the government, the ECC decided to lift the ban on imported goods except for auto CBU, mobiles and home appliances, the finance ministry stated.

Further, all held-up consignments except items which still remain in banned category, which arrived at the ports after July 1, 2022 will be cleared subject to payment of 25% surcharge, according to the decision.

On May 19, Pakistan had slapped a ban on import of 33 categories of goods, covering more than 860 product lines.
The analysis of the import data showed that there was a declining trend of imports after the imposition of the ban.

The overall imports of the banned items have shrunk by over 69% -- from $400 million to $124 million, according to the commerce ministry.

The main contribution came from the auto sector and the mobile phone kits whose imports were significantly reduced, covering about $218 million of the reduced import value of $400 million. The remaining 21% reduction came from 810 tariff lines.

Owing to serious concerns raised by major trading partners on the imposition of ban and considering the fact that the ban impacted supply chains and domestic retail industry, it was decided to restrict the ban to only those items that had helped contain the imports.

However, the government opened doors that could be misused to import the still prohibited goods.
It allowed the temporary import-cum-export of auto CBU for exhibition, display, test or trial purposes under the ATA Carnet (passport for goods) and TIR Convention. The Convention on International Transport of Goods Under Cover of TIR Carnets (TIR Convention) is a multilateral treaty that entails no payment of customs duties and taxes.

Islamabad signed the convention in August 2015 and ratified it in January 2016. The import of samples of mobile CBUs has also been allowed for mobile device manufacturers for research and development purposes on the recommendation of the Pakistan Telecommunication Authority.

The industrial appliances falling within the home appliances CBU and appliances imported by the government departments through vendors, hospitals and registered charity organisations shall be exempted from the ban.

Wheat import

Pakistan on Thursday decided to import 200,000 metric tons of wheat worth of $85 million ($407.49 per metric ton), which will increase the per kilo wheat price to Rs106.

The fresh tender was slightly more expensive than the previous one. At the price of $404.86 per ton, the government had allowed import of 300,000 metric tons of wheat last week.

Due to the relatively low exchange rate per kilo, the price was Rs89, which would now go up to Rs106.
With the fresh approval, Pakistan so far imported one million metric tons of wheat. The ECC also directed to negotiate the price of the wheat being imported from Russia under a government-to-government deal.

Prime Minister Shehbaz Sharif on Wednesday said that Russia offered to supply wheat, which his government accepted.

The Trading Corporation of Pakistan (TCP) invited bids on both cash and deferred payment basis due to the depleting foreign exchange reserves. But bidders gave bids of $419 to $458 per ton on deferred payment, which was not feasible.

The country faces at least three million tons of wheat shortage and the government so far took decisions for the import of one million metric tons.

As per bid evaluation committee report, the lowest responsive bid against the said tender was from Falconbridge Resources FZ LLC that offered provision of 110,000 metric tons of wheat.

Dealers’ margins

The ECC approved to increase the dealers’ margins by Rs7 per litre on petrol –a surge of 43% or 3.04% of the sale price. It also approved increasing the dealers’ margins on diesel from Rs4.13 to Rs7 per litre –an increase of 70% or 3% of the existing price.

The ECC was informed that the existing margins were fixed in December, 2021 and the Pakistan Petroleum Dealers Association approached the government for immediate revision of their margins due to inflation, increase in tariff salaries and utility bills.

The Ministry of Industries and Production submitted a summary on issues faced by Fatima Fertilizer (Sheikhupura Plant) and Agritech. Both the SNGPL-based plants were operated by provisioning of RLNG on a cost-sharing basis.

The ECC, after discussion, approved the proposal to ensure compliance with the earlier decision of the ECC and the Federal Cabinet of shifting both the plants to indigenous gas. The ECC further directed the ministries of petroleum, finance, national food security and industries and production to work out the gas price/VCM for the fertilisers.

The ECC also decided that sales tax may be charged on the actual price of the gas being paid by the company.

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