Duty-free import of plants: Aptma seeks changes, clarifications on 1998 SRO

The All Pakistan Textile Mills Association (Aptma) has sought changes and clarifications on SRO 554(I) 98 of June 12, 1998.
Aptma Chairman Waqar Monnoo has, in a statement here, formally requested the Chairman, Central Board of Revenue (CBR) that the SRO, which allows duty-free import of plant and machinery with the condition that the importer commits to export 50 percent of its output for the first two years and 60 percent thereon for the next three years, needs to be clarified.
"This has been the major concern of several importers of plant and machinery as the members of Aptma have opened letters of credit (L/Cs) for the import of one million spindles and are required to take a decision whether to opt for this SRO or not for their imports," he said.
Monnoo said that to meet the increased demand of the downstream export-oriented industries, a large portion of the yarn production was being consumed locally for indirect export.
"It is also in consonance with the declared policy of the government to increase the quantum of exports, which is possible, only when the exports of end product is assured," he said.
The government of Pakistan, the Aptma chief said, had recognised the industrial change and had introduced new schemes like the Duty and Tax Remission on Exports (DTRE) and the SPO schemes.
"However, the condition of export for units established under the abovementioned SRO does not synchronise with these schemes. "Indirect exports of a unit are recognised as exports for the purpose of Income Tax Ordinance, 2001. State Bank of Pakistan (SBP) also allows export finance for indirect exports to an ultimate export house," he said.
Monnoo said, surprisingly, the industrial units (indirect exporters), operating under the said SRO, manufacturing and supplying their end product to the direct exporter, were not provided the benefit of export on their indirect exports which, actually contributed to more foreign exchange earnings.
It would be, therefore, equitable and beneficial for the industrial growth if the indirect export of the units, operating under the above SRO, were also considered exports and a clarification to this effect was issued, he said.
"Aptma has brought to the attention of authorities that the world has been confronted with the turbulent post effects of incidents like September 11, the Iraq war and the Sars virus.
"The repercussions of these events on the export market needs no elaboration. These events have highlighted, more than ever, the need for a flexible customs regime to enable the industrial units to operate and increase the exports of the country," said the Aptma chief.
Monnoo hoped that it would facilitate the exporters if the proposed changes and clarifications were reviewed by the authorities in the best interest of industrialisation.