The Pakistan Art Silk Fabrics and Garments Exporters Association (Pasfgea) has said that the Karachi Export Processing Zone (KEPZ) was established to manufacture products for export to tariff area.
In a strong representation to Finance Minister Shaukat Aziz on anomalies in the 2004-05 Federal budget, especially in SRO 461, which restricts manufacturing units to export only 20 percent to the tariff area, the association said that an impression existed in the mind of certain quarters that the KEPZ was primarily meant for export to abroad and not to the tariff area.
However, Pasfgea said the founding fathers of KEPZ were very clear in their perceptions that the industries in the zone should act as a catalyst for industries in the tariff area.
It said this was amply proved by the fact that the original SRO 249 clearly envisaged no value-addition on the export to the tariff area.
The association pointed out that the scheme for establishing an export-free zone as approved by the Economic Co-ordination Committee (ECC) clearly mentioned that one of the main objectives and purposes of the zone was to provide a growing market to the investors at home for the country's raw material, semi-manufacturing, manufacturing, sub-contracting and service industries.
It maintained that this was not for the first time that such restriction or objections raised on the working of the KEPZ and a similar restriction imposed in 1984 was rescinded vide SRO 142 of 1988.
Challenging the restriction on the exports to the tariff area, the association said that the government was systematically projecting the exports from the other export zones in the region such as Jebel Ali, Sri Lanka and Bangladesh, which were allowed to export 100 percent products to our tariff area, whereas the exports from our zone were being restricted.
"Furthermore, any goods produced in the KEPZ consume labour and utilities and yield profits to the Pakistani businessmen, which is need of the hour. For example, any product manufactured in the zone as compared to similar products abroad has an edge of 30 percent ie any import from abroad worth dollar one is available at 70 Cents from the zone," it said.
It is pointed out that the most of the KEPZ units were helping the tariff area industries to upgrade their products by helping them and sending goods under the Duty and Tax Remission Rules for Export (DTRE) scheme as well as SRO 410 meant for temporary importation. "It is also illogical that products manufactured in the KEPZ are exported to Dubai and brought back to the tariff area, but not directly from the zone. The only factor would be additional freight," said the association.
The association said that the rules governing the zone clearly stipulated vide SRO 1058 of 1981, "Imports into the zones from the tariff area shall be deemed to be exports from Pakistan and imports into the tariff area from the zones shall be deemed to be imports from abroad and shall be subject to the same conditions and restrictions as are applicable to similar imports from abroad."
It said that the KEPZ showed spectacular progress during the current year and it was on a take-off stage and if the restrictions were not removed, the progress of the Zone would be affected.
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