The economic co-ordination committee (ECC) of the cabinet on Saturday approved a package of Rs 22-25 billion for the textiles sector, but most of the recommendations made by the textiles committee to reduce cost of doing business, especially rationalisation of utility's rates, have not been entertained.
Presided over by Prime Minister Shaukat Aziz, the ECC also decided to continue Research and Development(R&D) support to garments and apparel sector, the impact of which would be Rs 15 billion.
Briefing journalists after the meeting, textiles and industry minister Mushtaq Cheema, flanked by textiles secretary Masood Alam Rizvi and economic adviser to the finance ministry Dr Ashfaque Hasan Khan, said this time R&D support of 3 percent would be extended to printed fabrics and home textiles whereas 5 percent would go to dyed, printed home textiles.
However, the garment sector, which includes woven garments and knitwear, would continue to enjoy 6 percent R&D support during 2006-07 but it would be reduced to 3 percent from 2007-08, he added.
Cheema said export quality scheme has been changed as there were complaints of fund lapse, adding now mark-up on three years loan would be 6 percent while for seven-and-half-year period loan, it would be 7 percent.
Clarifying the procedure, he said the State Bank (SBP) would extend loans to commercial banks at 6 percent interest, which would extend it to exporters along with 2 percent spread, one percent less than the last year. He said the amount of loan would also be increased keeping in view exporters requirements but did not give details.
Earlier, according to the textiles minister, the export quality loan had been divided equally for the SME and corporate sector, but now it has been clubbed, however, preference would be given to the SME sector.
He was of the view now the SME could enjoy this facility through the commercial importer, adding import of thermal power generators has also been included in the scheme.
Replying to a question, he said there was no need to have equity, escrow account and the SBP approval for the loan, as all these conditions have been abolished to facilitate the textiles sector. Answering another question, he said, earlier, only imported machinery was included in the scheme but now the loan could be used to procure local manufactured machinery.
Loans taken by the textiles industry at 6 percent interest, after which interest rates increased to 12 percent or above, would be swapped at 6 or 7 percent, he said, adding it was the longstanding demand of the textile sector but spinning would not be included in the scheme.
He said refinancing rates have been reduced by 1.5 percent from 9 to 7.5 percent of which 6 percent would be charged by the SBP from commercial banks and 1.5 percent by banks as spread.
He hoped with the implementation of this package, textile exports, which constitute 60 percent of total exports, would show a growth of 22 percent during 2006-07.
The Prime Minister informed the ECC Qatar would invest $2 billion in Pakistan to set up plants in cement and other sectors, according to the economic adviser, he did not give details of proposals submitted by the Qatar government.
The ECC approved a plan of the agriculture ministry regarding procurement of gram, moong and mash pulses through Passco at intervention price during 2006-07.
Dr Ashfaque said intervention price for gram has been fixed at Rs 750 per 40kg; moong (Rs 1200 per 40kg); and maash by Rs 1300 per 40kg.
As the government felt prices in the local market were declining, Passco would start procurement to stabilise prices, so that farmers could get better return of their yield.
Dr Ashfaque further said the ECC discussed another proposal to fix support price for the paddy, but it was deferred till Monday as some information on international trends was missing.
Minfal has been asked to submit additional information to the Prime Minister by Monday to take final decision, he continued. The ministry has proposed Rs 625.25 per 40kg intervention price for super basmati and basmati against Rs 560, showing an increase of 12 percent, basmati 385, Rs 520.45 against Rs 460 per 40kg, an increase of 13 percent; and Irri-6, Rs 303.41 against Rs 260 per 40kg. He said the issue of income tax exemption proposed for Rs 8 billion Wapda Sukuk bonds would be resolved by Wapda and CBR chairmen.
He further said a package has also been approved for the IPPs, including reduction in performance guarantee and extension in commercial operation date and financial close. The ECC has also approved setting up of a 100mw thermal power station at Khuzdar on International Competitive Basis (ICB).
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