ECC decisions

The Economic Co-ordination Committee of the Cabinet (ECC), in its meeting chaired by Prime Minister Syed Yousuf Raza Gilani, last Tuesday, while approving a special package for textile sector with 7.5 percent duty drawback on total import value of PTA used for making polyester, put on hold a summary of the Ministry of Industries and Production for an overly incentivised package for Gwadar Export Processing Zone (GEPZ).
Instead, as revealed in a news report, it formed a high level committee - comprising the Advisor on Industries and Production Ministry, Manzoor Ahmed Wattoo as its Secretary, the Deputy Chairman of Planning Commission, Acting Petroleum Secretary, Secretary of the Ministry of Ports and Shipping, Federal Board of Revenue (FBR) Chairman - asking it to come up with a comprehensive plan for covering all economic and industrial zones for benefiting from all the incentives to make the package result-oriented.
State Bank Governor Dr Shamshad Akhtar and FBR Chairman Waqar Ahmad are reported have strongly opposed the proposal for allowing huge tax exemptions, arguing that if exemption were freely offered who would care to pay the tax. On the contrary, they reportedly maintained, there was much greater need for expansion of the tax base.
Moreover, the Ministry of Industries, in its summary, had sought permission for export of production from the export processing zone to tariff area up to 80 percent, against payment of normal duties. It also promised normal incentives for exports from GEPZ as available to projects established anywhere in the country.
As an incentive the plots in GEPZ would be provided to investors on lease (as per existing EPZA procedure) at a reasonable rate to be determined in consultation with the government of Balochistan. And furthermore, it also sought zero-rated sales tax on supply of construction materials to the GEPZ investors for development of zone infrastructure, besides exemption from stamp duty as well as import policy orders issued from time to time.
The meeting was also stated to have been informed that Ministry of Ports and Shipping had a special economic zone stretching over 900 acres in Gwadar to encourage investment. Similarly, Balochistan government was also stated to be in the process of setting up an industrial zone in Gwadar, and that five other industrial and economic zones were being set-up in different parts of the country, and needed the same incentives as recommended for GEPZ.
Little wonder the ECC did well to withhold decision on the extraordinarily incentive-driven effort. This much for the outcome of deliberations on the textile package and GEPZ projects. As against these, ECC is stated to have nearly okayed the recommendation for provision of 75 mmcf per day gas to Fatima Fertilisers for its plant marked to be operational in November 2009.
However, taking note of the demand of the same company for its 100MW power plant near Okara, the ECC constituted a committee to look into the matter and come up with a feasible solution. All, in all, it will be noted that instead of rushing headlong through its agenda, as too often in the past, this time it proceeded with due care and caution, perhaps, except for the Textile Package part of it, or so it will appear.