Incentives to 'pioneer' industry: Finance and FBR do not support Health ministry summary

The Ministry of Finance and Federal Board of Revenue (FBR) have refused to support a controversial proposal of the Industries Ministry for a pharmaceutical project which, according to Prime Minister Yousaf Raza Gilani, is a pioneer industry in Pakistan, sources told Business Recorder.
The Prime Minister, while inaugurating auto disable syringes manufacturing unit of Amson Vaccine and Pharma (Pvt) Ltd on September 12, 2008, had directed the Ministries of Commerce, Industries and Health to declare the plant as a pioneer industry in Pakistan.
Later on, the Ministry of Health moved a summary for the Prime Minister and proposed to declare the auto disable syringes plant as a pioneer industry. The proposal was approved by the Prime Minister, and Ministry of Industries was requested by the Ministry of Health to implement the decision.
Industries Ministry says that the technology of Amson's auto-disable syringes production plant is different from conventional syringe production as the new technology helps to guard against the re-use of syringes. This technology not only ensures protection from infectious diseases such as HIV/AIDS, hepatitis B and C etc but will also help in reduction of burden of disease in Pakistan. International agencies are also emphasising the use of auto-disable technology.
In pursuance of Trade Policy 2008-09, incentives for pioneer industries were considered by a committee comprising Secretaries of Ministries of Industries, Commerce, Health, Finance and Chairman FBR at a meeting held on April 15, 2009. The committee recommended the following incentives: (i) Duty-free import of plant, machinery, equipment and its raw materials; (ii) 15 years tax holiday from the date of start of commercial production; (iii) charging of industrial rates instead of commercial rates on utility bills and property tax; (iv) provision of utilities at base tariff (ie lowest tariff) without surcharge, excise duty and GST; (v) all utilities and other approvals be made available to the pioneer industry on fast track basis; (vi) price preference of 15 percent be given for government purchases in line with Ministry of Commerce SRO 193(1)/98 for engineering industry; (vii) reasonable protection against imports wherever considered appropriate will be provided by way of imposition of tariff/duties to make the pioneer industry competitive. This protection will be available for a period of 7 years from the date of commercial production.
The committee also recommended pioneer industry status for auto-disable syringes manufacturing plant of Amson Vaccine and Pharma (Pvt) Ltd.
Sources said that the Industries Ministry circulated its proposals to concerned ministries. In response, Ministries of Commerce, Health and Investment supported the proposed package of incentives. However, FBR was of the view that as plant, machinery, equipment and capital goods including raw material and ingredients are importable under concessionary rate of 5 percent customs duty, further relaxation cannot be supported. Supply of utilities, without excise duty and sales tax and blank exemption from income tax for 15 years were also not supported by FBR.
According to FBR tax regime on import of raw material imported by an industrial undertaking, concessions @ 3 percent can be availed. Finance Division supported the comments of FBR.
Industries Ministry has further proposed that the incentives being extended to auto disable syringes plant of Amson Vaccine & Pharma (Pvt) Ltd should also be given to other industrial unit to be declared a pioneer industry in future by the ECC.