Sectors declared as industry: ECC seeks report on status of concessions

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has sought a comprehensive report on the status of concessions availed by the sectors already declared as industry vis-a-vis concessions applicable for these sectors.

These instructions were issued at a recent meeting of the ECC during discussion on a proposal of Ministry of Industries and Production to declare “warehousing as an industry.”

The Industries and Production Division briefed the forum that the Prime Minister Office (PMO), during his meeting with Karachi Chamber of Commerce and Industry (KCCI) and other business associations in Karachi on April 25, 2024, was briefed on issues that were leading to slowdown of business and investment in the country, which included impediments faced in declaring warehousing sector as an industry.

Warehouses, logistics: industry status announced

The Prime Minister directed that meaningful consultations should be held for resolution of the said issue. In this context Ministry of Commerce had received a request from the Warehousing and Logistics Association of Pakistan for declaration of warehousing and logistics sector as an industry.

The modem warehousing and logistics sector (warehousing through cool chains, cold storages and temperature control units supported by specified reefers logistics) is an essential industry that supports agriculture, manufacturing industry, trade and services.

The MoI&P further stated that value added supply chain solutions, technical support and specialized services rendered by modern warehouses through their purpose-built facility support business development, exports and ultimately, contribute to the economic prosperity of the country.

The federal government, while approving various policy instruments on trade, investment and other sectoral policies, initiated by different ministries/Divisions of the federal government, granted approval to declare ten sectors of economy or segments of business as an “Industry” from 1990 to 2009. Eight such notifications were issued by the Ministry of Industries and Production, while one notification was issued by the Finance Division.

Thereafter, the practice of granting industry status by the Federal Government came to a halt with enactment of the 18th Constitutional Amendment, 2010, devolving the subject of “Industries” to the provincial governments.

The Industries and Production Division further briefed the forum that the comments of the stakeholders, ie, Ministry of Communications, Ministry of Commerce, Finance Division, Ministry of Law and Justice, Federal Board of Revenue and Board of Investment were requested on the proposal in light of rule-8 of the Rules of Business, 1973.

Ministry of communications and Ministry of Commerce supported the proposal. Ministry of Law and Justice endorsed the proposal in the light of the justification provided in the summary and stated that declaration of any sector as an industry was an administrative and policy decision which was to be taken by the relevant stakeholders.

The Board of Investment supported the proposal in principle, with the comments that views from Law and Justice Division and approval from Council of Common Interests (CCI) may be sought. Finance Division had no objection to the proposal subject to some observations on the size and extent and estimated financial implications of the subject proposal. The Federal Board of Revenue has not provided comments on the proposal. The provinces were also requested to provide their comments.

The Governments of the Punjab and Khyber Pakhtunkhwa supported the subject proposal. The Government of Sindh had no objection to the proposal, if covered in existing rules and regulations; Government of the State of Jammu and Kashmir also conveyed no objection on declaring warehousing and logistic sector as an industry.

The Government of Balochistan commented that the warehousing and logistics sector does not lie under the definition of industry in the context of Balochistan.

The Industries and Production Division proposed that the Federal Government may declare Warehousing and Logistic Sector as an Industry.

During the ensuing discussion, the forum was informed that the business community had time and again stressed the need of declaring warehousing and logistics as an industry. Karachi Chamber of Commerce & Industries also took up the issue with the Prime Minister on his recent visit to Karachi whereupon business community was assured that a result-oriented consultation would be held with the stakeholders on the matter.

The forum was also apprised about the essential role of warehousing and logistics sector in the growth of agriculture, manufacturing industry, trade, etc. It was also highlighted that non-declaration of it as an industry had been causing problems such as provision of credit, issues of taxation, etc. which were impeding its development.

It was pointed out that although the subject had been devolved but since all the provinces had given their NOC to the Industries &Production Division and because all taxes are federal, therefore, it would be in the fitness of things to declare warehousing as industry by federal government and after ratification by the Cabinet there would be no need to refer it to CCI.

The forum also expressed the need to avoid entanglement in the rigmarole of unnecessary procedures while deciding on matters related to ease of doing business.

Copyright Business Recorder, 2024