Bid to give boost to Shipping Industry: Up to 25-year extension in duty, tax waivers recommended

In a bid to give boost to the Shipping Industry in Pakistan, a Parliamentary Panel on Tuesday recommended the government to give up to 25 years extension in customs duty and sales tax waivers. National Assembly's Standing Committee on Ports and Shipping met with Mir Aijaz Hussain Jakhrani in the chair where it was briefed by the Pakistan National Shipping Corporation (PNSC) that how the organisation has benefited from duty/tax exemptions given by the federal government.
The committee recommended that to give a proper boost to the Shipping Industry, the customs duty and sales tax waiver should be extended for 20 to 25 years. Sales tax and customs duty at the rate of 17 percent and 10 percent respectively were being collected from the ship acquisition. The 27 percent cumulative effect of custom duty and sales tax together which was imposed on the ship acquisition from financial year 2011 to 2014 has completely been waived off till 2020.
The committee was informed that the federal government exempted the Shipping Industry from tax on import of ships and aircrafts. Collection of withholding tax at import stage is not applicable in the following cases; (a) Import of ships and other floating crafts including tugs, survey vessels and other specialised crafts purchased or bare-boat chartered by a Pakistani entity and flying Pakistani flag upto the year 2020 subject to the condition that imports ships, etc are used for the purpose they were imported for. In case of ships and crafts used for demolition purposes, the import tax will be applicable.
Standing Committee appreciated the government for taking into consideration the precarious situation of the Shipping Industry and facilitating it. The authorities concerned are estimating that the country's seaborne trade will grow to 31 percent during next four years. PNSC has offered the private sector investors to enter into joint ventures (JVs) with it for the acquisition of vessels.
The national flag-carrier made the offer in the backdrop of government having abolished, in fiscal year 2016-17 budget, customs duty, general sales tax and withholding tax on the import of ships and other floating craft. This would not only save the country's valuable foreign exchange but also improve cost and reduce dependency on foreign carriers which would ultimately benefit investors and shareholders by means of higher profitability.
The current PNSC fleet comprised modern vessels with dead-weight carrying capacity of 681,806 metric tons, highest ever since its inception. PNSC's profitability continued to increase with a net profit of over Rs 2 billion with foreign exchange savings of over $1.5 billion. The current national seaborne trade stands at 73 million tons and looking at the potential of this sector, PNSC expects this figure would reach to 95 million tons by 2020.
The government decision of waiving taxes would help the private sector investment in the maritime sector as well as provide them a golden opportunity to join PNSC through public private partnership. Minister for Ports & Shipping, Mir Hasil Khan Bizenjo assured the committee that the Ministry will fully support the PNSC to buy shipping vessels as the time is right due to the low cost of oil. He also informed that work is in progress regarding ferry service to different neighbouring countries and they would be encouraging the entrepreneur from private sector to invest in this sector.
The meeting was attended by Haji Muhammad Akram Ansari, Chaudhry Hamid Hameed, Syed Ayaz Ali Shah Sherazi, Shaheen Shafiq, Romina Khurshid Alam, Khalil George, Mir Aamir Ali Khan Magsi, Lal chand Malhi, Chaudhry Tariq Bashir Cheema, Mohammad Jamal ud Din, Malik Muhamamd Aamir Dogar, Secretary, M/o Ports & Shipping, Chairman PNSC, Secretary PNSC and other senior officers from the Ministry.