The federal government has refused to withdraw 100 percent export restriction imposed on units established in Export Processing Zones (EPZ), saying that any change in the existing policy would be disadvantageous to the local industry.
Official sources told Business Recorder that the issue had been submitted by Industries Ministry to Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting.
The ministry was of the view that certain incentives allowed to investors for EPZs have been withdrawn by the CBR to the detriment of the existing and potential investors.
Sources said that the ministry had proposed that export restriction imposed on units in EPZs should be withdrawn and 100 percent export of manufactured items to tariff areas for home consumption on payment of customs duty may be withdrawn.
Alternatively, the ministry suggested that exports up to 60 percent of production to tariff areas may be allowed, besides import of construction material by units in the EPZ at zero rate in respect of excise duty and sales tax, sources said.
They said that CBR opposed the proposal tooth and nail, saying that the incentives proposed by Industries Ministry, if approved, would not only create distortion in the economy but would also hurt industry.
According to sources, the ECC agreed with the viewpoint of CBR and rejected the proposal of Industries Ministry, which disappointed the concerned officials of the ministry.