The Economic Co-ordination Committee (ECC) of the Cabinet on Tuesday imposed 25 percent regulatory duty (RD) on import of potatoes from India, removed RD on capital goods to be imported by investors, and allowed the Industries Ministry to sign revised Letter of Intent (LoI) with Trans Polymers Limited (TPL).
The meeting presided over by Advisor to Prime Minister on Finance Shaukat Tarin, the committee did not approve the revised policy on re-lending of foreign loans when some ECC members expressed the view that as there was no change in the existing terms and conditions for the 're-lending' loans, the provinces may not be ready to accept the decisions of the ECC, said one of the participants.
According to an official, the ECC considered the Economic Affairs Division (EAD) summary outlining fresh proposals for re-lending of foreign loans/credits to provincial governments, GoP corporations/bodies/DFIs and directed the concerned Division to follow transparent terms and conditions which may have Exchange Risk Coverage (ERC) subject to provincial governments' concurrence along with nominal administrative charges.
ECC directed EAD to reconsider its recommendations for re-lending of foreign loans to Federal government organisations/bodies/DFIs, and resubmit fresh proposals after necessary homework.
The ECC approved a proposal of Industries Ministry with regard to supply of magnetite concentrate by MRDL Saindak to Pakistan Steel Mills (PSM) as the latter is the only end-consumer of this by-product. The committee, considering Ministry of Investment's proposal for seeking exemption from RD on import of capital goods required for business of retail chain stores, approved the proposal with procedural modifications.
The summary was submitted by the Ministry after the investors agitated over imposition of RD on imports of capital goods to be used for projects. Though the Ministries of Finance and Industries and Federal Board of Revenue (FBR) had opposed the proposal in their written comments, the Investment Minister Waqar Ahmad Khan got ECC approval with the backing of 'real decision makers' in presidency, said another official.
However, FBR has been asked to revisit the procedure so that the facility can not be misused, as in the past. While reviewing Ministry of Industries summary for permitting Trans Polymers Ltd (TPL) proposal for setting up polyethylene plant at Port Qasim costing euro 400 million, it decided to allow issuance of revised Letter of Intent from Ministry of Industries and Production to TPL for setting up the said plant as an incentive package for investment in petrochemical industry, stipulating one-year time framework.
Sources said that the proposal regarding imposition of 25 percent regulatory duty on import of potatoes from India came from the Ministry of Food and Agriculture, which said that duty-free import of potatoes would hurt the local farmers.
The ECC expressed hope that this would provide incentive to local farmers to increase crop yield to cater to domestic market needs, observing that Pakistan is self-sufficient in production of household potatoes and produced more than 2.5 million tons on 1.3 million hectares.
The ECC reviewed key economic indicators and overall price situation in the country and noted that overall Consumer Price Index (CPI)-based inflation had registered a deceleration of 1.4 percent during December 2008 as compared to December 2007. Current wheat stock during first week of January 2009 standing at 2.232 million tons was considered adequate to meet domestic requirements.