Federal Advisor Textile, Dr Mirza Ikhtiar Baig has expressed the hope that cross subsidy is all set to get away in next budget and the gas tariff of textile sector will be lowered by 12.5 percent accordingly. The Advisor disclosed this during his short visit to the office of Business Recorder Lahore on Friday evening.
"The cross subsidy model has failed terribly and the government would have to get it out," he said, adding: "We have advised the government to get away from the cross subsidy and instead provide a direct subsidy to the required sectors through budget." Dr Baig also hinted at a reduction in discount rate by 2 percent in June, provided the inflationary pressure gets ease by then.
Talking about the Federal Budget for the year 2009-10, he said, "our top most priority is agriculture and manufacturing sectors and most of the incentives would be given to both the sectors." We advocate tax on income because in the world, indirect taxes are eliminating, he said, adding that pre-emptive tax regime is a failed model. He foresees tax on all the sectors in the coming budget, which are making income.
Dr Baig said agriculture and manufacturing sectors would be offered maximum benefits in order to create jobs, as the services sector has failed to do so. When asked what further he was expecting out of next budget, Dr Baig said the textile ministry has strongly advocated zero-rated exports. Also, he added, import of capital goods and spare parts have also been proposed to be zero-rated.
According to him, the Research and Development (R&D) Fund is an old story now and the duty drawback regime is likely to replace from next fiscal. He said he was negotiating with the European Union for increase in benchmark to qualify for GSP Plus from current one percent to 2 percent. Pakistan's exports are about 1.5 percent of total imports in the EU therefore, it does not qualify for the GSP Plus.
"But we are negotiating the issue with the EU officials and it would be highly beneficial to Pakistan textile once it gets through," he hoped. On Reconstruction Opportunity Zones (ROZs), Dr Baig added that Pakistan was persuading the US officials to extend the scope of scheme to the areas like Mansehra, Abbotabad and Balochistan besides FATA, Waziristan and Pak-Afghan border.
"The agreement relating to ROZs will be signed in a week or so. On BT Cotton, he said, he was pursuing the US Company to offer a rational contract before Pakistan is full of Australian and Indian BT Cotton. On stuck up R&D Fund until June 2008, Dr Baig said remaining claims of Rs 6 billion are likely to be cleared with the start of next fiscal.
He said he was also negotiating with the GERZI International to bring at least 10 international brands in Pakistan. Dr Baig further expressed the hope that Pakistan rupee is likely to appreciate with much-likely inflows ahead. He said the country's bourses would show further improvement with improvement in Swat situation.
Earlier, while addressing the 2nd International Conference on Textile and Clothing organised by the University of Management and Technology (UMT), Lahore and the Textile Institute UK, Dr Mirza Ikhtiar Baig announced setting up of a "Resolution Trust Company". The proposed company will take over all the sick units of textile industry for making them viable, he said, adding a fund of $200 million has been created. This company will operate on the basis of public-private partnership to strengthen the country's textile sector with the revival of sick units.
Talking about "Textile City" project being set up in Faisalabad, he said contract worth Rs 200 million had already been awarded for construction of link road. Likewise, contract worth Rs 160 million has also been awarded to a contractor for establishment of administrative block in the proposed City.
He further said that technical textile is the most promising area that needs to be promoted through awareness to remain competitive in the globalised competitive environment. He said the government would help out the textile sector for setting up "Research and Development Centers" for the promotion of technical textile. He said the government would also give subsidy on raw material imported for use in technical textile. Among others, Hassan Suhaib Murad, Dr Umer Farooq, Dr Arshad Mahmood and Fariha Arooj spoke on the occasion.