ISLAMABAD: Senate Standing Committee on Commerce on Wednesday constituted a Sub-Committee to devise a mechanism for import of gold after it was revealed that 170MT of gold is coming into Pakistan illegally.
Presided over by Senator Zeshan Khanzada the committee also decided to have detailed presentation by National Tariff Commission (NTC) on issues related to import of raw materials, import of steel from Iran on barter trade basis and other related issues.
On the issue of restrictions on import of gold raised by Senator Anwar-ul-Haq Kakar, who stated that 80MT of gold is smuggled into Pakistan, a representative of Progressive Jewellers Group noted that Pakistan’s gold consumption is 170MT per annum, of which only upto three percent is legally imported.
The committee was informed that legally approximately upto 27 percent recycled gold is imported whereas 60-70 percent is being smuggled due to excessive tax rates and hurdles in official import policy of gems and precious metals.
It was recommended that the government should remove discrepancies in legal import of gold and discourage smuggling.
Senator Kakar claimed that as the Prime Minister announced import of coal from Afghanistan, the price of coal has increased in Afghanistan by $100 per ton.
He said Pakistan did not import gold legally and raw gold was smuggled, adding he had learned that State Bank of Pakistan (SBP) did not allow import of gold.
He contended that India exported gold jewellery and earned foreign exchange but since Pakistan did not import gold legally it could not export jewellery items.
Former Commerce Advisor Abdul Razak Dawood had allowed the import of five tons of gold, Kakar said, adding that no progress had been made on that issue so far and that permission was also for sales tax registered jewellers.
Responding to questions raised by Senator Kakar, Minister for Commerce Syed Naveed Qamar said that gold import was illegal, which was why the government couldn’t even impose tax on it. He maintained that there were also issues related to FATF and money laundering.
After detailed discussion, the Senate Committee decided to constitute a Sub-Committee to devise a mechanism to allow import of gold within a month.
The Standing Committee was further informed that Commerce Ministry was not on board when Regulatory Duty (RD) was imposed on over 800 tariff lines.
Both Commerce Minister and Commerce Secretary revealed that the European countries were unhappy on imposition of RD on their products whose worth was just in millions of dollars despite the fact that Pakistan’s exports to EU block was multi-billion dollars.
“Pakistan’s counterpart countries whose items have been banned are unhappy at this decision. Our counterparts say on the one hand Pakistan is seeking more trade from us and on the other is banning our imports,” he continued.
They maintained that Commerce Ministry was working on a policy to segregate imports whose worth was just in millions of dollars, adding that the main financial impact in imports was in the auto industry and mobiles.
Syed Naveed Qamar said that imposition of RD was to reduce luxury imports aimed at bring down Current Account (CA) deficit, adding the current figures of CA were very alarming.
The committee also discussed the issues being faced by the importers who opened Letters of Credit (LCs) for goods before import of RD.
Naveed Qamar said that a lot of work had been done regarding gold. It is in the luxury item list so it is temporarily banned. But the import ban is an emergency measure that is to be lifted soon. He added that the trade imbalance and current account deficit figures were worrisome. Syed Naveed Qamar assured that the issue of gold import would be resolved within a month.
Commenting on this issue, Commerce Minister said the purpose of imposition of restrictions on import of luxury/unnecessary items was to save dollars but if foreign exchange had already been remitted then there was no question of stopping import of already booked containers, adding that SRO in that regard would come out soon after approval of due process. The government wants a slowdown of import of fuels so that energy bill is reduced.
The committee accepted an offer from Commerce Secretary for a detailed briefing by the NTC and Tariff Section of Commerce Ministry on issues being faced by different industries and possible remedies including import of iron rod from Iran under barter trade mechanism.
The proposal of barter trade of iron rod from Iran was floated by Senator Abdul Qadir, who is a contractor. He pointed out that the local steel industry had increased price of iron rod manifold due to which construction sector had become very expensive, and suggested that the government should allow import of about 10,000 to 20,000 tons of iron rod so that local industry should bring its price down.
The committee also considered the issue of containers stranded at the port due to import ban. Syed Naveed Qamar said the government would settle the tax issues with the owners of those containers as soon as possible and release them. Senator Fida Mohammad pointed out that jaggery (Gur) and sugar are considered in the same category and expressed his concerns over export ban on Gur. Syed Naveed Qamar informed the committee that meetings of the Sugar Policy Board scheduled for Wednesday took up issue in these meetings. Considering the availability of sugar in the country, a decision was taken regarding export. The Commerce Secretary agreed with Senator Fida Mohammad that the issue of Gur and Sugar should be dealt with separately.
According to the official statement, the committee was briefed on the steps taken by the ministry to protect the local gypsum industry. Chairperson NTC informed the committee that a 26 percent tax has been imposed on gypsum imports to protect the local industry. Representatives of the gypsum industry said that paper used in finished gypsum products was being imported from Thailand and China. “This special type of paper is not manufactured in Pakistan but still heavy tax has been imposed on its import.” Chairperson NTC said “the industry should file its case in NTC and we will take necessary steps in this regard.”
The Ministry of Commerce gave a briefing on increase in price of iron/steel rods and consequently increase in construction cost.
Senator Mohammad Abdul Qadir said the local production of steel in Pakistan was about 7-8 million tons annually. The steel mafia has been able to get the taxes imposed on steel imports in the form of heavy regulatory duties and anti-dumping duties, as well as drastically increasing the price of local steel in the country. He was of the view that import of one to two million tonnes of steel should be allowed in the country. “This will have a positive effect on prices and create a competitive atmosphere in the market. In particular, a policy should be formulated to import cheap steel from Iran through barter trade.”
Chairperson NTC, Rubina Athar said that “in any case we have to reduce the regulatory duty.”
Deputy Chairman Senate Mirza Muhammad Afridi said that tax on imported scrap used in steel should be reduced in order to reduce prices of steel products.
The Chairman Committee decided to convene a meeting at the Ministry of Commerce or NTC as soon as possible under a one-point agenda to further consider the matter.
The committee’s meeting was attended by Federal Minister for Commerce Syed Naveed Qamar, Deputy Chairman Senate Mirza Muhammad Afridi, Senators Fida Muhammad, SaleemMandviwala, Dinesh Kumar, Mohammad Abdul Qadir, Palwasha Muhammad Zai Khan, Senator Anwar-ul-Haq Kakar and senior officials of the ministry.
Copyright Business Recorder, 2022