Pak Economy: Highlights of trade policy 2008-09

ISLAMABAD: Following are the salient features of Trade Policy 2008-09 announced by Commerce Minister Ahmad Mukhtar Friday.

The export target for the fiscal year 2008-09 has been fixed at $22.10 billion, which represents a growth of 15% over the last year’s exports worth $19.22 billion.

* The total merchandise exports for the year 2007-08 were $19.22 billion with a record net increase (between 2006-07 and 2007-08) of $2.246 billion.

* The total imports during the 2007-08 amounted to $39.97 billion giving rise to a trade deficit of $20.7 billion.

* The underlying causes for this year’s trade deficit were mainly the increase in oil prices raising its import bill to over $11.3 billion as against $7.3 billion last year; import of wheat at higher than previous prices; increase in price of palm oil from $502.7 PMT to $839.3 PMT; raw cotton imports due to crop shortfall; increase in import of machinery and increase in import of fertilizers and chemicals.

* This year again the imports compared to last year have increased by $9.428 billion whereas exports have also increased by $2.246 billion.

Plant, machinery and equipment imported to setup a unit in DTRE scheme will be exempt from duty and taxes.

* Inputs in DTRE will also be allowed to be imported from India, even if these are not included in the importable items from India, or manufactured locally.

* The period of retention of raw material and components for export under temporary importation scheme (SRO 1065) may be increased from current 12 months to 18 months i.e. at par with DTRE.

* It has been decided to increase the draw back rate by 1% of FOB value for 14 products i.e. (i) Tents, Canvas & Tarpaulin, (ii) Electric machinery,

(iii) Carpets, Rugs, & Mats, (iv) Sports Goods, (v) Footwear, (vi) Surgical Goods/Medical Instruments, (vii) Cutlery, (viii) Onyx manufactured, (ix) Electric

Fans, (x) Furniture, (xi) Auto Parts, (xii) Handicrafts, (xiii) Jewellery and (xiv) Pharmaceuticals .In order to facilitate the exports, the government has decided to introduce a new scheme where by a notified percentage of inputs may be allowed to be imported at zero duties against fob value of exports with flexibility to import any product among the notified list in any quantity within the overall entitlement of the exporter.

* It is proposed to allow the temporary import of PET bottle scrap for manufacture and export of PSF in the DTRE scheme, subject to non-hazardous certification.

* It has been decided to support the setting up of new pharmaceutical plants by providing it with the incentive of having an accelerated depreciation allowance facility of 90pc in the first year on investment in Plant Machinery and Equipment.

* It has also been decided that Ministry of Health will draw up a proposal for establishing bio-availability and bio-equivalence laboratories in the National Institute of Health.

* Export of free samples up to 5% of quantity is allowed against exports in the preceding year to pharmaceutical exporters.

* In order to further facilitate exports in this sector it has now been decided to allow exporting companies to send free samples to the extent of 10% of the commercial quantity exported in the preceding year.

* In addition pharmaceutical sector would also be allowed to retain 15% of their export proceeds.

* To increase the exports of gems and Jewellery sector, and to encourage investment and remove all anti-export biases, gold, silver, platinum, palladium, diamond and precious stones be exempted from levy of customs duties & sales tax.

* It has been decided that import of machinery / equipment for mining /quarrying and grinding of minerals (along with spares) would be allowed from India.

Source: The News, 19/7/2008

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