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News & Views REWARD QUOTA FOR TEXTILE EXPORTERS The textile exporters with excellent performance would be rewarded with additional quotas in the shape of reward quota, states the Textile Quota Management Policy for 2001-04. The reward quota would be provided to encourage greater utilisation and higher per unit price. It shall be made from the growth quota subject to such limits determined by the government. The policy will be implemented from January 2001 and shall remain in force till December 31, 2004 till the phasing out of textile quotas from January 1, 2005 under the obligations of World Trade Organisation. The policy aims at attaining a level of competitiveness which shall ensure continued and enhanced market access in the quota-free environment. The government has also constituted the Quota Supervisory Council and the appointment of its chairman and members will be for a specific tenure. The council will provide recommendations to the government regarding quota management, and these policy recommendations shall ordinarily be accepted by the government. The council will also recommend, on an annual basis, the associations that will be authorised to handle servicing of various quota categories for product group. MALICK URGES GOVERNMENT TO TAKE POSITIVE STEPS He was speaking at the annual general body meeting at the Federation House. In the largely attended meeting, Fazal-ur-Rehman Dittu, the outgoing president handed over the charge to Malick, who was elected unopposed for the term 2001-2002. The newly elected president paid rich tributes to Dittu and outlined his future strategy to make the association dynamic, vibrant and responsive to the aspiration of the business community. "The uplift of trade is our first priority as the economic strength revolves around trade. If trade is flourishing, industry will prosper, business opportunities will multiply and people will get jobs, he said. "The business community is ready to pay taxes but the tax policies should be more business friendly". He said harassment, implementation of irrational policies, imposition of multistage taxes,, bossing at the part of departments, uncertainty about the amnesty provided by the previous government on dollar accounts, tax raids and high rates of GST will adversely affect business activities and make the economic conditions worse than ever. "We would like to hold discussions with the government on these issues", he remarked. "If the government wants revenue, it should provide business-friendly environment and take the FPCCI into confidence by including its representatives on the Advisory Board of CBR". "Tax payers are the stakeholders and revenue could only be collected on permanent lines with the co-operation of business community", he added. EXPORT TARGET FOR LEATHER GOODS The Government has set a target of US$ 620 million for export of leather products this year which is 22% higher than the previous years. In the first five months of current fiscal year, the export of leather products increased by 31% due to change in fashion, according to Chairman Pakistan Tanneries Association (PTA), Farrukh Shaikh. To a question he hoped, this increase and current trend will continue at least two years as change of fashion takes some time. SMEDA TO CONCENTRATE ON PROMOTING SMEs KCCI FOR AMENDMENTS IN SROs The Karachi Chamber of Commerce and Industry (KCCI) has urged the government to amend SROs 319, 417 and 818 on priority basis in order to strengthen country's export sector. Zubair Motiwala President KCCI, while commenting on a report regarding CE's advice for amendments in some SROs, asked the authorities concerned to avoid using delaying tactics. The KCCI chief recalled that the chamber itself redrafted SRO 417, which was also approved by the Commerce Ministry in principle, but the matter was left out in the cold. Motiwala said in the meetings with CE on July 11, 2000, and November 4, 2000, KCCI was given assurances to remove irritants, emanating from the cumbersome and complicated procedures of refund of taxes and duties but "nothing has been done in this regard". He argued that one of the main reasons of not fulfilling the export target of $ 5.5 billion during the first six months of the current fiscal, was the enforcement of ill-conceived SROs for the refund of taxes. He urged the CE to give a definite timeframe to government, departments to implement the decisions with immediate effects. GSP CERTIFICATES FOR EUROPE The Export Promotion Bureau has started issuing Generalised System of Preferences (GSP) certificates under cumulation rules of origin, which are needed in European countries for export purposes. An EPB announcement said that the European Commission (EC) has recently modified Community Customs Code Regulation EEC No. 2454/93 as amended by Regulation (EC) 12/97 and 1602/200 to include the South Asian Association for regional Co-operation (SAARC) for regional co-operation. The modification will allow the SAARC member states as a group to benefit from the GSP Rules on the cumulation of origin. The regional cumulation provides more flexibility and is designed to encourage regional cooperation among those countries which are both GSP beneficiaries and members of a regional grouping. Regional cumulation rules apply to all products covered by GSP but for the textile products, certain rules apply in order to acquire the origin of the country in which they are processed. According to the rule of cumulation, goods originating in a country, which is a member of regional group, are worked or processed in another country of the same regional group, shall have the origin of the country of the regional group where the last working or processing was carried out. Proof of the originating status will be established by a certificate of
origin from "A". The EPB has advised the exporters to avail this facility.
LEATHER CRAFT SHOW AT PESHAWAR Export Promotion Bureau, Peshawar is organizing the first ever leather goods exhibition in NWFP. The exhibition will be held at Pearl Continental Hotel Peshawar from 31st January to 2nd February 2001, in which about 30 companies from all over the province will be participating, representing all sectors in the industry i.e, finished leather; Peshawari Chappls for men, men shoes formal, casual, school and riding, ladies Shoes, Bags, Belts, Wallets, Office stationery items like brief Cases, Bags, etc, alongwith embrodied chappals for men and shoes for ladies leather furniture, shoe uppers, gift items like key chains and saddellery items, etc. In 1999-2000, leather exports stood at U$ 12 million, of which shoes were nearly U$ 64000/- the rest represented leather and other leather products. This brought NWFP share to 2.05% of the country's total leather and leather good exports of U$ 584 million during the year 1999-2000. Export Promotion Bureau, and all those involved in the trade are of the opinion that this figure can be further increased. To further Promote this sector Export Promotion Bureau is setting up a leather training cum facility centre at Charsadda, where people would be trained on the job to ensure supply of skilled labour force to the local chappal/Shoe makers, which are also exported to the Middle Eastern countries, where there is concentration of Pakistani labour force and to the former East European countries in small quantities. At the moment there are a total of 18 units of leather in the formal sector and over 1000 small enterprises in the informal sector, of which 246 are in district Charsadda. The above Export Promotion Bureau is also encouraging participation of
leather goods Manufactures who are mostly small enterprises in local and international
exhibitions, and the show at Peshawar is the first step in this direction. ISO 9000 CERTIFIED COMPANIES To encourage manufacturer exporters to obtain ISO 9000/14000 certification for sustained export growth in future, Ministry of Commerce, Government of Pakistan in the Trade Policy for the year 1997-98 had announced an incentive of Rs. 150,000/-(one lake and fifty thousands) for manufacturer-exporters who want to obtain ISO 9000/14000 certification till 30th June, 2000. In addition to this Ministry of Science and Technology, Government of Pakistan has also launched a scheme to help small and medium enterprises to improve industrial productivity and management quality and to obtain ISO 9000/14000 certification. This scheme provides 50% grant in aid for undertaking professional studies. A maximum amount of Rs.50,000/- (Fifty thousands) per study is available under this scheme. This is, however, subject to the provision of a matching amount by the selected small and medium industrial units manufacturing goods, preferably for export. Applications are invited from manufacturer-exporters interested in availing the incentive for obtaining ISO-9000/14000 certification. The application should be sent to Deputy Project Manager, Ministry of Science & Technology, H.No.2, Street 15, F-6/3, Islamabad (Tel: 051-9213285, Fax: 05-9206048) with following details: Name of the Organization LAHORE LEATHER EXPORTERS GET RELIEF FROM SRO 417 The Central Board of Revenue has liberalised the condition of inventory for obtaining sales tax refund by leather exporters based in Lahore, while the Karachi based exporters have not been allowed the relaxation under SRO 417, according to Farrukh Hussain Sheikh, chairman of Pakistan Tanners Association, who attended the meeting of Federal Export Promotion Board (FEPB) held in Islamabad, which was chaired by the Chief Executive. The exporters in Lahore have started receiving refunds which has eased their liquidity. The PTA chief said that the FEPB did not take any concrete decision on the issue of SRO 417, except forming a committee, which is an old bureaucratic tactic to postpone solution of a problem. He expressed dismay over the attitude of the representatives of the Central Board of Revenue at the Federal Board meeting who criticised the Chairman of Export Promotion Bureau for advocating the problems of exporters. Sheikh said that the Federal Board, whose main objective was to solve the problems on the spot, did not take any positive action on the problems arising from wrong interpretation of SRO 1314 by the CBR which now requires leather exporters to pay sales tax on duty-free accessories imported since 1996. On this issue, the Chief Executive directed the Finance Minister to take up the issue of recovery of tax from a back date with the Auditor General of Pakistan. Sheikh pointed out that the CBR has not yet issued the notification about
the only problem of leather exporters which was resolved at the Board meeting. This is
about removal of import duty at the rate of 15% on the import of finished leather. 10.3 MILLION COTTON BALES EXPECTED The Standing Committee on Cotton Crop Assessment expects a crop of 10.3 million bales ex-farm this year. At its 6th meeting, held at the Karachi Cotton Association under the Chairmanship of Adviser to the Chief Executive on Food, Agriculture and Livestock Shafi Niaz, the Committee realised that on the basis of 4.5% increase in area and the reported with-holding of crop by some farmers in the Punjab the provincial output was expected to be 8.3 million bales this year. As for Sindh, the consensus was on 2.0 million bales production. Thus, on national basis, a crop of 10.3 million bales ex-farm was expected. The Committee also reviewed the cotton crop situation, volume of seed
cotton deliveries so far and the market behaviour. The Committee observed that despite 17% decline in area sown, cotton
production in Sindh has been reasonably good, whereas in the Punjab the area sown was 4.5%
higher than last year. It was stressed that in view of the possible water shortage during
the next season the farmers should cultivate more and more area under cotton which
requires much less water than rice or sugarcane. The Committee also noted that this season 1.029 ginning factories were in operation by mid December whereas last year 924 factories were operating by this time. The meeting was attended by representatives of the important cotton related agencies, including the Directors of the Cotton Research Institutes, Plant protection Adviser, Textile Commissioner, representatives of the Provincial Crop Reporting Service, TCP, Director Federal Bureau of Statistics, Chairman KCA, representatives of the APTMA, PCGA and the growers both from Punjab and Sindh. FREE COTTON IMPORT, EXPORT POLICY TO CONTINUE Current policy of free import and export of cotton would continue and no government intervention would be made in this regard. This was decided at a meeting of the Federal Textile Board chaired by Minister for Commerce, Industries and Production Abdul Razzak Dawood. The Board would continuously monitor progress for investment in spinning for import of machinery under BMR - expansion or new units. All Pakistan Textile Mills Association would take the proposal of Commercial Warehousing Scheme with the banks at its own. If needed, the government intervention would be solicited for support from the State Bank, the meeting further decided. The meeting noted that the textile industry was in need of an easy mechanism for importing various synthetic fibres, which are not locally manufactured. The SRO 818, the meeting decided, was to be made user-friendly and a list of MM Fibres & Yarns, not produced locally, be prepared for change of tariff. A meting should be convened to discuss on the issue with stakeholders (synthetic fibre manufacturers and importers of synthetic yarn) for producing high value-added garments for exports, the board observed. Regarding technology upgrading in weaving, the meeting decided that the Ministry of Industries, commercial banks and State Bank would sort out issues pertaining to availability and disbursement of funds to the power-loom owners under LMM scheme as well as for imported/ second-hand shuttleless looms. The representative of the State Bank said that the bank would also look into the issue at its own. It was also decided that the dyes not manufactured in Pakistan would be listed and issue of reduction in import duty would be taken up with the Central Board of Revenue. Issues concerning privatisation of National College of Textile, Faisalabad, the issues raised by University Grants Commission regarding Textile Institute of Pakistan, Karachi, Textile Processing Institute being managed by All Pakistan Textile Processing Mills Association should be revised and settled. The Board decided to upgrade the Shahdra Institute and equip it with latest facility.
RECOMMENDATIONS OF QSC Under the new Textile Quota Policy, a Quota Supervisory Council (QSC) will be set up to provide policy recommendations regarding quota management. The policy recommendations would ordinarily be accepted by the Government. The council would also recommend, on an annual basis, the associations that would be authorised to handle servicing of various quota categories or product groups. QSC would also advise the Export Promotion Bureau on measures to enhance and accelerate quota utilisation, and check and control quota premia in the market and such advice would be binding on the Export Promotion Bureau if otherwise consistent with this Order, the Act, and public interest. The council would examine all such complaints against the Export Promotion Bureau as are brought before it either by the Exporters or an Association; so far as it pertains to quota management, and given its specific recommendations to the Ministry of Commerce. The Quota Supervisory Council would arrange audit of Textile Associations covering all aspects of quota management, including receipt and expenditure from security deposits. If any irregularity or lack of propriety would be found the Quota Supervisory Council would have the Export Promotion Bureau delete the association's name from the list of associations authorised by it to perform quota functions and servicing and recommend to the Director Trade Organisations action against the association under the Trade Organisations Ordinance, 1961. The action would be recommended to the Vice-Chairman, EPB action under this Order, and or Registration (Importers and Exporters) Order, 1993. The council would deal with matters specifically assigned to it by Export Promotion Bureau or Government and maintain proper minutes of its meetings and records of its communications. Secretarial assistance to Quota Supervisory council would be provided by the Export Promotion Bureau and the Chairman and Members of the Quota Supervisory Council would hold office during the pleasure of the government and they may resign through a letter addressed to the Secretary, Ministry of Commerce. PAKISTAN EXPORTS TO TURKEY 679% INCREASE DURING APRIL-JUNE Trading between Pakistan and Turkey for the period April to June, 2000 has
been dominated as usual by traditional products, according to the quarterly economic
report prepared by the Consulate General of Pakistan, Istanbul, Turkey. Cotton yarn, readymade garments/made ups and fabrics/cotton were the top items on the export list of Turkey with 262.7%, 462.0%, 431.9% and 364.6% respectively, during this period. Appreciable increase was also observed in carpets, synthetic/textile and leather products with an increase of 290.6%, 142% and 47.5% respectively when compared with the corresponding period last year. Among the non-traditional items, significant increase has been noticed in the export of dry fruits (450 percent) from Pakistan to Turkey during the same period. Food/food preparation and guargum have been exported to Turkey to the tune of Rs. 23,921 million and Rs 8,18 million respectively. However, surgical and sports goods have shown a decrease of 13.7% and 1.4% respectively but have shown improvement when compared with the quarter, January-March 2000. Although Turkey has not been a traditional importer of Pakistani carpets, in recent months, carpet export to Turkey has increased significantly with an export of Rs. 106.45 million in the quarter under review. Further development in this sector could yield even better results provided a systematic marketing approach is adopted by the Association and EPB. Imports from Turkey have been consisted of manufactured items mainly, i.e. chemicals, tyres, aluminium & steel products, electrical parts, machinery & parts, rubber, glass, polymer fibre and lentils etc.
The committee for revival of sick units has given a list of 89 industrial units, out of which 40 textile units have been rescheduled/ revived/ restructured. The outstanding amount was Rs. 12.456 billion and Rs 4.476 billion was the
defaulted money for the 40 revived units. Two cases are of HBL, one of ADBP and one for NBP out of four non-revived. Out of 85 revived cases 10 belong to ADBP, 01 of ABL, 01 ANZ Grindlays, 04 of Bankers Equity, 30 of HBL, 04 of IDBP, 02 MCB, 15 NBP, 04 NDFC, 04 PICIC and 10 of UBL. Thirty-four units are of textile sector, 05 of edible oil, 08 of sugar, 09 of paper-related units and two are leather and others are form miscellaneous. The job of this committee was later on legally transferred to Corporate Industrial Restructuring Corporation (CIRC) as the government promulgated its ordinance.
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