Incentives for Industry

Economic Review, September 1997 | Go to article overview

Incentives for Industry


* The local assemblers, manufacturers of automotive vehicles and components have been allowed to import duty free assembly kits corresponding to the number of their exported units provided no duty drawback was claimed by them at the time of exports.

* The State Bank of Pakistan has permitted the engineering industry to avail of concessional bank financing equivalent to the sale price of the exported items even if the equipment or machinery includes imported components of upto 20 per cent of the cost of machine.

* Five year tax holiday has been allowed to manufacturers of solar equipment who set up their industrial undertaking between July 1997 and June - 2000.

Notwithstanding the fact that Trade Policy for 1997 was termed as "save industry and destroy agriculture policy", it contains several incentives for the industry. To achieve GDP target of 6 per cent, it would be necessary to remove the hurdles across the path of industrialisation. The growth target for manufacturing is 7 per cent against the negative growth rate during the last year. Engineering industry has been given a special place in the Trade Policy. The policy contains the following incentives for the engineering industry:

Engineering Industry

* The duty drawback rates of the engineering will be reviewed covering all inputs including fuel oil while calculating these rates.

* The import of raw materials and components for the manufacture of engineering goods meant for exports has been allowed duty free against Bank Guarantee for specific orders. The components, will include even those which are locally manufactured because, at times, foreign buyers insist on foreign manufactured components with ISO 9000 certification. The locally manufactured components which are to be allowed shall be identified by a committee Bet up for this purpose in the Engineering Development Board.

* Machinery (not manufactured locally) imported by engineering units for export-related production be subject to zero rate of tariff upto 200% of the export value during the preceding financial year, of the claimant unit. This facility will be available, on annual basis, up to 30th June, 2000.

* The local assemblers, manufacturers of automotive vehicles and components have been allowed to import duty free assembly kits corresponding to the hum bet of their exported units provided to duty drawback was claimed by them at the time of exports.

* Import of the certain items, machines, tools and equipment required by Gems & Jewellery' Industry have been allowed duty free to manufacturer-exporters.

* Exporters of engineering products have been allowed to establish ware-houses in selected foreign countries for specified products to enable sale of engineering goods off the shelf in foreign markets through local dealers. For this, State Bank of PakiStan would allow exports on consignment basis and also allow export refinance for 250 days instead of the existing 120 days. State Bank of Pakistan will issue a circular in this regard.

* Specified engineering and other industries have been allowed duty free import of raw materials after the manufactured goods using imported raw materials have been exported without claiming duty drawback. Importers will be entitled to duty free imports if they do not claim duty drawback on exports.

* Private sector will be allowed and supported by the Government on (BOO) Build Own and Operate basis to construct airports and set up allied facilities like transport, storage and packaging in cities and towns where exportable surplus of items fruits, vegetables, fresh flowers, sports goods and surgical instruments is available.

* Local sponsors of engineering goods industries operating under foreign licences will be required to have specific provision in their agreement for buy-back arrangement or guaranteed export of 30 per cent of the production.

* Export of blister copper mined and produced by the Saindak Mining Project and other areas shall be allowed, as refining facilities are not available within the country.

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