ISLAMABAD - The government on Wednesday has extended the export package worth of Rs195 billion for next three years to increase the exports.

The Economic Coordination Committee (ECC) of the Cabinet, which met with Prime Minister Shahid Khaqan Abbasi in the chair, has extended the PM Export Package for the next three years i.e. upto 30th June 2021.

The package aims at improving the competitiveness of the textile and non-textile export sector to continue the export growth in the coming financial years.

The package was initially approved in January 2017 for a period of 18 months i.e. till June 2018. The package has vitally contributed towards the turnaround in exports in FY 2018 which had been continuously declining since FY2014.

During the first ten months of the current financial year i.e. July-April 2017-18, the exports have registered an increase of 14 percent compared with the corresponding period of the previous year. It has contributed additional $2.3 billion foreign exchange earnings during this period.

The additional gains are estimated to be around $2.7 billion by the end of the financial year 2017-18. Therefore, in order to maintain the growth momentum in exports, the ECC has extended the package for the next three years with improvements.

In order to improve competitiveness and incentivise investment in export-oriented production, the Drawback of Local Taxes and Levies (DLTL) has been extended, on the same terms and conditions, for the commercial and manufacturer exporters.

The zero rating of textile machinery imports and withdrawal of duty on manmade fibre other than polyester has been continued.

Besides, in order to encourage more non-traditional sectors, electric fans, electrical appliances, electricity equipment and cables, transport equipment including motor bikes, sports bags, leather products e.g. leather wallets, auto-parts, stationery, furniture, fresh fruits and vegetables, meat and meat preparations including poultry, juices and syrups have also been included in the package.

The package approved by the ECC is in addition to the three other relief measures announced by the government for the export sector: in the recent budget the government has included packaging material in the zero-rating regime for sales tax in respect of the five export-oriented sectors i.e. textile, leather, sports goods, surgical goods and carpets; the Federal Government has extended the duration of Rs 3 per unit subsidy under Industrial Support Package (ISP) for another three months; and the import duty on 255 out of 484 items of raw material and machinery proposed by the Ministry of Commerce has been reduced during the Budget 2018-19.

The extension of the PM's Export Package for the value-added and non-traditional products and non-traditional markets for a period of 3 years will provide predictability to local and foreign investors to invest in export-oriented production capacities.

These components of the exports package are estimated to provide competitiveness benefits of around Rs65 billion annually (including Rs41 billion in Drawback of Local Taxes and Levies) to the export sector. The ECC considered issues in the applicability of SRO. 1067(I)/2017 due to limited human resource and capacity constraints of Department of Plant Protection (DPP).

It was decided that the import of various food items as listed in SRO. 1067(I)/2017 would only be allowed at Karachi Sea Port, and land border posts at Sost, Chaman, Torkham, Taftan, Wagha, Peshawar and Quetta till the required human resource with necessary technical capacity is raised by the DPP for handling inspection work at other ports of the country.

The meeting also discussed the issue of sub-standard CNG cylinders/kits, flourishing roadside CNG conversions by unskilled workers and enforcement of inspection/testing of CNG Vehicle cylinders and kits. The ECC decided to relax ban on import of CNG cylinders and kits; to allow authorized dealers to import CNG cylinders/kits and to reduce custom duties on imported kits and cylinders. The ECC also permitted Inter State Gas System (Pvt) Limited to construct pipeline connecting the LNG regasification terminal at Sonmiani named Bahria Foundation LNG Terminal Project to Nawabshah.

The pipeline would be capable of transporting 700 to 1200 MMCFD high pressure regassified Liquefied Natural Gas which shall further be transported to the north of the country.

The project will play a key role in mitigating energy crises and creating job opportunities. A proposal of Petroleum Division for adjustment of margin on LNG to mitigate higher incidence of tax on LNG was accepted by the meeting. The ECC also allowed Pakistan LNG Limited (PLL) to use the existing GoP guarantee of $150 million for issuance of Letter of Credit/Standby Letter of Credit facility. The facility would enable PLL to procure LNG on mid to long-term basis.  In order to incentivize pioneer industries in the country, the ECC also approved amendment in Section 19 of the Customs Act 1969, Sales Tax Act 1990 and Income Tax Ordinance 2001 for providing enabling legislation to extend incentives under the Pioneer Industry Policy.