ECC imposes 30-day ban on import of gold

A meeting of the cabinet’s Economic Coordination Committee (ECC) was held under the chairmanship of Finance Minister Ishaq Dar at the Prime Minister’s Office on Tuesday.

One of the initiatives taken by the government to diversify exports is promoting the export of value-added gold jewellery. For this purpose there are special schemes in operation currently to facilitate jewellery exporters whereby they are able to import gold without payment of any duty on the condition that this gold is re-exported after converting it into value-added jewellery.

These schemes governed by SRO 266(I)/2001, dated May 7, 2001 of Ministry of Commerce are referred to as the “Entrustment” and the “Self Consignment” schemes.

Recently however, there have been serious apprehensions that these schemes for duty-free import of gold are being abused by some unscrupulous elements and the national interest is being damaged. That is to say that instead of the duty-free gold being used for the purpose it was intended, it is being smuggled to India.

In this regard it is noteworthy that in recent months the import of gold into Pakistan, under these schemes has seen an enormous surge which is highly abnormal. During the January to June period, gold worth Rs 92.970 billion was imported compared to Rs 19.132 billion in the same period in 2012. This trend has become even more alarming since in the first 26 days of July, the import of gold under these schemes was to the tune of Rs 52.549 billion.

In its meeting, the ECC was also told that during the past few months been the Indian government had consistently been engaged in discouraging the import of gold.

In this context India increased the import duty on gold from two percent to sic percent in January and to eight percent in April-May 2013.

The Indian press reports also indicated that the seizures of smuggled gold by Indian authorities increased by as much as 365 percent in April-June as compared to the same period last year. This difference in import duties seems to have provided the incentive for increased duty-free imports in Pakistan and smuggling to India.

In view of these developments, the government took cognizance of the apparent abuse of these schemes and decided to take some immediate steps to prevent further damage to the national economy. It decided to impose a short-term, temporary ban of 30 days on the duty-free import of gold under these special schemes.

The ban would be purely temporary and was intended to allow the government sufficient time to re-examine the operation of these schemes with a view to speedily removing any loopholes and deficiencies and to quickly restore these scheme in an improved form so that genuine exporters of gold jewellery are facilitated in the best possible way to contribute to the national objective of increasing exports.

The ECC decided that operation of SRO 266(1)/2001 dated May 7, 2001 may be suspended with effect from 31.7.2013 for a period of 30 days. The Ministry of Commerce would take administrative measures to implement this decision in letter and spirit.

In compliance of the directions of the ECC, the Ministry of Planning and Development submitted a report on the reasons and causes in the cost escalation in various components of the Nandipur Combined Cycle Project which was now estimated to cost of Rs 58.4 billion.

This tentative cost may undergo change subject to actual costs increased on insurance duty construction rates, dollar fluctuation, taxes, cost of inclusion of gas component and damage to equipment, if any.

Expenditures will be made on actual after validation and special monitoring arrangements will be made by the Ministry of Water and Power. It was also decided that the Ministry of Water and Power might share the report with the Transparency International.

The ECC also noted that the matter was sub-judice and a comprehensive report had also been submitted to the prime minister in the matter.

In order to encourage the export of processed meat and provide by-products such as hides, bones, blood, the ECC decided to impose a ban on the export of live animals with effect from October 1.

The ECC directed the Ministry of Petroleum and Natural Resources to carry out a study to establish a basis for revision of margins of oil marketing companies and dealers within 45 days and submit it for consideration.

The Oil and Gas Regulatory Authority (OGRA) has also been asked to assist the Ministry of Petroleum in the matter.

The ECC approved the export of 30,000 tonnes of wheat to Iran as a part of a barter trade agreement with Iran. Iran will export electricity in exchange.

The cabinet secretary informed the meeting that since the assumption of power by the government, 23 decisions had been taken by the ECC of which 12 had been implemented while the rest were in various stages of implementation.

The aviation division secretary informed the ECC that Rs 6.1 billion of Rs 6.89 billion released by the Ministry of Finance had been paid to vendors and an amount of Rs 789 million had been paid to Exim Bank as part of the repayment of loans.

The aviation division secretary also informed the ECC that the accounts between the PIA and the FBR had been reconciled on account of the federal excise duty collected by the PIA. Also that a separate account was now being maintained since July 1 for collection of eth federal excise duty and that an amount of Rs 250 million had been deposited with the FBR so far.

The ECC directed the Ministry of Aviation to present a viable plan to overcome the annual loss of Rs 3.3 billion being incurred by the PIA, adding that the plan should include a breakdown of the present losses as well as the way forward.

The ECC also approved the renewal of GOP guarantee for running a finance facility of Rs 2 billion for the Pakistan Steel Mills up to January 4, 2014.

Dar informed the members of the ECC that the prime minister had restored the status of ECC as it existed on October 1999. “This decision was taken by the prime minister after a summary was moved for the purpose,” he said.

The industries secretary informed the ECC that sales of utility stores touched Rs 13 billion during the first 10 days of Ramadan and was likely to cross Rs 25 billion.

The ECC was also informed that Ministry of Industries was contemplating computerisign its 5,800 utility stores and warehouses across the country.

The ECC reiterated that no exception would be allowed to PPRA rules on import of liquefied natural gas or award of contract for construction of terminals for storage and regasification, to ensure transparency.

The Ministry of Petroleum and Natural Resources was directed to brief the media and dispel any misperception in this regard by sharing the entire process of purchase of LNG.

The meeting was attended by Minister for Industries and Production Ghulam Murtaza Jatoi, Minister for National Food Security and Research Sikandar Hayat Bosan, Minister for Information Broadcasting and National Heritage Pervaiz Rashid, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, Minister for Planning and Development Ahsan Iqbal, Minister for Water and Power Khawaja Asif, Minister for Science and Technology Zahid Hamid, Minister of State for Information Technology Anoosha Rehman and heads of various divisions and departments.

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