ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved ‘Duty Reduction’ for import of second hand tractors. The move is a part of benefits meant to be passed on to farmers through the Prime Minister’s Kissan Package 2022.
Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar presided over the meeting of the Economic Coordination Committee (ECC) of the Cabinet. In pursuance of Prime Minister’s announcement of the Kissan Package-2022, Ministry of National Food Security and Research (MNFSR) prepared and presented a detailed Package to the ECC including a proposal regarding import of up to 5-year-old tractors with duty reduction.
Kissan Package and tractor industry
The Kissan Package is a Rs1,800 billion support package that the Government of Pakistan announced on October 31. The package was part of a series of measures that the Government had taken on the backdrop of the terrible flooding across the summer in Pakistan that had cost the economy roughly $40 billion.
Under the package, the government will give Rs10.6 billion loans to small farmers across the country while small farmers of flood-hit areas would get loans worth Rs 80 billion. In addition to the interest-free and subsidised loans, subsidies will also be given on farm imports such as fertilisers, electricity, seeds, and even tractors.
The most immediate impact of the measure will be that it will provide a lifeline to the domestic tractor industry whose current five month sales volume is 52% lower compared to the same period last year. As to how much of this tax relief the companies pass on to the customers is debatable, particularly given how Millat Tractors, one of the two major tractor manufacturers in Pakistan, is currently embroiled in a conflict with the Office of the Federal Tax Ombudsman over tax fraud as part of a previous Government scheme aimed at the agricultural industry.
Ministry of Industries & Production shared a proposal/position paper “import of used/old tractors in CBU condition classified under PCT codes 8701.9220. 8701.9320 8701.9400 and 8701.9500 with depreciation allowance in value at not exceeding 50% of value of tractor”: date of first registration of tractor in the country of export shall be taken as date of manufacturing”; (c) “FBR shall make corresponding changes in relevant Customs General Order (CGO) for finalisation of the customs value of imported tractor”.
ECC meeting
Sources said that FBR also has proposed to maintain the existing mechanism for depreciation per month and up to a maximum of 60%, to facilitate the end Kissan package. Moreover, FBR has also suggested to include PCT 8701.9290 in the proposal to make it all inclusive for agriculture tractors.
Sources said that the Ministry of Commerce has allowed import of up to 5-year-old tractors, an amendment has to be made in IPO 2022 in order to implement the subject direction of the Cabinet regarding Kissan Package 2022. It also proposed to allow import of agriculture tractors not less than 5 years. The age of the tractor shall be determined from January 1, 2022 till the shipment as per the date of landing.
For the purpose of determining the year of manufacture for a used tractor, the shipment shall accompany a certificate from OEM or a certificate of first registration or a PSI issued by one of the PSI companies listed at Appendix-H IPO 2022, verifying the year of manufacturing.
Other decisions
The Finance Division also presented a summary on proposals of State Bank of Pakistan (SBP) regarding equity investment of USD 4.9 million by Fauji Foundation for acquisition of shares of Daharki Power Holding Limited and submitted that the Govt allowed Fauji Foundation to make equity investment abroad of US$ 12 million in ‘Daharki Power Holdings Limited’ in 2008. Fauji Foundation, Asian Development Bank and Daharki Power Holdings Limited, BVI entered into an agreement in 2008, which provided ADB the right to exercise the put option in respect of 2,750,000 shares subscribed by it. The ECC considered the proposals of SBP and allowed equity investment of US$ 4.9 million by Fauji Foundation for acquisition of 2,750,000 shares (18.64% stake) of Daharki Power Holdings Limited and granted waiver/exemption to Fauji Foundation from the policy enumerated in Foreign Exchange Manual being incorporated as a trust under Charitable Endowment Act 1980.
The Ministry of Energy (Petroleum Division) presented a summary for assignment of working interest in exploration licences/Blocks. The ECC after discussion approved assignment of 34% working interest of M/s Pakistan Oilfields Limited (POL) and 6% of M/s Attock Oil Company Limited (AOC) to M/s Polskie Gornictwo Naftowe I Gazowinictwo S.A (Polish Oil and Gas Company) (POGC) in Kirthar South Block (Sindh).
The power division also submitted a summary regarding amendments in the Standardised Security Package Documents (SPDs) for the large solar PV projects, based on the market response on the earlier modifications by the competent forum and in order to ensure the viability of the project. The ECC after discussion approved the proposals that indexation of tariff in the SPDs be on an annual basis and payment mechanism for settlement of invoices as per Framework Guidelines.
Another summary was presented regarding the Enhancement of Oil and Gas production from Tal Block (KPK) proposing sale of gas from Mamikhel South discovery to third parties in accordance with the Petroleum Concessions Agreement (PCA). It was also submitted that the State Owned Entities (SOEs) have around 70% working interest in TAL exploration Licence. This arrangement will be to the benefit of the Government of Pakistan in the form of increased dividends and taxes and it will be an opportunity to enhance private sector participation. The ECC considered and approved the proposal.
The ECC considered and approved a summary submitted by the Ministry of Commerce on policy regarding B2B barter trade mechanism, especially where there is absence of banking channels and generally to facilitate trade with other countries.
Everyone is just showing Kissan Package. But all these are just announcement. there is no practical packages.
Nice. I agree with you.