Economic Coordination Committee of the Cabinet imposes 30-Day ban on import of Gold

Islamabad, July 30 2013 (PPI-OT): A meeting of the Economic Coordination Committee of the Cabinet (ECC) was held under the chairmanship of Finance Minister Senator Ishaq Dar at the PM Office today.

One of the initiatives taken by the government to diversify exports has been to promote the export of value added gold jewellery. For this purpose currently there are special schemes in operation 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 period January to June, 2013, gold worth Rs.92.970 billion was imported compared to Rs.19.132 billion for the same period in 2012. This trend has become even more alarming since in the first 26 days of July 2013, the import of gold under these schemes was to the tune of Rs.52.549 billion.

The ECC was also told that the Indian Government has during the past few months been consistently engaged in discouraging the import of gold. In this context India increased the import duty on gold from 2% to 6% in January 2013 and to 8% in April-May 2013. Indian press reports also indicate that the seizures by Indian authorities of smuggled gold increased by as much as 365% in April-June 2013 as compared to the similar period of 2012. 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 of Pakistan has taken cognizance of the apparent abuse of these schemes and decided to take some immediate steps to prevent further damage to the national economy. It has been decided to impose a short term temporary ban of 30 days on the duty free import of gold under these special schemes.

This ban is purely temporary and is 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. The objective of the government is 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 7th May 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 ECC, the Ministry of Planning and Development submitted a report on the reasons and causes in the cost escalation in different 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 actuals 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 may share the report with Transparency International.

The ECC also noted that the matter was subjudice in the Supreme Court and a comprehensive report has also been submitted to the Prime Minister in the matter.

In order to encourage export of processed meat and provide by-products such as hides, bones, blood and allow to many downstream industries in the country, the ECC decided to impose a ban on the export of live animals with effect from October 1, 2013.

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 dealer within 45 days and submit it for its consideration. Oil and Gas Regulatory Authority (OGRA) has been asked to assist the Ministry of Petroleum in the matter.

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

The Cabinet Secretary informed the meeting that since the assumption of power by the present government 23 decisions have been taken by the ECC of which 12 have been implemented while the remaining are under various stages of implementation..

The Secretary Aviation Division informed the ECC that Rs.6.100 billion have been paid to vendors out of Rs.6.89 billion released by the Ministry of Finance and an amount of Rs.789 million has been paid to Exim Bank as part of repayment of loans.

The Secretary Aviation Division also informed ECC that the accounts between PIA and FBR have been reconciled on account of federal excise duty collected by PIA. Also that a separate account is now being maintained since July 1, 2013 for collection of federal excise duty and that an amount of Rs.250 million has 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 PIA. This plan should include breakdown of the present losses as well as the way forward.

The ECC also approved the renewal of GOP guarantee for running finance facility for Rs.2.0 billion for Pakistan Steel Mills upto 4.1.2014.

Senator Ishaq Dar informed the members of the ECC that the Prime Minister has 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.

The Secretary Industries informed the ECC that sales of utility stores touched Rs.13 billion during the first ten days of Ramazan and is likely to cross Rs. 25 billion. The ECC was also informed that Ministry of Industries is contemplating to computerize its 5800 utility stores and warehouses throughout the country.

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

The Minister 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. Due process and transparency would not be compromised in any way, resolved the ECC.

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

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +9251 925 2323 and +9251 925 2324
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