December 29, 2002	Sunday	Shawwal 24, 1423

KARACHI, Dec 28: Commerce Minister Humayun Akhtar Khan has said that the government will provide 25 per cent freight subsidy to exporters from January 1, 2003.

Talking to the members of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) at a dinner function on Friday, he said that the decision to allow freight subsidy was taken in 2002-03 trade policy and exporters would now avail it from the first day of January.

According to FPCCI president Iftikhar Ali Malik, the incentive of providing 25 per cent freight subsidy to the exporters having total export of over $5 million or on making exports to those countries where Pakistan’s total exports are less than $10 million could not be implemented despite announcement in the trade policy.

Humayun said the government will create Infrastructure Fund for mega projects very soon followed by issuance of Infrastructural Bond and Municipal Bonds in order to finance these mega projects.

He said the liquidity position of commercial banks have improved a lot and this can be a great source of funding in order to kick-start the economy.

He said that the cost of capital is still very high due to higher difference of local lending rates as compared to other countries.

“Banks are charging eight per cent interest rates as compared to one to two per cent in other developed countries which I think is not justified,” the minister said urging the State Bank to act quickly by rectifying this situation.

On five per cent customs duty on import of plant and machinery, he said he would suggest that it should be brought down to the zero. “I am a firm believer of zero-rated duty on these equipments,” he added.

On a complaint by ex-FPCCI chief Tariq Saeed over the mediocre performance of commercial counsellors abroad, he said he would discuss the matter in the cabinet and ambassadors will be made responsible for boosting trade and economic relations with foreign countries.

He said that despite good policies — the common man is still facing problems. On the industrial front, the situation is still pathetic as no major industrial units have been set up.

He said that infrastructure cost in Pakistan is the highest in the region specially the utility charges which is affecting the competitiveness of the local products in the global market. After the expiry of Multi Fibre Agreement in December 2004, exporters and industrialists will have to face a stiff competition. The minister sought suggestions and proposals from the FPCCI members to cope with these challenges.

Iftikhar Ali Malik said major changes have been made in the shipment policy of the USA effective from December 2, 2002. Any violation of this policy by the exporters will result in heavy penalties starting from $5,000 and above. The change in shipment policy will affect Pakistan’s exports destined for US markets.

He urged the government to prepare a contingency plan to protect the local industry from the onslaught of imports after expiry of multi fibre agreement in 2004 and globalization. He said exporters are still facing problems of delay in sales tax refunds and duty drawbacks.