ISLAMABAD, June 3: The Pakistan Jute Mills Association (PJMA) on Thursday urged the government to allow a five per cent export market assistance and reduce rate of withholding tax on export of jute goods.

The PJMA in its budget proposal for 2004-05 also demanded of the government to allow import of jute mills' machinery and spare parts from India, which it believed were much cheaper than that of the United Kingdom.

The association has suggested the government to allow price preference of 25 per cent to the local jute industry as was allowed to the engineering industry, and impose at least 20 per cent regulatory duty, which was imposed in 1999 as a counter-measure against unfair trade practices by the Bangladesh government and its jute industry.

Jute mills were of the opinion that the government assistance was necessary to counter the effect of a five per cent cash subsidy paid by the Bangladesh government to its exporters of jute goods.

They also underlined the need for a reduction of withholding tax on export of jute goods from 1.25 per cent to 0.25 per cent to boost export of non-traditional items.

Since local textile made-ups were paying withholding at the rate of 0.75 per cent, export of jute goods should also have been included along with textile. The PJMA also suggested an increase in customs duty on import of jute yarn to 20 per cent to protect the local jute industry from dumping of yarn by Bangladesh.

Elaborating further, the association pointed out that cash subsidy payment by the Bangladesh government to its exporters has seriously hit the export of Pakistani jute goods. Due to this subsidy, it has become difficult for Pakistan's jute industry to compete in the international market.

During the current year, the jute industry is expected to export over Rs400 million worth of jute goods against Rs62 million in 2002, which showed an increase of 650 per cent. With this, Pakistan will become world's third largest exporter of jute goods after Bangladesh and India.

By giving a five per cent export market assistance on export of jute goods not only Pakistan will earn valuable export earning, but it will also help in reviving the jute industry.

"Even the Indian government has started paying export market assistance and duty entitlement pass book up to 11 pre cent on export of jute goods," the association adds.

The PJMA requested the government to allow import of jute mills' machinery and spare parts from India as they were comparatively much lower than that of Britain, in addition to the lower freight cost.

The local jute industry is spending approximately Rs30 million every year on the import of machinery and spare parts and the exorbitant increase in freight and prices adversely impacts the cost of end products, the association added.