0
ISLAMABAD, Nov 13: The government on Tuesday practically abolished the support price of wheat.
The last meeting of the Economic Coordination Committee of the cabinet under the present government also approved tax exemptions for Gwadar Port’s Singaporean operators for up to 40 years. Prime Minister Shaukat Aziz presided over the meeting.
Special Secretary to the Finance Ministry Dr Ashfaq Hasan Khan told reporters after the meeting that the ECC had decided to de-link support price and procurement price of wheat and had set a target of seven million tonnes of wheat procurement for the 2007-08 crop at prices to be decided at that (procurement) time.
Last year, wheat procurement target was five million tonnes.
Responding to a question, he confirmed that Minister for Industries and Production Jehangir Khan Tarin heading an inter-ministerial committee had recommended a support price of Rs450 against Rs500 per 40 kg proposed by the ministry of agriculture. Both the proposals were overruled by the ECC after detailed discussion, he said.
A participant of the meeting said the decision to do away with the support price had been taken also against recommendations of a parliamentary committee on agriculture that had called for increasing the support price.
He said the decision showed a clear divide between the ruling Pakistan Muslim League and the prime minister as it might hurt the party in the elections, particularly in rural areas.
“The prime minister has granted tax exemptions to foreign investors in Gwadar Port for 40 years but deprived domestic farmers of an essential and decades-old system of wheat support price on foreign advice,” he commented.
Dr Khan said the total wheat stocks stood at about 3.347 million tonnes as of November 11 and the import of about 50,000 tonnes would be completed by the end of the current month, followed by another 150,000 tonnes by the end of December and 300,000 tonnes by the end of January to complete the target of 500,000 tonnes.
Responding to a question, he said the import was taking place at more than $400 per tonne but the ECC did not discuss why wheat had been exported at less than half that price a few months ago. He did not comment on suggestions that wheat trade would turn out to be one of the biggest scandals of the current government.
GWADAR PORT: The special secretary said the ECC exempted the Singaporean company from corporate income tax for 20 years while allowed sales tax exemption for 20 years to three operating companies being set up under the contract. He said sales tax exemption was also granted on material and equipment for the construction of the project for 40 years. He did not respond when asked if it was a pre-departure gift from the government to a Karachi-based broker who was partner of the Singaporean company.
Dr Khan said the ECC also allowed payment of $50 per motorcycle as research and development support on export of two-wheelers. He said the number of motorcycle companies had increased from three to 43 in the recent years with the emergence of 40 Chinese companies and about 200,000 people were employed by the industry. About 85 per cent motorcycle parts were manufactured locally, he added.
In its recent meeting, the ECC had strictly prohibited the ministries from bringing cases of research and development support in future when subsidies were sought by some industries of the textile chain.He said the ECC had also decided that Pakistan Sugar Mills Association would apply for an upfront tariff to the National Electric Power Regulatory Authority (Nepra) for power cogeneration by the sugar mills with all the relevant information and Nepra would be required to take maximum of 45 days to determine the upfront tariff based on information provided by the industry.
Dr Khan said that sugar industry had an available capacity of producing 1500-1800MWs and could produce electricity on a fast-track basis. He said that instead of an earlier suggestion of gas allocation for power cogeneration by the sugar industry, these power plants would now be based on local or imported coal along with bagasse.
He said the prices of essential items as measured by sensitive price index rose by 9.8 per cent last week and the prices of 24 items went up compared with reduction in four items. Likewise, the inflation as measured by consumer price indicator rose by 9.3 per cent in October this year compared with 8.1 per cent and 8.3 per cent of the last two years.
Dr Khan said the total tax collection in October stood at Rs66 billion against a target of Rs61.8 billion, showing an increase of 23.7 per cent over the same month last year.
In the first four months (July-October) of the current fiscal year Rs271.1 billion tax was collected against a target of Rs284 billion, although it was 14.3 per cent higher than Rs237.2 billion of the same period last year.
He said imports had increased by 58.8 per cent to $3.4 billion in October compared to $2.13 billion of the same month last year while July-Oct imports had increased by 19.7 per cent to $11.4 billion. Exports had improved by 6.3 per cent to $5.8 billion in the first four months, he added.
