ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday approved Rs10 billion additional funds to provide emergency relief to flood-affected citizens and ordered the release against payment of surcharge of imported goods held up during a temporary ban on luxury and non-essential items.

A meeting of the ECC, presided over by Finance Minister Miftah Ismail through video link from Washington, also deferred a summary on the import of wheat through Gwadar port at substantially higher charges and rejected a case for withdrawing 22-26 per cent customs duties on 11 pharmaceutical ingredients and instead ordered a fresh summary on paracetamol.

Sources said the health ministry had sought complete exemption of 20pc customs duties and 6pc additional custom duties on a total of 11 active pharmaceutical ingredients (APIs), including paracetamol — the generic name for a medication used to treat mild to moderate pain and reduce fever.

The health ministry said the APIs for manufacturing were imported at concessional customs duties and most other ingredients were imported at zero per cent duty. However, the 11 APIs in question were subject to a higher rate of 20pc customs and 6pc additional customs duties.

Defers summary on expensive wheat imports via Gwadar, rejects case for withdrawing duties on 11 drug ingredients

These ingredients include sulfamethoxazole, pseudoephedrine and its salts, ephedrine and its salts, penicillin and its derivatives with a penicillanic acid structure and related salts, cephalexin, cefixime in bulk, oral cephradine, ciprofloxacin, norfloxacin, paracetamol and ibuprofen.

The health ministry also advocated that duties on the import of finished drugs based on these APIs were equal to or less than on the ingredients’ imports, which it said was an anomaly and discouraged local manufacturing of finished drugs.

Besides, it said, the rupee’s devaluation had added to the import cost of these APIs and local manufacturers were hard-pressed and many local products had become unviable at a time when their demand had shot up in the wake of devastating floods.

Some participants of the meeting had serious reservations because a related move only a couple of weeks ago seeking an increase in the price of drugs had been rejected by the prime minister and the cabinet.

Therefore, the ECC directed the health ministry to withdraw the summary and submit a fresh one on paracetamol and “to rationalise the price and ensure its availability”, an official statement said.

Flood relief

The committee approved Rs10bn for relief — shelter, food, medicines, etc. — to flood-affected people and asked the finance division to immediately disburse Rs5bn to the National Disaster Management Authority (NDMA), which had sought Rs10bn funds to procure and supply relief goods.

Updating the ECC, the NDMA reported that 33 million people had been affected across Pakistan, 1,507 died, 12,759 injured, while almost 1.8m houses had been damaged. It said immediate relief operations were launched and the authority started procuring various goods (29,900 tents, 1.4m mosquito nets, 82,400 food packs, 235 dewatering pumps, 12,000 water jerry cans and 45 life-saving boats) on an emergency basis costing Rs2.4bn.

Due to colossal damages, the already procured items were insufficient, it said, seeking fresh orders for emergency procurement of more items (278,000 tents, 610,000 mosquito nets, 2000 food packs and 50 dewatering pumps) at the cost of over Rs7.1bn to minimise the loss of lives, property, livestock, etc.

Earlier, the NDMA was allocated Rs8bn for procuring and supplying relief items to flood victims. However, the authority said the amount was insufficient, as the cost of only procurement surpassed Rs9.5bn. Besides, the logistic cost of goods provided by friendly countries and organisations was estimated at Rs5.3bn.

Stuck imports

The ECC also considered a summary of the commerce ministry seeking the clearance of stuck consignments in light of memoranda it issued on July 22, Aug 19, and Aug 23.

Under these memoranda, import bans were removed on certain items, the release of in-transit of some other items was allowed against 5pc to 100pc surcharge and regulatory duties and additional duties were imposed on some other items.

Importers and businesses complained that their consignments could not be cleared at surcharge rates notified by the commerce ministry because the new rates of regulatory duties and additional duties, on top of surcharges, also came into play because these had also been added to the WeBOC customs clearance system, resulting in a double penalty.

The commerce ministry said those importers and business groups demanded that the held-up consignments, when landed at any port before Aug 19 should be cleared against payment of notified surcharge/penalty and the new imports — through bills of lading issued on or after August 19 — should be subject to new rates of regulatory and additional customs duties.

“The ECC approved the proposal and directed that the consignments of previously banned items that landed in Pakistan till Aug 18 may be released at the rate of surcharge,” an official statement said.

Published in Dawn, September 22nd, 2022