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Budget to phase out all, but auto, deletion plans

ISLAMABAD (May 28 2003) : The Budget 2003-04 would phase out all the deletion programmes in line with WTO requirements, except for the auto industry for which the government is expected to move the world body for extension in time, it is learnt.

A meeting of the Board of Management of the Engineering Development Board of Tuesday decided to phase out various industries where the government had given tariff concessions to protect the local industry.

These items have been taken out of the concessionary SROs and now will be brought under the custom tariff code.

Sources told Business Recorder that the tariff likely to be announced in the Budget would be a lower rate.

The present four slabs of tariff are 25 percent, 20 percent, 10 percent and five percent duty.

In the case of most items for the industries being phased out from deletion programme, the rate of duty is proposed to be reduced.

The raw materials are likely to be subject to five percent rate of duty, sub-components and components at 10 percent and finished products between 20 and 25 percent.

An official source told Business Recorder that the engineering industry would now have to face the challenges of WTO on its own and compete in the international market.

Under commitment with the WTO, the Budget for next year would specify over a 100 items relating to the deletion programme of the concerned industries.

These include electrical goods industry, like bulbs, fans, refrigerators, air conditioners, TV, cement and sugar plants, home appliances, agriculture machinery, etc.

The meeting presided over by Dr Akram Shaikh; Secretary Ministry of Industries and Chairman of EDB appreciated the sizeable rise in production of 21 large-scale manufacturing items. The increase is in double digits.

Giving increase in production of Steel Mill, its Chairman said that Mill's production rose from 7000 tonnes in 2000 to 20,000 tonnes in 2001 and to 35,000 tonnes in 2002.

Some other highlights of industrial growth during July-March period are: Auto parts production rose by 50 percent and employment doubled during the last two years; production of domestic appliances increased by 20 percent; production of split- type air-conditioners rose by over 50 percent; the automobile production rose by 35 percent; motorbikes by 15 percent; and tractors and plastic auto parts by ten percent.

Besides, the meeting was told that the vendors industry has made new investment of Rs four billion during the last one year creating nearly one lakh additional jobs.

It is stated that nearly two hundred vendors have invested, on average, Rs 15 million to Rs 20 million as the local demand had increased and the units were working to their capacity and that additional investment went to BMR.

Here are the details of the large scale manufacturing items during July – April for the past two years:

===============================================================  LARGE SCALE MANUFACTURING ITEMS SHOWING DOUBLE DIGIT GROWTH  ===============================================================  PRODUCT                UOM       2001-2002    2003-2003    %AGE                                  (Jul-Apr)    (Jul-Apr)   Change  ===============================================================  1  CEMENT              Th. Tons    8,025          9,547      19  2  SUGUR               Tons    3,224,050      3,662,625      14  3  SODA ASH            Tons      209,049        236,841      13  4  COTTON CLOTH        Th. M   4,068,190      4,541,745      12  5  MOTOR TYRES/TUBES   Th. Nos.    1,182          1,389      18  6  BICYCLES            No.       445,794        518,247      16   HOME APLIANCES  7  DEEP-FREEZERS       Nos.       79,100         96,000      21  8  REFRIGERATORS                 221,450        296,000      34  9  TV SETS                       370,000        621,000      68   STEEL PRODUCTS  10 H.R. SHEETS/STRIPS            318,965        234,733      36  11 C.R. COILSI/SHEETS            100,833        125,303      24   AUTOMOBILES  12 CARS                Nos.       32,168         49,285      53  13 MOTORCYCLES                   106,891        140,203      31  14 LCVs                            6,315          9,929      57  15 BUSES                             855          1,186      39  16 TRUCKS                            793          1,608     103  17 TRACTORS                       18,708         20,680      11     PAPER & PAPER BOARD  18 PAPER PRINTING      Tons       15,876         21,883      38  19 PAPER PACKING                  25,843         30,126      17  20 PAPER BOARD                   133,441        170,025      27   JUTE GOODS  21 SACKING             Tons       41,188         49,506      20  ===============================================================

The meeting was told that the ceramic industry was at take-off stage because Wapda was embarking on village electrification programme and ceramic conductors were in great demand.

Sources however admitted that despite the increase in production and various incentives given to the industry, the complaint of high cost of products was not incorrect.

This was largely due to the high utility rates of electricity, gas and water. It was also admitted that over a score of agencies were supervising the working of the industries.

The inspectors and supervisors, according to a recent report of the World Bank, extorted money or created unnecessary hassle for the industries.

In common parlance of the industries, the inspectors are called “bribe taking vultures”.

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