New quota policy likely to show improvements

KARACHI (December 27 2002) : The quota policy for 2003 is likely to show a lot of improvements over the 2002 policy in the light of a large number of suggestions received from the textile associations and stakeholders by the Quota Supervisory Council (QSC).

At a meeting, presided over by the Chairman, Export Promotion Bureau, Tariq Ikram, here recently, the QSC Chairman, Abdul Aziz Memon, briefed the participants on the necessity of conveying the meeting pertaining to the present position of the ELVISA, exceptional flexibilities, shipment position of Cat-9 EU.

To avoid arrest of consignment in the EU, one of the possibilities discussed was to stop issuance of visa of Cat-9 against offering equal benefit to the exporters to cover up their loss and to re-credit in the next year.

After detailed deliberations, the following decisions were taken unanimously:

— In case there is a balance of performance quota in an exporter's CPB, which he is being blocked from using, it will be deemed that the same quantity has, in fact, been exported and his next year's entitlement will be worked out on such basis.

— The performance quota not allowed to be utilised in 2002 will, in addition to the above, be allowed as special carry-over to be used one time only in 2003.

— In case there is a balance of flexibility quota in the exporter's CPB, the same will be carried over into 2003 for one time use only.

— The balance of over-programming quota in 2002, if any, will lapse and will not be carried over into 2003.

— In case of allocation of over-programming quota in less utilised categories, it was decided to allow 10 percent over-programming quota, where the utilisation is less than 80 percent.

It was observed that most of the less utilised categories are placed in the FCFS except few categories.

It was decided to recommend to the Ministry of Commerce to allocate 10 percent over-programming quota in these categories.

— On the re-credit of surrendered quota in succeeding year, it was observed that most of the chairmen of textile associations and stakeholders are not in favour of re-credit of surrendered quota in succeeding year.

— Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association has suggested for doing away with the auction of growth quotas and instead of giving the same to performance holders on pro-rata basis.

This will bring down the quota prices, which will help in enhanced exports.

The FCFS policy should be announced by the end of 2002 and should be available to the exporters from the beginning of the year, etc.

— Pakistan Hosiery Manufacturers Association believes that the textile industry is already under the heavy stress after the September 11, 2001 incidents.

Consequently, the exporters are facing severe competition over prices.

Therefore, the government should not make money out of auction of quotas in the years ahead, rather the entire rather quota should be placed on the FCFS to provide a breath of comfort to the exporters.

— Pakistan Readymade Garments Manufacturers and Exporters Association has suggested that there should be four auctions, 25 percent in January, March, May and July, 2003.

These auctions should be non-transferable and for one time use only. These auctions should be surrendered by September 30, 2003, if unutilised.

The flexibilities of the auction quantity should also be auctioned rather than forming part of entitlement.

The over-programming policy should be announced from the beginning of the year to make it more transparent.

Ten percent over-programming should be given in August 2003 on all categories where the utilisation is less than 60 percent of the adjusted ceiling at the end of July 2003.

Further 10 percent or five is less than 70 percent or 80 percent at the end of September 2003, respectively.

— All categories, which are utilised less than 70 percent of the adjusted ceiling by November 2002, should be placed on the FCFS basis.

The QSC member, Tahir Jahangir, has suggested that those manufacturers, who obtained better price than the country average price, should be given some special incentives in terms of additional quota, and those manufacturers, who are exporting to non-quota countries, should be awarded some quota for the same item.

Above allocations should come out from growth quota.

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