Because of its more feasible sea route to Africa and land route to Central Asian markets, cheap labour, painters and mechanics, the proposed EPZ may turn out to be more attractive than the EPZ in UAE.
FPCCI noted that some manufacturers (like Dawlance etc) are demanding that overseas Pakistanis may be allowed to send foreign exchange to manufacturers through banking channel for delivery of goods to their relations in Pakistan, which may be treated as export. Some stores outside Pakistan have contacted the manufacturers for delivery of goods in Pakistan.
These stores in foreign countries will make consolidated payment in foreign exchange through banking channel to manufacturers in Pakistan.
They have requested the manufacturers in Pakistan to send samples for booking of orders.
The issue is that after payment of duty and taxes the goods made in Pakistan become more expensive.
The Pakistani expatriates then prefer to purchase smuggled goods from the open market or send goods in baggage (better quality and less cost) declaring it as old and used goods after removing its packing etc.
Store owners abroad have shown keen interest in booking Pakistani manufactured goods to be delivered in Pakistan.
FPCCI proposed that such goods, where orders are booked from abroad and FE is sent in Pakistan through banking channels, may be treated as exported goods and may be exempted from local duty and taxes or partial exemption may be given in the form of fixed duty drawback/rebate of tax to be notified.
FPCCI noted that the global warehousing market is more than US$1 trillion and is growing at a very fast pace. The Export Policy Order vide para 9(g) allows export of imported goods in same state - unprocessed form from bonded warehouse and the imported goods already cleared from home consumption.
This is not in line with this global business practice. Singapore, Malaysia, Sri Lanka and a number of other countries allow such export, which helps in earning foreign exchange and generates employment.
The issue is that re-export of imported goods in the same state is allowed but there is no procedure which allows refund of duty and taxes paid, nor such imports are covered under Duty and Taxes Remission for Exports (DTRE) or any other export facilitation scheme (manufacturing bond, temporary imports, export oriented unit etc).
No importer can import goods, put them in the warehouse and re-export them after payment of import duty and taxes. They can re-export to mitigate their loss but cannot adopt it as a business to utilize cheap warehousing in Pakistan.
FPCCI proposed that Ministry of Commerce and Federal Board of Revenue (FBR) may allow import for re-exportation under DTRE Rules subject to value addition of 5 percent or 10 percent.
FPCCI noted that import of used clothing and their export after sorting, repair, washing and packing is allowed to exporters operating in EPZ. However, this facility is not allowed under DTRE scheme and is denied under other Export Facilitation schemes too. If the same is allowed, Pakistan can capture a bigger share because of its cheap labour