Under the package a tax holiday
will also be provided
From SHAMIM AHMED
July 08 - 14, 2002
The decision taken by the federal cabinet last week
allowing duty-free and sales-tax free import of machinery and equipment
for use in corporate agriculture farming will be welcomed as a major
breakthrough in the ambitious plan for a revolution in the predominantly
agricultural economy of the country. An amendment in the land reform act
1977 to do away with the clause of 100 acre maximum land ceiling is also
in the offing to facilitate corporate farming.
It was early last year when Minister for Food and
Agriculture had told newsmen that the Chief Executive has approved the
policy of corporate agriculture farming. He said under the incentive
package for the introduction of the corporate agricultural farming, it
will have a status of industry and will enjoy all the facilities
including the credit availability as admissible to industry... He said
under the package a tax holiday for five years for the irrigated areas,
7 years for barani areas and 10 years for the cultivable areas will be
provided. However, such tax exemption would be given to only those
companies listed on the stock exchange.
Besides providing tax holidays, the minister said,
exemption on duties on transfer of land would also be allowed for the
corporate agricultural farming. The corporate agricultural companies
will be required to observe the relevant sections of the workmen's
compensation Act 1923, payment of wage Act 1936 and bonded labour system
abolition Act (111 of 1992).
Under the present investment policy of Board of
Investment (BOI) there is no upper ceiling on land holding for corporate
agricultural companies so the legal cover will be provided in this
regard to avoid any complications in future. The Federal Agriculture
Ministry has also urged the federal government that determination of
size of corporate farm may be left to the prospective investors.
For the availability of credit for the Corporate
Agricultural Farming, it has proposed that investing or lending to
corporate agricultural farming projects may be considered as part of the
agricultural lending targets fixed by the State Bank for financial
institutions. The BOI has also agreed to reduce the foreign equity from
$0.5 million in the present investment policy to $0.1 million.
The state land may either be sold or leased out to
the investors for 50 years and extendable for another 49 years under the
corporate farming. The preference in this regard will be given to
cultivable wasteland. The primary idea for the introduction of the
Corporate Agricultural Farming was to organise farmers, particularly the
small and medium size farmers, and to invite domestic as well as foreign
investors and attract them to corporate agricultural farming.
The latest policy decision in this direction is to
grant status of industry to the agriculture and introduce corporate
farming in the country. A comprehensive package to attract local and
foreign investment in corporate agriculture farming has been prepared,
which envisages giving farming the status of industry, a five-year tax
holiday exclusion of big land holdings from future land reforms and no
tax at district level.
According to the proposed package, the land to be
used for the purpose of Corporate Agriculture Farming will not be
included in any land reforms, undertaken by the government in future.
The CAFs will be taxed on the pattern of industry. Moreover, there will
be no hurdles in exporting the CAF production nor there will be any tax
at the district level. Electricity tariff for these corporate farms will
be the same as applicable to agriculture tube-wells. Gas, water and
phone facilities will be provided by the state at normal charges.
The induction of corporate companies will bring
modern production technology, access to capital, direct access to
domestic and foreign markets, and professional management expertise. It
will also generate rewarding opportunities for the inputs industry, as
the agricultural companies will act as large consumers of farm inputs.
On the marketing side, agricultural companies generally undertake their
primary processing and grading at farm sites and supply raw material to
Some Chinese and Arab investors have shown keen
interest to invest in corporate farming and other Agro based industries.
The provinces have been informed that Pakistan and China had signed an
agreement on economic and technical cooperation, which inter alia
entails that the Chinese government would initiate a project of modern
farming in Pakistan. Under the agreement, the Chinese government will
provide capital and expertise while Pakistan would provide land and the
favoured investment policy.
Last week decision of the cabinet has paved the way
for the launch of the plan which was delayed due to various constraints,
spread over a wide range of problems, including availability of land in
suitable locations, development of infrastructure, inconsistencies of
taxation and fulfilment of numerous other formalities that have long
remained the dread of even enlightened enterprising investors. Needless
to point out among the present government's initial multi-pronged effort
to reactivate the national economy, attention was also focused on
removing the ambiguities around the prospects of modernisation of the
agriculture sector from a whole new direction. The explains the
emergence of the concept of development of corporate farming. It will be
noted that the urge, in this regard, was largely inspired by comparative
studies of the successes achieved from similar pursuits in various other
countries bearing marked similarities with objective conditions in