ECC EXPANDS INDIAN ITEMS' IMPORT LIST, APPROVES DUBAI-LIKE CITY PLAN

It is, however, surprising that the federal government took such an important decision without consulting the Sindh government

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
Oct 09 - Oct 15, 2006

The Economic Coordination Committee of the Cabinet (ECC), which met in Islamabad last week with Prime Minister Shaukat Aziz in the chair, took a number of decisions bearing far-reaching effects on national economy, during its six hours deliberations. The most important decision was the expansion of list of importable items form India by adding 302 more tariff lines to expand trade with India. The other most important decision was the government's approval to a plan submitted by a UAE-based firm to build a model city in Karachi involving a huge investment of $ 43 billion over the next 10 to 13 years.

The other decisions included reduction in the price of phosphate fertilizer, restoration of duty drawback facility for export of cement to Afghanistan and endorsement of import of 100 MW electricity from Iran for Gwadar City, which is fast coming up as a major port. Later briefing reporters, the Prime Minister stated that 302 more tariff lines have been added to expand trade with India in consultation with all stakeholders. Notably, these items include pharmaceuticals, plastic, iron and steel, machinery and parts of windmills, diesel locomotives and rubber products. He said that the decision in this regard was taken after an objective re-appraisal of the prospects of mutual benefits to the two countries, as both have been moving in the direction of increased business and economic cooperation from an enlightened approach.

As far as the reduction in the price of phosphate fertilizers by Rs. 250 per bag is concerned, the Prime Minister expressed the hope that it would help increase agricultural productivity since the price of phosphate fertilizers would come down to Rs. 827 per bag from about Rs. 1,077. He claimed that the use of DAP would help raise the income of farming community, thereby proving instrumental in improving their living standards. In a farmer-friendly gesture the government would further import DAP and urea for the Rabi season starting on October 1 and ending by March 2007. Again, noting that one million tones DAP was available in the country and 0.2 million tones was being imported to augment the supply, he pointed out that o.1 million tones urea was also being imported. Evidently to motivate farmers to use phosphate fertilizer for their own advantage, he said that an awareness campaign would be launched shortly to encourage them to use DAP, instead of urea, to increase the yield. It is, however, not known if the reduction in the price of DAP fertilizer would be made possible with the import subsidy which had been earlier announced, but yet to be implemented. This is a reference to an earlier report, pointing to DAP importers' predicament following cancellation of import contracts worth around $ 30.97 million, due to uncertainty in the matter. It was stated that contracts of around 105,000 MT of DAP fertilizer at an average cost of $ 295 per MT had been made but they faced a setback when the banks declined to favour them with letters of credit until convinced of the subsidy on DAP imports. Seemingly, disenchanted by the delay, the farmers feared that even if the government confirmed subsidy on DAP, prices in the international market could leave them in hot waters. Significantly, the ECC meeting also decided to increase the support price of wheat from Rs. 415 per 40 kg to Rs. 425.

Briefing the newsmen on some other decisions of the ECC, Economic Advisor to Finance Ministry, Dr. Ashfaq Hassan, revealed that a Dubai-based company would invest over $ 43 billion during the next 13 years to establish a state-of-the-art city near Karachi. Spread over 12,000 acres, it would comprise two islands known as Bundal and Buddo. Moreover, he revealed that yet another UAE-based company would invest $ 300 million in a second container terminal at Port Qasim, which would be the first "green field" project in the port sector. He further said that with a view to attracting investment in the sector, the ECC has also allowed foreign companies to engage in insurance business in Pakistan. His revelation that the facility of Research and Development Support Fund for textile, previously confined to processing, would now be available across the board to the entire sector, which was widely welcomed by the textile industry. One can only hope that the ECC decisions would be so implemented as to yield results within the projected timeframe.

By adding another 302 items in the list of importable goods from India, the list has been expanded to a total of 1,075 items. The decision, however, caused a surprise in the concerned circles as it is unilateral and has negated the nation's broad understanding that trade with India should be in tandem with the resolution of the long-standing Kashmir issue. Of late, Pakistan is expanding the list of importable items from India. If, however, it is due to mutual concession, then the list of Pakistani items to be exported to India has rather hurt the nation's stand since it amounts to compromising the country's principled position on the issue of trade and normalization with New Delhi. No body is against trade with India, but to do so at the cost of national sensibilities is certainly neither appropriate nor acceptable. Besides, the trade ought to be mutual and not unilateral. It also amounts to turning Pakistan into the dumping ground of Indian goods.

Giving details of the proposed model city near Karachi, Dr. Ashfaq Hassan Khan disclosed that the UAE firm, which will have 85 percent equity in the project, will develop two islands, Bundal and Buddo, near Karachi into a city having state-of-the-art facilities. "It will be just like another Dubai", Khan said, adding; "It will consist of everything - residential buildings, theme parks, offices, just about everything".

Port Qasim Authority will hold 15 percent stake in the from of land, Khan said after a meeting of the Economic Coordination Committee, the country's top decision making body on economic issues. The project is expected to take about 13 years. Khan said the project was approved in principle after fulfilling all formalities, adding that legal documents would be completed within three months.

It is, however, surprising that such an important decision was taken by the federal government without consulting the provincial government (where the proposed project is located) as alleged by Sindh Chief Minister Arbab Ghulam Rahim in a public statement. Talking to newsmen at the CM House at an Iftar dinner, he said he would lodge his protest with the Prime Minister in this regard.

It can be said without fear of any contradiction that this biggest ever-real estate project is going to be the most rewarding one from economic and commercial point of view. The decision by the world famous UAE-based construction company Emmar to invest a staggering amount of $ 43 billion over the next 13 years to develop a state-of-the-art city on two islands near Karachi is reflective of the investors' confidence in the policies of the government. Apart from huge benefits that would accrue to the national economy from this unique project, it would also send right kind of signal to other potential investors. Economic activities to be generated by the construction of the new city would help overcome some of the critical problems confronting Karachiites, like growing unemployment and rising level of poverty. However, for all this to happen, it is necessary that the project should be implemented on fast track basis, clearing all impediments. Those at the helm of affairs must ensure that such a gigantic project should not fall prey to the bureaucratic rigmarole or polities.