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ECC approves policies for mobile device, electric vehicle manufacturing, removes 4pc tax on local phone production

  • Moreover, removal of Sales Tax on locally manufactured phones was also approved in principle and modalities would be worked out in consultation with the Finance Division.
Published December 16, 2020

ISLAMABAD: The Economic Coordination Committee (ECC) on Wednesday approved different policies pertaining to Mobile Device Manufacturing, Electric Vehicles, New Re-lending-2020, in addition to removal of 4 percent tax on locally manufactured phones and issuance of offshore Pakistan Rupee-linked Bonds to the International Finance Corporation (IFC).

The ECC meeting was chaired by Federal Minister for Finance and Revenue Dr. Abdul Hafeez Sheikh, according to press statement issued by the Finance Ministry.

“The ECC approved Mobile Device Manufacturing and Electric Vehicles Policy (02-03 wheelers and HCVs) presented by the Ministry of Industries and Production,” it said.

After due deliberation, the forum approved removal of withholding tax of 4pc on manufacturing to retailers of locally manufactured phones to incentivize the sector.

Moreover, removal of Sales Tax on locally manufactured phones was also approved in principle and modalities would be worked out in consultation with the Finance Division.

The ECC also approved various technical supplementary grants (TSP) including Rs. 219.300 million for the operationalization of the newly established Isolation Hospital and Infections Treatment Centre, Islamabad; and Rs. 305.462 million to payoff Pakistan’s annual contribution to World Health Organization (WHO).

The committee also approved Rs.106.775 million TSP for the ICT Administration for various projects; Rs. 706.82 million for FATA, temporary displaced persons, Emergency Recovery Project, NADRA; Rs. 278.091 million for Annual Contribution of Pakistan to UNFA, PPD & IPPF-FPAP for FY-2018-19, 2019-20 & 2020-21; and Rs. 53.10 million for procurement of medical equipment, machinery and medicines to combat COVID-19.

On the occasion, the Finance Secretary briefed the forum about rationalization of subsidies (phase-I) whereas a detailed presentation was given by SAPM on Revenue focusing on Electricity, Food and National Savings during the first phase.

The Chair appreciated the detailed plan for rationalization of subsidies, its various components and directed to present a comprehensive summary with concrete proposals suggesting a way forward before ECC.

Priority berthing for wheat and sugar imports was also discussed during the meeting.

Minister for Maritime Affairs updated the forum about latest position of wheat vessels and operations of Karachi Port Trust (KPT) and Port Qasim Authority (PQA) accordingly.

The Chair directed that the Logistic Committee of the ECC would be chaired by the Minister for Maritime Affairs to work out SOPs ensuring all stakeholders including private sector are on-board with reference to priority berthing.

Ministry of National Food Security and Research presented a summary for provision of additional quantities of wheat to the Government of AJ&K and Utility Stores Corporation.

The Chair directed to provide first load of the additional quantities to both AJ&K and USC on priority as an interim arrangement to ensure smooth supply of wheat across the country. The detailed proposal would be discussed in the next ECC meeting.

The ECC approved the new re-lending policy 2020, presented by Economic Affairs Division. The new re-lending policy will reflect the changes in the borrowing cost of the government, take into account variation in the exchange rate and pass on actual rates to the borrower for transparency.

Other terms and stipulations, including with respect to recovery of commitment fee as in the policy in vogue, will continue to apply.

The ECC also accorded approval for issuance of offshore Pakistan Rupee (PKR) linked Bonds to the International Finance Corporation (IFC).

This will help in availability of financing to priority sectors, promote private sector investments and bring foreign exchange liquidity in domestic foreign exchange market in the post-COVID-19 scenario.

The Karachi Transformation Plan was postponed to the next ECC meeting.

Among others, the meeting was attended by Minister for Interior Sheikh Rashid Ahmed, Minister for Industries and Production Hammad Azhar, Minister for Economic Affairs Khusro Bakhtiar, Adviser to the Prime Minister on Commerce Abdul Razak Dawood, Adviser to the PM on Institutional Reforms and Austerity Ishrat Hussain, Special Assistant to PM (SAPM) on Revenue Dr. Waqar Masood, SAPM on Petroleum Nadeem Babar, Federal Minister for Maritime Affairs Ali Haider Zaidi, SAPM on Poverty Alleviation and Social Safety Dr. Sania Nishtar, SAPM on Energy Tabish Gauhar, Federal Minister for Privatization Muhammad Mian Soomro and Federal Minister for Energy Omar Ayub Khan.

Governor State Bank of Pakistan Dr. Reza Baqir joined the meeting through video link, the statement added.


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