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ISLAMABAD: Exporters have approached the Special Investment Facilitation Council (SIFC) against the Federal Board of Revenue (FBR) for creating hurdles in exports of copper ingots to China under the Export Facilitation Scheme (EFS).

In a communication to the Director General SIFC, Prime Minister’s Secretariat, the documented steel sector objected that instead of facilitating struggling exporters, the FBR has become a major hurdle in exports of copper ingots to China. Exporters are running from pillar to post to get small irritants resolved in EFS but the tax authorities are not taking any decision.

After getting frustrated from FBR, the exporters are making frantic appeal by knocking the doors of the SIFC to intervene and resolve the industry’s pressing issues related to EFS.

FBR restructuring plan finalised

The exporters of copper are facing red tape and inordinate delay by FBR in the incorporation of required enabling provisions in EFS Rules hindering copper export potential. This inordinate delay has already resulted in a huge loss of foreign exchange in terms of lost exports.

According to the letter to the SIFC, the industry stated that Pakistan has tremendous potential for the export of processed copper recovered from imported salvaged/used electrical compressors and motors. This much-needed objective can be achieved by removing a small hurdle that the exporters of copper have been confronting for the last one year.

The best part of this whole activity is that this is a labour-intensive process and with hardly any capital expenditure (nil imported machinery) it would generate employment of approximately over 100,000 skilled and unskilled workers.

Within 2-3 years it can become the second-largest export of Pakistan after textiles. The following are the facts/hindrances being faced by copper exporters:

(i) Steel sector of Pakistan imports steel scrap worth $2.6 Billion annually.

(ii) The electrical motors being imported for purpose contain 65 per cent steel scrap (by value) and 35 per cent is copper. (By value) which acts as import substitution.

(iii) Copper extracted out of these imported motors is further processed and exported to China. From copper to copper, the value addition in this is more than 30 per cent (FBR requirement is 10 per cent).

In case of processed copper export (from imported motors and compressors) the value addition should be more than 10 per cent when compared with copper; (excluding steel scrap which was imported with the motors and is being used as import substitution).

The FBR is required to issue a notification that “in case of processed copper export from imported motors, compressors, electrical cables 10 per cent value addition would only apply to copper excluding steel imported with it.”

This is industry’s earnest appeal for intervention in this important matter for bailing-out the copper export sector out of this impasse, it added.

Copyright Business Recorder, 2024

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