ISLAMABAD, March 15: The existing fiscal benefits, being provided to the infrastructure projects under Build, Operate and Transfer (BOT) agreements , are also likely to be made available to container terminals at ports by providing incentives of duty free import of machinery and equipment, not manufactured locally.

Official sources told Dawn here on Monday that the Ministry of Privatization and Investment has prepared a proposal to the effect which would now be submitted to the Cabinet Committee on Investment (CCoI) for approval. The CCoI is expected to meet before the end of this month.

A number of fiscal benefits were currently available to infrastructure related projects specially exemption of customs duty on import of machinery and equipment (not manufactured locally) for oil terminals, gas terminals, LPG terminals, grain terminals of BOT projects, power generation, agriculture and information technology.

However, the sources said, these benefits and exemption of duties have not been extended to container cargo terminal, which were also infrastructure projects, essential for upgrading and modernization of cargo handling at different ports of Pakistan.

Presently ships and all floating crafts including tugs, dredgers, floating cranes specialised crafts for port services were exempt from custom duties under SRO: 358(1)/2002. It may be noted that gantry cranes etc., used for cargo handling within the bonded area of the ports and are performing similar functions as cranes are liable to customs duty at the rate of 10 per cent.

The Ministry of Privatisation and Investment, the sources said, had proposed to the CCoI that the requirements of heavy capital investment and long gestation periods of cargo terminal projects require fiscal benefits in line with other infrastructure projects.

The development of greater Gwadar port could not be ignored as it would be requiring major incentives from the government including zero rated customs duty on import of handling equipment, for its quick operation viz-a-viz business activities.

"These objectives of the government could only materialise if the private sector is given an attractive incentive package," said a proposal sent to the CCoI by the ministry of privatisation and investment.

In another separate proposal made to the CCoI, the Ministry of Privatisation and Investment said, that the customs duty and First Year Allowance (FYA) should be restored for the Category A.B.C.D industries with a view to attracting investment and competing with other countries in the region. The proposal, the sources said, had been circulated to the ministries of finance, commerce, industries and production and the Central Board of Revenue (CBR).

According to the proposal, while the investment climate in the country had not been very encouraging for the last several years, withdrawal of incentives already made available to investors, sent negative signals. "This inconsistency in the investment policy has also affected the confidence of the local and foreign investors.

Furthermore, revenue collection is very little on account of imposition of 5 per cent customs duty on the import of plant, machinery and equipment (PME), not manufactured locally, for the category A&B.

The restoration of the withdrawn incentives and the resultant large imports of the PME would open new doors for revenue collection on the manufactured output, besides creation of job opportunities and general push to the economy," the proposal said, the copy of which was also made available to this correspondent.