GOVERNMENT OF PAKISTAN

MINISTRY OF COMMERCE

Islamabad, the 26th March, 1998

 

ORDER

 

                S.R.O.193(I)/98.-  In exercise of the powers by sub-section (1) of section 3 of the Imports and Exports (Control) Act, 1950 (XXXIX of 1950), the Federal Government is pleased to make the following Order, namely:-

 

1.             Short title and commencement.-  (1)  This Order may be called the Improt of Engineering Goods (Control) Order, 1998.

 

                (2)           It shall come into force at once.

 

2.             Definitions.-  In this Order, unless there is anything repugnant in the subject or context.-

 

                (a)            "engineering goods"  means goods specified in the Customs General Order No. 7 of 1998 issued by the Central Board of Revenue; and

                (b)            'Public sector agencies"  include all the statutory or autonomous corporations, attached departments and other agencies or bodies under the administrative control of the Federal Government and the Provincial Governemnts, including private or public companies with the government shareholding.

 

3.             Price preference to be accorded.-  Bidders tendering for engineering goods produced in Pakitan shall be accorded a price preference in rupees upto a specific percentage (in proportion to the value addition) of the lowest quoted landed cost of an item of foreign origin with similar specifications as mentioned in the tenders:

 

                (1)           Provided that -

 

                                (a)            the saving in foreign exchange is not less than the amount of price preference; and

                                (b)            it is ensured that in each case of such preference, the total import requirements for producing the supplies tendered for locally  manufactured items has been duly indicated by the bidders.

 

                (2)           Price preference shall be allowed as under:

 

                                (a)            Having minimum of twenty per cent value addition through indigenous manufacturing price preference shall be fifteen per cent;

                                (b)            having over twenty per cent and upto thirty per cent value addition through indigenous manufacturing, price preference shall be twenty per cent; and

                                (c)            having over thirty per cent value addition through indigenous manufacturing, price preference shall be twenty five per cent.

 

4.             Public sector agencies to procure their requirements from within the country, etc.- 

 

                (1)           The public sector agencies shall -

 

                                (a)            procure their requirements of engineering goods from within the country and omit such items from the list of barter, credit and loans;

                                (b)            while preparing any scheme or project, make adequate provision of rupee component in their annual procurement budgets for facilitating the local purchases and for this purpose explore all sources of local financing;

                                (c)            encourage local industry by providing educational and development contracts where applicable, for an amount equivalent to ten per cent of their annual procurement budget, share the initial development charges, on one-time basis, on mutually agreed terms; and

                                (d0           submit reports on six monthly basis to the Ministry of Commerce with copies to the Engineering Development Board.  The Engineering Development Board will monitor, on a regular basis, the implementation of this Order towards achieving importsubstitution and indigenization about the cases of price preference allowed and provide full justification about the cases where  local purchases are not made and preference is given to imports.  The report shall outline the future plan for import substitution in that area.

 

                (2)           The raw materials and component requirements of the local engineering industry shall be met from the credits referred to in clause (a) of sub-paragraph (1).

 

5.             Compliance of directives or decisions.-  Public sector agencies shall comply with all the directives of the Prime Minister, decisions of the ECC of the Cabinet and government policy decisions on promotion of indigenization and import substitition.

 

6.             Special provisions.-

 

                (1)           Notwithstanding any provisions to the contrary in any of the existing rules and oders, the requirments as to inviting of tenders and quotations  and making of enquiries, etc., shall be waived in cases where purchases by the government controlled units or public sector agencies are  made from government controlled manufacturing units or public sector agencies.

                (2)           The public sector agencies shall incorporate condition in tender documetns for all major industrial and infra-structure projects that import  of turnkey plants or award of turnkey contractrs to foreign manufactuers or contractors for such projects shall not be allowed, and instead  local manufactuers or contractors shall be encourged to undertake EPC (engineering, Procurement and Construction) contracts.  However, in cases where local capacity and expertise is not available to this extent, the foreign manufacturers or contractors shall be considered but required to associate fully the recognized local design, engineering and manufacturing organization on the concept of sub-EPC contractor.  The public secotr agency shall patronize the public sector manufacturing organization on the concept of sub-EPC contractor. The public sector agency shall patronize the public sector manufacturers as consortium partners to foreign companies to ensure that dependence on imported plant and machinery reduces progressively from year to year.  The local content in large projects shall bedetermined, on case to case  basis, by the Engineering Development Board (EDB) on the pattern of industry-specific deletion programme.

                (3)           In case of participation of public sector manufacturers, the requirements of furnishing carnet money or tender guarantee, security deposit, etc., shall be waived and instead, a letter to the effect from the parent Ministry confirming its public sector entity shall serve the purpose. Performance bond or bank guarantee shall be provided by the manufacturer or, as the case may be, the contractor.

                (4)           Decision for award of contract shall be made on the basis of competitive prices and technical suitability and preference shall be given to the manufacturers or contractors having obtained certification of quality and standards such as ISO 9000, ASME, API etc., EDB will help and facilitate the local industry in achieving quality standrads and timely completion of large projects.

                (5)           In case there is only one recognized manufacturers in the public sector of the required item or component of engineering goods, it hsall be mandatory on the public sector agencies to award contract to the local manufacturer on  negotiation basis. In case the terms of contract are not mutually agreeable between the buyer and seller, a decision shall be taken by the National Council for the Engineering and Industrial Coordiation (NCE&IC).

 

7.             Repeal.-  The Import of Engineering Goods (Control) Order, 1983, is hereby repealed.

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[F/No.1(2)/83-E.VI]

SYED HABIB AHMED

DEPUTY SECRETARY