The Economic Coordination Committee (ECC) of the Cabinet on Thursday allowed the import of long staple cotton through land routes from India and Uzbekistan to meet the country’s shortfall of three million bales, Daily Times (Pakistan) reported.

The government will also conduct a study to examine how allowing the import of short staple cotton would affect local cotton farmers, and how to minimise the negative effects, Dr Ashfaque Hassan Khan, advisor to the Ministry of Finance, told reporters after an ECC meeting chaired by Prime Minister Shaukat Aziz that took up a 13-point agenda.

Pakistan produces some 13 million bales of cotton per year and consumes 16 million bales, leaving a shortfall of three million bales. The decision to allow import of cotton through land routes would reduce the cost of import and would make Pakistan’s textile exports competitive in world markets, Dr Khan said.

He said the ECC had directed the Ministry of Food and Agriculture to set up quarantine facilities at Wagah, Torkham and Chamman to facilitate the import of cotton from India and Uzbekistan through Afghanistan.

The ECC exempted foreign insurance companies from raising $4 million equity from local as well as foreign sources. These companies have now been allowed to raise the money purely from local sources, Dr Khan said.

The committee also decided that companies investing in services would not be required to get approval from the ECC for concessionary tax and duties on their imports.

The ECC also approved the establishment of a floating liquefied natural gas (LNG) terminal and allowed Port Qasim Authority to sign an agreement with the Associated Group for setting up the terminal. It approved the establishment of a 450 MW power plant in Chichawatni. Bids of $8.842 cents per kilowatt hour of Alston of the United States, Merubeni of Japan and the State of Qatar were accepted.

The ECC directed the Securities and Exchange Commission of Pakistan to finalise real estate investment trust rules before the announcement of the budget.

It also allowed 6% research and development support to textile exporters to seven Central American countries, including Panama, Costa Rica, Belize, Guatemala and Honduras. R&D support for dyed and printed fabrics, white home textile and dyed and printed home textiles was allowed.

The committee directed the Central Board of Revenue to examine a proposal to exempt electricity produced by the Pakistan Ordinance Factories from sales tax and present a report on this in the next meeting.