KARACHI: Pakistan has alarmingly lost about $4 billion exports since the economy has taken a downward trend, industry while sounding alarm has said that the declining of export is still continuing as government has taken no steps to arrest the trend.
President, Lasbela Chamber of Commerce and Industry (LCCI), Ismail Suttar urges the government to take steps to increase the export proceeds of Pakistan which have been declining for the past few years. From 2012-13 the exports dropped from $24.5bn to $20.9 bn in 2015-16. He pointed out the cause for this slump mainly to be the cost of doing business of industry by the policies.
Mr. Suttar suggests some measures that the government can take to counter this and increase exports. Government is collecting around trillions of rupees from oil and gas which is almost one third of total collection a year. It has effectively eroded competitiveness of the industry. There needs to be a reduction of gas charges and abolition of Gas Infrastructure Development Surcharge. A reduction of customs duty on raw materials and other inputs not locally manufactured to 3% and on others 11%. A full exemption of customs duty, sales tax and withholding tax on machineries, equipment and other capital goods not manufactured locally and on others, customs duty at 3% and sales tax at 6% and withholding income tax 1%.
The new machineries are assessed at $2.5 per kg as per guidelines of customs. New machineries may be assessed on transaction values. Customs values of old and used second hand machinery are determined as per Valuation Ruling No. 571/2013 dated 24th July 2013. The valuation method as envisaged in terms of Section 25(9) of the Customs Act, 1969 was considered for determination of customs values of old used second-hand machinery. There should be no valuation ruling for old and used second hand machinery. The users of the machine sell their old and used machineries by auction to replace with new machineries with latest technology. Transaction Values under Section 25(5)/25(6) may be accepted to promote rapid industrialization in our country.
There should be imposition of regulatory duty on all goods manufactured locally which are imported under concessionary rates of duties under FTA/PTA regimes. Utilization period for inputs imported under Duty and Tax Remission for Exports should be restored to two years from one year as before due to present economic scenario of Pakistan. Mark up rate of 20% is charged for not fulfilling conditions of Temporary Imports for Re-exports in time. The mark up rate of 20% is unrealistic and on a very high side. It should be brought down to Export Re-finance rate or at the most at present bank rate of 5.75%. Export incentive package should be given to all exports and not only to textile sector, as Micro Fiber has replaced textile, which Pakistan does not have.
Export Development Surcharge has been levied vide SRO NO.10 (1)/2003/ 04/01/2003 at 0.25% of FOB value of export. Government is running 54 trade offices in more than 30 countries; government has spent Rs1.71 billion 2016-17. Export Development Surcharge has increased the cost of exports. Pakistan’s products are losing competitiveness in global markets.
The function of Trade Development Authority of Pakistan and Foreign Trade Offices are nearly same. The government has to spend on two state institutions causing burden on exchequers and exporters. Export Development Surcharge may be withdrawn SRO.2003/ 04-01-2003 may be rescinded. Full administrative and financial control may be given to Trade Development Authority of Pakistan for developing Pakistan’s Trade.
Strategic Trade Policy Frame Work 2015-18 may be revisited as it is more restrictive and creating unnecessary hurdles in imports of several goods required for consumption/industrial production and exports. Ministry of Commerce should give full awareness to Pakistani Exporters, the benefits which are available on goods exported to countries with which Pakistan has signed FTA/PTA Agreements. This may be given in the shape of booklet and also published in Pakistan’s Customs Tariff. Power to regulate imports of raw materials and other inputs under SRO 568(I) 2006/05/06/2006 may be re delegated to Collector of Customs having jurisdiction, from input out co-efficient organization as before for reducing cost of doing business.
Instead of rupee devaluation we must opt for exporter’s incentives plan. Government should introduce Export Bonus Vouchers Scheme for all export sectors currently on decline instead of cash incentive. Declare all exports zero rated and exempted from withholding tax at purchases as well at export stage. Waive off SBP penalties imposed on exporters due to short performance.
Mr. Suttar pointed out that government’s faulty policies have resulted in exports falling from $24.5bn in 2012-13 to $20.9bn in 2015-16 therefore these measures need to be discussed and implemented.