KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Mohammed Tariq Yousuf, while expressing deep concerns over withdrawal of Regionally Competitive Energy Tariffs (RCET) earlier on electricity and now abruptly on natural gas and RLNG, demanded from the government to restore RCET for electricity, natural gas and RLNG to zero-rated sectors with immediate effect which must also continue in next financial year so that the country’s exports could be saved from undergoing a disastrous situation.
In a statement issued, Tariq Yousuf stated that on one hand, Prime Minister, Finance Minister, Commerce Minister and Chief Executive TDAP have been convincing the exporters to do more and bring dollars into the country but on the other hand, the acts were altogether negative which would only bring retardation and there cannot be any enhancement in exports.
He pointed out that the government has abruptly withdrawn RCET for gas despite commitment to continue it till 30th June 2023 for zero rated sectors whose manufacturing cost suffered has already gone up badly as a similar move was taken earlier by withdrawing RCET for electricity which raised the electricity cost by almost 80 percent, making it impossible for industries to bear the burden. “The withdrawal of RCET on gas and electricity, which were introduced to make export-oriented industries viable against regional competitors, would have a disastrous impact on the whole system as the industries along with many allied SMEs and vendors would close down their businesses, which would trigger massive unemployment all over the country”, he added.
He said that the very essence of introducing RCET was to maintain and enhance the exports by making Pakistani products competitive in the international arena so that the exporters were able to earn the desperately needed dollars but now as RCET for gas and electricity have been withdrawn, it would intensify the problems for the industries and the economy.
He stated that the withdrawal of RCET for gas overnight despite commitment has not only created serious trust deficit but also shattered the confidence of buyers who were dubious because of instable costs, restrictions on raw material imports and also the ongoing political and economic instability.
“Consequently, the buyers of Pakistani goods are shifting their orders to regional competitors including India and Bangladesh. The government has to see that Bangladesh exports have risen by US$5 billion and ours have gone down with similar numbers which clearly shows how speedily we are giving away our exports share in the international markets to our rivals”, he said, adding that the recession in UK and US was unlikely to have any impact on our exports as, being low-end suppliers, we do not fall in that recession bracket but the core reason for losing exports in these important markets can only be attributed to withdrawal of RCET and many other factors.
He was of the view that Pakistan’s exports were going through awful situation not only due to political and economic instability but also because of several other factors including very high interest rates, sky-rocketing inflation, restrictions on import of raw materials, accruing demurrage/ detention charges on already imported raw material containers, delays in release of Sales Tax Refunds, withdrawal of DLTL and many other factors. “All these factors are not only sabotaging the exports but also terribly affecting production as the industries are not even able to sell 50 percent in the local markets”, he added.
President KCCI further said that the withdrawal of RCET would deprive Pakistan from earning dollars through enhanced exports and the country would continue to depend on IMF for rescue which, despite applying so many restrictions, has not even released US$1.2 billion to date. “God forbids but if the situation continues like this and our exports continue to descend, what will happen to our economy and what option will be available to us except to keep on looking at the IMF whose restrictions have actually hampered the exports and crushed the local production”, he added.
Keeping in view the overall situation, President KCCI demanded from the government to immediately revive Regionally Competitive Energy Tariffs for natural gas, RLNG and electricity from the date they were withdrawn.