March 12, 2006	Sunday	Safar 11, 1427

KARACHI, March 11: Pakistan’s textile exports recorded a rise of around 21 per cent during July-Jan, 2005-06 in post-textile-quota environment. Commenting on the growth in exports the textile experts said that the country had a potential to perform better, because Its rivals in textiles trade, India and China, performed much better in the free trade era and their exports increased manifolds during the same period.

There is, however, little doubt that Pakistan could have performed better, had there been some focused and joint efforts from the respective ministries, experts said adding that there could be many reasons for this, but one of the major factors was high input cost compared to other countries in the region.

Consequently, there is a growing concern amongst the textile industry which felt that the country was fast becoming a supplier of semi-finished goods, such as yarn and fabrics and is now assuming the role of providing raw material to the value-added textile industries of other countries.

Though it is encouraging that the import of capital goods has been rising over the last couple of years, but the rising trade deficit during last seven months to around $5.5 billion is an issue of grave concern.

The rising import of capital goods may help in increasing country’s production and assist in increasing exports of value added products but, for now, they are putting pressure on external trade by creating imbalance.

The only silver-lining is from the rising remittances which are presently off-setting the rapidly widening trade imbalance and was helping to keep away the pressure on country’s forex reserves which keep hovering between $11 to $12 billion.

However, there could be no denial of the fact that the country badly needs to register a leap or quantum jump in its exports if it want to ensure sustainable economic growth and job opportunities created for the large number of unemployed youth. But all this could not be achieved by taking decisions in piecemeal or expecting that the ministry of commerce will alone start doing miracles.

The trade and industry have been time and gain drawing attention of the authorities at the highest level to the fact that they need level-laying field to sell their products in the world market. The ministry of commerce from time to time took some measures to give export trade some relief but these decisions, instead of giving some cushion to genuine exporters, generally became the victim of corruption and malpractices.

For instance, the benefits of a freight subsidy scheme launched about two years back for new markets and products could not reach the genuine exporters rather became a boon for non-genuine and unscrupulous exporters who with the connivance of authorities mis-used the scheme.

Similarly, the Research and Development (R&D) rebate provided to the garment exporters at the rate of 6 per cent also became the victim of such corrupt practices giving little benefit to the export trade.

Therefore, it was strongly recommended that the government or the policy makers, instead of launching such schemes, which could easily become victim of corruption and mal-practices, should give built-in relief which could not be tampered with.

There are many taxes and charges on export trade, which if removed, could easily bring down cost of production of the export industry and also help them to become competitive in the world market. However, most of such levies and taxes pertain to or are imposed by the ministry of finance.

For example, if the ministry of finance withdraws one per cent income tax (withholding tax) on exports and also do away with export cess at 0.25 per cent, some room would be created in the cost exporters. Similarly, stamp duty imposed by the provincial government on documents and bill of exchange at 0.35 per cent without any justification could also provide some relief.

There are many other measures, if taken, could directly give relief to the export trade, for instance, 36 provincial and federal agencies like SESSI, EOBI, labour department etc., could also help export trade from unnecessary involvement and payment of taxes and cess.

But most of these measures have to be taken by the ministry of finance, which is presently without a permanent steward as the prime minister is holding the portfolio with him. However, being a political-cum- administrative slot, the prime minister could not fully devote his time and energy to such an important subject around which every thing revolves.

Even if, the finance ministry totally withdraws duties on import of capital goods and raw material, this would also make a lot of difference. But the most important factor is that no relief should be given directly. It should be only through fiscal measures to make the industry and export trade viable and competitive in the world market.

However, all these measures have to be taken with a lot of courage by the finance ministry and no other ministry could contribute to exports as the commerce ministry had been doing all it could from its own resources and this only resulted in fattening of unscrupulous elements on both sides of the divide i.e., exporters and the implementing authorities.