Incentives package to lift exports likely

Published September 11, 2015
ISLAMABAD: Commerce Minister Khurram Dastagir Khan addresses a press conference after the consultation committee meeting on Thursday.
ISLAMABAD: Commerce Minister Khurram Dastagir Khan addresses a press conference after the consultation committee meeting on Thursday.

ISLAMABAD: Prime Minister Nawaz Sharif is expected to announce on Friday a bailout-cum-incentive package to support country’s falling exports.

A five-member ministerial committee on Thursday concluded talks with textile exporters on the package that would be taken up for approval by the prime minister.

The prime minister would spend five hours with the All Pakistan Textile Mills Association today to resolve problems relating to textile exports, Aptma leader Ejaz Gohar told Dawn after the ministerial committee meeting.

He said the committee agreed to zero-rate exports because there was no point in holding refunds.

This comes at a time when Pakistan’s merchandise exports fell 3.5 per cent last fiscal year and 17pc in July 2015 on a year-on-year basis.

Ministers for commerce Khurram Dastagir Khan, power Khwaja Asif, planning Ahsan Iqbal, petroleum Shahid Khaqan Abbasi and adviser to prime minister on revenue Haroon Akhtar led the government team. Finance Minister Ishaq Dar, who is also member of the committee ,could not attend due to other engagements.

Dastagir told journalists that the committee had detailed discussions with various associations on reasons behind falling exports and the proposals to regain Pakistan’s share in the international export market. “The entire government machinery would have to work with exporters to enhance exports because the commerce ministry alone could not deliver,” he said.

He said that most of issues and complaints were related to tax system and scant power supply and high tariffs. He said a summary of the proposals would be presented to the prime minister on Friday who would later announce an incentive package after consultation with exporters.

He said that enhancing exports did not mean only fetching foreign exchange but linking Pakistani economy with the global market for job creation and improving living standards.

He said efforts would be directed to provide even-playing field to manufacturers to help them compete with regional rivals.

He said the taxation system would be simplified and payment of refunds would expedite. Regarding energy supply, Dastagir said the petroleum minister assured the participants of improvement in gas supply by end of this year but issues relating to its pricing still needed a lot of consideration.

Adviser on Revenue Haroon Akhtar said the government was now moving towards growth after achieving economic stability and it had now reasonable resources to support exports.

Gohar Ejaz was critical of the government policies. He said Indian exports were growing 16pc compared to Pakistan’s 2pc average growth in a global export market growing at 6.6pc. “This meant we are losing our share every year,” he said as India provided 10pc subsidy to its exports and ensured 100pc refunds.

As a consequence, Pakistan’s textile exports had increased from $11 billion to $13bn since 2005 while India exports jumped from $17bn to $41bn over the same period.

Ejaz said the impositions of a number of surcharges on electricity prices and infrastructure cess on gas supply to textiles had extrapolated energy prices, leaving industry uncompetitive not only in the global market but also in the domestic market.

He said the global electricity cost averaged 9 cents per unit compared with Pakistan’s 14 cents per unit. He said Pakistan’s per capita textile consumption was around 10kg and local industry contributed only 2.5kg while the rest came from abroad including around 5kg per person in the shape of smuggled second-hand garments. In India, domestic textile contribution was double at 5kg per person even though purchasing power was not any better there.

Published in Dawn, September 11th, 2015

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