ISLAMABAD: Pakistan’s merchandise exports to the United States persistently declined during the first two months of the current fiscal year, primarily attributed to a decrease in the export of textile products.
The exports dipped by 23.77 per cent to $0.934 billion in July-August from $1.22bn in the same period last year, according to the data compiled by the State Bank of Pakistan.
In the last fiscal year, exports to the US witnessed a decline of 14.45pc to $5.92bn from $6.92bn in FY22 when merchandise exports had not only been on the rise, but the US also emerged as Pakistan’s primary export destination.
The decline in overall exports can be attributed to several key factors. These include a shortage of capital which has hindered the ability of businesses to invest in their export operations. Additionally, there have been issues with refunds, such as delays in receiving sales tax refunds, deferred sales tax payments, and income tax refunds.
In a highly anticipated move, the caretaker commerce minister has announced an immediate release of Rs31bn to exporters in sales tax refunds. This long-awaited development, initially scheduled for Sept 4, has been eagerly awaited by the export community.
In a parallel development, the ministry has made another announcement regarding the provision of regionally competitive energy prices for exporters. However, it appears that these plans have yet to materialise, as they currently exist only on paper.
Furthermore, the duty drawback on local taxes and levies has created additional challenges for exporters. Another contributing factor is the lack of access to the technology up-gradation fund, which has limited the ability of businesses to modernise their export processes.
Ever since assuming the role of US Ambassador to Pakistan, Donald Blome has been actively engaging in a series of meetings with the country’s finance and commerce ministers. The primary objective of these meetings revolved around the enhancement of bilateral trade between the two nations.
Both countries have already launched a five-year project named the Investment Promotion Activity (IPA) to be implemented by the United States Agency for International Development (USAID).
The IPA will help strengthen Pakistan’s business environment, build the capacity of institutions focused on investment promotion, attract FDI, and increase US-Pakistan bilateral trade and investment. Overall, the project aims to reduce barriers to investment and trade by improving Pakistan’s investment promotion capabilities.
Published in Dawn, September 28th, 2023
