KARACHI, March 25: CBR chairman Abdullah Yusuf on Saturday said that the zero-rating of five export-oriented sectors from the sales tax resulted in saving of Rs40 billion in refunds, which were being claimed by exporters under “fake and flying invoices.”

Speaking at the luncheon meeting organized by the All Pakistan Textile Mills Association (Aptma), the CBR chief said that this huge amount now was being ploughed back into the economy. These major exporting sectors — textiles, sports goods, leather and leather goods, carpet and surgical goods — were claiming to around 80 per cent of these refunds, he added.

He said that emphasis was now being given to make trade and industry more competitive by brining down the cost of doing business. “The prime minister has also announced National Trade Corridor (NTC) which will streamline the movement of goods from place of manufacturing to the export point.”

He said that the objective of the NTC was to improve infrastructure facilities by combining and gearing up the efforts of ministry of commerce so that it could match the current private sector growth and expansion activity.

Stressing the need for broadening the tax base, Mr Yusuf said that a large number of retailers, transporters etc., were still not in the tax net and added that the agriculture sector itself was a critical issue and legislation was required to bring it under tax net.

He also pointed out that even services and manufacturing sectors needed a lot of improvement in their tax related responsibilities.

Above all, he further said that before tackling with all such issues it was necessary that the CBR should first put its house in order by enhancing its capacity and facilitation of taxpayers.

Aptma chairman Ahmad Kuli Khan Khattak raised a number of issues in his address of welcome and the CBR chief accommodated all of them and assured that all would be done to remove irritants.

Abdullah Yusuf said that the country needed more local and foreign investment to maintain the current economic growth rate of around 7 per cent. He said that last year Pakistan was only second to China in achieving impressive 8.4 per cent GDP growth.

Consequently, he said that the government was ensuring business friendly policies and providing a level-playing field to all and had created an environment conducive to investment.

He admitted that issues like high inflation did confront the country, but it had now been under control and brought down to around 8.5 per cent during first eight months of current fiscal from 11 per cent.

He anticipated that in next three years the inflation would be brought down to around 5 per cent. He also pointed out some of the factors such as high cost of POL products, high food inflation and a sudden hike in rental value owing to higher prices of steel and cement as major contributors toward higher inflation.

About soaring trade deficit, the CBR chief said that it was also because of high crude oil prices in the international markets which had risen by over three times. He added that higher imports of capital goods and raw materials would ultimately come into production and would boost exports of the country.

Higher remittances and privatization proceeds, however, presently keep supporting foreign exchange reserves which are sufficient to meet the country’s four months imports, he said.