KARACHI: Pakistan Business Council (PBC) has recommended comprehensive benchmarking of export incentives with competitor countries, advising the government to renegotiate trade agreements, particularly with China.

The government has set an ambitious export target of $60bn to be achieved in three years.

Impeding this admirable objective are regionally uncompetitive energy costs, higher taxation, and the cash flow burden from withholding taxes, the council remarked.

In a letter to Prime Minister Shehbaz Sharif on Friday, PBC Chief Executive Ehsan Malik said that while the council members are encouraged to hear the government’s intent to reduce the cost of power, it may still leave a gap against tariffs prevalent in South Asian neighbours.

The recent increase in the cost of gas for captive power plants will not help either, he added.

“Our market access and trade representation in the 54 countries of the African continent pale in comparison to India’s,” he said, adding that PBC has shared the lessons from past trade agreements with the Ministry of Commerce.

He said PBC is encouraged to note a broad agreement to focus on export-oriented foreign direct investment. However, the existing investment policies do not differentiate in favour of such investment compared to market-seeking FDI.

On fiscal policy and tax regime, he said PBC supports raising the tax-to-GDP ratio but this should be done by promoting business and investment growth by directing it towards exports and indigenisation, encouraging formalisation, corporatisation, and listing of companies, and broadening the tax base to include the untaxed and the under-taxed sectors.

“If, however, the target of a higher tax-to-GDP ratio is attempted by taxing the already taxed, like the current budget, then it will do the opposite of encouraging the growth of business,” he said.

Published in Dawn, February 1st, 2025