KARACHI: Pakistan Business Cou­ncil (PBC) has warned that revoking the Export Facilitation Scheme (EFS) would be a catastrophic mistake which would cripple the export industry, stifle economic progress and leave Pakistan vulnerable to growing trade imbalances.

The EFS is not just a policy — it is the backbone of our value-added export sector. Instead of revoking it due to enforcement failures, the council said the government must tighten regulatory controls, strengthen customs and FBR oversight, and severely punish violators.

Revoking the EFS will be an economic suicide, warned PBC chief executive Ehsan Malik in a letter to finance, commerce, and planning and development ministers.

He added that the path to prosperity lies in empowering value-added exporters, ensuring regulatory transparency, and competing with the world’s best.

Ehsan urges govt to address lapses instead of penalising export sector

The domestic spinning industry has raised concerns that some value-added exporters are illegally diverting imported yarn into the local market without paying sales tax, making local spinners less competitive.

“This issue is not a failure of the EFS itself but a failure of enforcement by customs authorities and the Federal Board of Revenue (FBR),” he said, adding that scrapping the scheme due to enforcement lapses is akin to demolishing a bridge because of a few loose planks.

Instead of dismantling the EFS, the government must take decisive steps like strengthening customs and FBR oversight. Implement end-to-end traceability mechanisms using blockchain, digital invoicing, and mandatory audit trails to ensure every kilogram of imported yarn is accounted for.

The spinning industry should improve its quality and cost structure to compete globally rather than relying on a captive local market. He added that if Pakistani yarn is internationally competitive, it should also be exported, helping Pakistan earn foreign exchange just like value-added textiles do.

Published in Dawn, March 8th, 2025