LAHORE, Oct 30 (APP): Prime Minister’s Adviser on Commerce & Investment Abdul Razak Dawood said on Saturday that viable policies of the government had improved considerably country’s export diversification during the last three years, which is the only way to enhance export revenues.
In a meeting with the business community here at the Lahore Chamber of Commerce and Industry (LCCI), he said that market and product diversification is the best way to increase exports. “Our export of traditional items to non-traditional markets has increased 60 per cent while export of non-traditional exports to non-traditional markets has gone up by 77 per cent during the last three years,” he added.
The PM adviser said the government was going to introduce DLTL (Drawbacks in local taxes and levies) policy in which extra incentives would be given on the exports of non-traditional products. The government is also going to sign TIR (Truckers Interchange Receipt) convention with Afghanistan for free movement of trucks to Central Asian States and other parts of the region.
He said that the government was targeting Central Asian Region to boost national exports. The government is also going to implement ‘Look Africa Policy’ and an official delegation would visit Nigeria the next month.
Abdul Razak Dawood said that the Temporary Economic Refinance Facility (TERF) of the State Bank of Pakistan, which expired in March, would be restored for SMEs and other targeted sectors.
The adviser said that the engineering and iron and steel sectors would be next area of focus for tariff rationalisation. To a question, he said that International Monetary Fund (IMF) was the major hurdle for sales tax rate reduction. He said it was demand of the IMF that Regulatory Duty should be imposed on everything.
“As far as the matters pertaining to GSP-Plus Status and Basmati Rice are concerned, the things are well under control,” he said and added that though there were challenges, those were far less than the past three years.
He said that the import cost was increased due to inflation at international level. Oil imports have been increased in term of value. He said that the Lahore Chamber would be given representation in Export Development Fund Board.
LCCI President Mian Nauman Kabir, Senior Vice President Mian Rehman Aziz Chan and Vice President Haris Ateeq, FPCCI (Federation of Pakistan Chambers of Commerce and Industry) President Nasir Hayat Magoon, former FPCCI president Mian Anjum Nisar, former LCCI presidents Sheikh Muhammad Asif, Shahzad Ali Malik, Irfan Iqbal Sheikh and Executive Committee Members also presented their viewpoint at the meeting.
Mian Nauman Kabir said that Lahore Chamber had always advocated the effective utilisation of Export Development Fund (EDF) in consultation with the important stakeholders of the economy. However, the LCCI had not been given representation in the EDF Board. Considering the importance of the LCCI, it should be given adequate representation in the EDF Board.
He said that the issue of a steep rise in trade deficit needs urgent attention of the government. “In the short-term, we would urge the government to immediately implement currency swap with China from where our imports amount to around US$13 billion,” he suggested.
Mian Nauman Kabir proposed that for curtailing trade deficit, the customs duties and regulatory duties on luxury and non-essential items should be increased.
Mian Nauman Kabir said that the facility of duty drawback on local taxes and levies (DL/TL) for the exporters would not be curtailed but further enhanced in the value added sectors.
He said that Pakistan’s export products were heavily concentrated in a few product lines as textiles, rice and leather account for almost 70 per cent of our exports. There is a need to diversify our exports, especially focusing on potential sectors like pharmaceutical, engineering industry and halal food, etc.
He recommended that these potential export sectors of the economy should be completely zero rated so that their export competitiveness could be increased.
The LCCI president said that there was a need for collective actions for exploring new export markets as about 65 per cent of the Pakistan’s exports go to just 10 countries.
For enhancing our exports to untapped potential markets like Africa, Russia and Central Asia etc, the formal banking channels should be established on priority basis. This issue has already been raised before the State Bank and Ministry of Commerce.
“We appreciate the government for reducing duties on many raw material lines in the last couple of years,” Mian Nauman Kabir said and added, “We recommend that the process of tariff rationalisation should continue and import duties (Customs Duties & Regulatory Duties) on all raw materials not produced locally should be slashed.
He said that the Temporary Economic Refinance Facility of the State Bank, which expired this year in March, would be revived again for targeted sectors. This scheme was really good for setting up new industrial units as concessionary refinance was being provided.
He said that access to finance for the SMEs remains a persistent challenge. The SMEs get only six per cent of private sector credit in Pakistan, while the number of SME borrowers is just 180,000. In this connection, the government should make a concrete strategy in collaboration with the private banks.
The LCCI president said the rate of 17 per cent sales tax on the inputs of various export oriented industries was extremely high and needed to be brought down.
Mian Nauman Kabir said continuation of GSP plus was imperative for our economic survival as European Union caters to more than 30 per cent of our exports (around 8 billion dollars).
He vowed, “We would like you to play a sound role in getting the business community facilitated by the government for compliance of GSP Plus conventions.”
Former FPCCI President Mian Anjum Nisar drew the attention of PM’s adviser towards long delay in movement of goods at Pak-Afghan border.
He said that there were long queues of trucks that was hampering the trade between the two countries. He also called for reduction in freight charges for Pak-Afghan trade.
FPCCI President Nasir Hayat Magoon said that State Bank of Pakistan should control the exchange rate, which was affecting the businesses.
LCCI Senior Vice President Mian Rehman Aziz Chan and Vice President Haris Ateeq said that it should be made sure that electricity tariff for the export oriented industries remains competitive as any tariff increase results in increasing the cost of doing business tremendously. The continuous availability of gas (24/7), particularly for the export oriented industries in the winters should be ensured.