Govt to spend Rs20bn to enhance exports in three years

ISLAMABAD: The government would spend Rs. 20 billion over next three years to enhance Pakistan's export competitiveness and institutional strengthening under Strategic Trade Policy Framework (STPF) 2015-18.

In response to emerging international changes, several other initiatives are being implemented to enhance export basket and market share, sources at Commerce Division said here on Saturday.

The sources said total volume of Pakistan's exports in terms of billion dollars was 24.5 during 2013 and 20.8 during 2016.

Highlighting the steps taken by the government to enhance exports, the sources said a sales tax zero-rating regime for five export oriented sectors, i.e textile, leather, carpets, surgical and sports goods has been introduced with from July this year.

The other steps were establishment of Export Promotion Council for Pharmaceuticals & Cosmetics, and Rice Export Promotion Council, support for import of plant & machinery to strengthen supply chain and encourage value addition and Performance Based Incentive (PBI) to offset burden of higher utility costs and local levies and taxes on export sectors, i.e. per unit price based refund a 4% of 10% over last year's exports.

The sources said under short-term export enhancement measures, four product categories i.e. Basmati rice, horticulture, meat and meat products, and jewellery, are being focused with parallel focus on markets including Iran, Afghanistan, China and European Union.

An additional Rs. 6 billion is available this fiscal year to exporters through Textile Policy 2014.

Policy of uninterrupted energy supply has been implemented with zero electricity load-shedding on industrial feeders since October 2015 and zero gas load-shedding for industry since March 2016.

In order to fulfil long, awaited demand for reducing cost of doing business, the government has taken a major step of reducing electricity tariff by Rs. 3 for industrial units with effect from January 1, 2016.

Furthermore, the fuel adjustment has been passed on to consumers to further reduce cost of production.

The export infrastructure is being continuously improved : capacity of Lahore Expo Centre has been doubled, ground-breaking at Peshawar Expo Center and at three 21st-century land ports at Torkham, Wagha and Chaman is also expected this fiscal year.

The sources said in order to counter import surge through unfair trade and strengthen trade defence mechanisms, National Tariff Commission Act has been revamped and approved by Parliament in 2015.

The leading business support institutions are being strengthened. Trade Development Authority of Pakistan has recently been restructured while Pakistan Horticulture Development and Export Company is being revitalized and strengthened.

Trade Development Authority of Pakistan (TDAP) is undertaking various export promotional activities through trade exhibitions and delegations.

The availability of affordable finance for the export sector has considerably improved.

The State Bank of Pakistan has further reduced discount rate which currently stands at 5.75%. The Export Finance Rate currently at 4.5% is the lowest in a decade.

The sources said Exim Bank is being established to facilitate export credit and for reducing cost of borrowing for exporting sectors on long term basis. This will also reduce their risks through export credit guarantees and insurance facilities.

The Board of Directors of the bank have been appointed and it will be functional after completing the technical formalities.

Moreover, Federal Cabinet has approved resumption of banking channels between State Bank of Pakistan and Central Bank of Iran, which will boost Pak rice exports substantially. There is consistent effort for negotiating additional market access for Pakistani products in target markets - FTA negotiations with Turkey and Thailand are at advanced stage, negotiations with Iran on FTA are being initiated, and joint research study to assess the potential for a preferential arrangement with Korea is underway.