Government urged to help bring down export items' input costs

The government should help bring down input costs to make local products more competitive in the international market, said the Federation of Pakistan Chambers of Commerce and Industry in its Trade Policy 2007-08 proposals forwarded to Commerce Ministry.
It said that "if the cost of production in Pakistan is not reduced to the level of our competitors, the opportunities of globalisation will remain elusive for us." Several other problems impeding the growth of exports have also been identified in the proposals. These include: high cost of production, non-tariff barriers, modern technology, lack of market research, inadequate transportation and procurement facilities and shortage of manpower and insufficient training facilities.
Non-tariff barriers has been identified as an impediment in the country's growth rate. The FPCCI has suggested that these issues need to be addressed effectively through the commercial sections of the embassies abroad. It said that the National Tariff Commission should be strengthened to resolve issues pertaining to anti-dumping duties, both at home and abroad.
There is urgent need to strengthen Pakistan Intellectual Property Rights Organisation (Pipro) as IPRs issues are arousing serious concerns in USA and EU, which are major destinations for Pakistani products. The delay in the settlement of the concerns raised by professional economists of both destinations may result in levy of more non-technical barriers.
It is essential to provide six percent research and development (R&D) to at least 20 top export-oriented items and similar facility be also extended to products placed in under-developmental category of exports.
Severe electricity shortage has hampered the industrial growth. Therefore, the government should consider alternative sources of energy. It is suggested that solar and wind energy should be promoted and equipment used in these technologies should be declared zero-rated. FPCCI should be provided finance through Export Development Fund (EDF) for establishing foreign offices to achieve the objectives of trade policy and improving exports of the country's products.
Agriculture and Non Agriculture Access (NAMA) are the key issues for Pakistan and issues regarding this may be finalised this year. Therefore, the government needs to engage its agriculture stakeholders in policy formulation to derive benefits out of Doha Round.
Certain projects in the Trade Policy 2005-06 and 2006-07, including establishment of textile cities, IT cities and affluent treatment plants in various cities etc were announced in various cities but due to slow follow-up process the implementation of these projects had not been completed.
To make textile sector competitive, it is suggested that the industry should be declared a priority sector. Further, it is recommended that 10 percent financial support for capital investment be given; import of all machinery, spares and generators be zero rated; and withholding tax on exports of textile should be given at 0.25 percent; and investment tax credit be given at the rate of 20 percent.
It is feared that production of SMEs might decline after increase of mark-up rate. Therefore, it is suggested that the mark-up rate should not be more than five percent. Free trade agreements (FTAs) and regional trade agreements (RTAs) are gaining momentum around the globe. FPCCI suggests that before entering into FTAs, the government should first prepare independent feasibility studies in consultation with the private sector and then initiate the process of signing these agreements.