Label Chamber suggests steps to stop exports' downward trend

President of the Lasbela Chamber of Commerce and Industry (LCCI), Ismail Suttar, has suggested some measures that the government can take to stop the downward trend in exports and increase them. Expressing his concern over the alarmingly lost about $4 billion in exports since the Pakistani economy took the downward trend, he said that the decline in export is still continuing as the government has taken no steps to arrest the trend. From 2012-13 exports dropped from $24.5 billion to $20.9 billion in 2015-16.
He described the cause of this slump as being mainly the cost of doing business.
Suttar noted that the government is collecting trillions of rupees from oil and gas, which is almost one-third of the total collection in a year. It has effectively eroded competitiveness of the industry.
He suggested that there needs to be a reduction of gas charges and abolition of the Gas Infrastructure Development Surcharge. He also advocated reduction of the customs duty on raw materials and other inputs not locally manufactured to 3 percent and 11 percent on others.
A full exemption of the customs duty, sales tax and withholding taxes on machineries, equipment and other capital goods not manufactured locally and on others, customs duty at 3 percent, sales tax at 6 percent and withholding income tax at 1 percent. The new machineries are assessed at $2.5 per kg in accordance with the customs' guidelines. New machineries may be assessed on transaction values. The customs values of old, used and secondhand machinery are determined in accordance with Valuation Ruling No 571/2013, dated 24th July 2013.
The valuation method, envisaged in terms of Section 25(9) of the Customs Act, 1969, was considered for determination of customs values of old, used and secondhand machinery. There should be no valuation ruling for old and used secondhand machinery. The users of the machine sell their old and used machineries by auction to replace them with new machineries having the latest technology. Transaction Values under Section 25(5)/25(6) may be accepted to promote rapid industrialisation in our country. There should be imposition of regulatory duty on all goods manufactured locally which are imported under concessionary rates of duties under FTA/PTA regimes.
The utilisation period for inputs imported under Duty and Tax Remission for Exports should be restored to two-years from one year as before due to the present economic scenario of Pakistan. The markup rate of 20 percent is charged for non-fulfilment of the conditions of Temporary Imports for Re-exports in time.
The markup rate of 20 percent is unrealistic and on a very high side. It should be brought down to Export Re-finance rate or at the most at present bank rate of 5.75 percent. The exports incentive package should be given to all exports, not only to the textile sector, as microfiber has replaced textiles, which Pakistan does not have.
The Export Development Surcharge has been levied vide SRO NO.10 (1)/2003/ 04/01/2003 at 0.25 percent of the FOB value of export. The government is running 54 trade offices in more than 30 countries; the government has spent Rs 1.71 billion in 2016-17. The Export Development Surcharge has increased the cost of exports. Pakistan's products are losing competitiveness in the global markets.
The function of the Trade Development Authority of Pakistan and Foreign Trade Offices are nearly the same. The government has to spend on two state institutions, causing a burden on exchequers and on the exporters. The Export Development Surcharge may be withdrawn and SRO.2003/ 04-01-2003 may be rescinded. Full administrative and financial control may be given to the Trade Development Authority of Pakistan for developing Pakistan's trade.
The Strategic Trade Policy Framework, 2015-18, may be revisited as it is more restrictive and it is creating unnecessary hurdles in imports of several goods required for consumption/industrial production and exports. The Ministry of Commerce should give full awareness to Pakistani Exporters, the benefits of which are available on goods exported to countries with which Pakistan has signed FTA/PTA agreements.
This may be given in the shape of booklets and also published in Pakistan's Customs Tariff. The Power to regulate imports of raw materials and other inputs under SRO 568(I) 2006/05/06/2006 may be delegated to the Collector of Customs having jurisdiction, Instead of rupee devaluation we must opt for an exporters' incentives plan. The government should introduce an Export Bonus Vouchers Scheme for all export sectors currently on decline, instead of cash incentive.
It should declare all exports zero-rated and exempted from withholding tax at purchases as well at export stage. It should waive off SBP penalties imposed on exporters due to short performance. Suttar pointed out that the government's faulty policies have resulted in exports falling from $24.5 billion in 2012-13 to $20.9 billion in 2015-16. Therefore, these measures need to be discussed and implemented.