ISLAMABAD: The government is exploring the possibility of replicating some major tax incentives, concessions, subsidies and rebates available to Bangladesh exporters to the existing exporters and new emerging export sectors in Pakistan.

Sources told Business Recorder that the Adviser to the Prime Minister on Institutional Reforms Dr Ishrat Hussain has started an exercise in this regard and has approached the Pakistan High Commissioner in Dhaka to provide details of latest incentives available to the export sectors in Bangladesh. He has also requested State Bank of Pakistan (SBP), Federal Board of Revenue (FBR), Planning Commission, Board of Investment (BOI) and other relevant ministries/divisions to submit their proposals on the applicability of these Bangladeshi incentives to Pakistani exporters.

In a letter written to Pakistan High Commissioner Dhaka, he requested High Commissioner in Dhaka to share an updated picture of all fiscal and non-fiscal incentives enjoyed by the exporters in Bangladesh. Many different data points were being presented particularly in respect of utility pricing. Pakistan High Commissioner Dhaka has prepared a note highlighting (a) the mechanics of back to back L/Cs; (b) incentive package for export processing zones; (c); utility pricing for exporters; (d) and cash subsidy for readymade garment (RMG) exporters.

Dr Hussain has also requested relevant ministries/divisions to submit their comments on the applicability of these incentives for new emerging exports in Pakistan.

Besides, he also prepared a table on comparative economic indicators of Bangladesh and Pakistan for the latest period, the letter added.

Sources said that the high cost of doing business, liquidity crunch/cash flow, consistent/predictable policies, continuous decline in cotton production, as well as high import tariffs, withdrawal of zero rating, low domestic and foreign investment, product diversification and limited focus on market diversification as major challenges for textile export.

He added that the previous two textiles policies, - 2009-14 and 2014-19 - were formulated to enhance textiles through support of fiscal measures of Rs188 billion and Rs65 billion respectively. However, these targets were not fully achieved due to delayed/no payments under the respective facilitation schemes and non-allocation of funds for infrastructure development, vocational training, productivity and compliance-related programmes.

The draft Textiles and Apparel Policy 2020-25 proposes rationalization of custom tariffs, taxation regime, simplification of temporary importation schemes, duty-free import of textiles and apparel machinery and spare parts, revision of custom duty drawback rates for value-added products, enhanced long-term financing facility disbursements and scope, lower mark-up rates of financing schemes and long-term assurance, restoration of tax credit for investment, setting up of state-of-the-art industrial cities and expo centers, revitalization of existing garments cities, establishment of combined effluent treatment and water recycling plants, pursuing zero rating of entire value chain, machinery and spare parts, focusing on research and development, product diversification, support for testing and accreditation.

Copyright Business Recorder, 2021


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