- Policy interventions will be made by the Ministry of Commerce by increasing the share of exports in medium-to-high technological content products
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has reportedly excluded two recommendations of Strategic Trade Policy Framework (STPF) 2020-25 relating to fixed cost of electricity and DLTL (Duty Drawback on Local Taxes and Levies), well informed sources told Business Recorder.
On November 4, 2201, the ECC was informed that Technical Advisory Sub-Committee headed by Finance Advisor Shaukat Tarin deliberated on the proposed draft of STPF of Commerce Ministry and recommended it for approval of the ECC with the following modifications: (i) energy cost as given in the draft policy be deleted; (ii) DLTL cost to be deleted as it is being considered separately; (iii) export projections to be synchronized with draft policies of textile and DLTL; and (iv) timeline of two months may be fixed for operationalization of Exim Division by the Finance Division.
The sources said policy interventions will be made by the Ministry of Commerce by increasing the share of exports in medium-to-high technological content products. After conducting a detailed benchmarking study, specific policy interventions will be made to enable industry to steer toward consolidation so that the industrial sectors could expand and enhance their technological know-how to produce high value-added products. Consolidation will help the industry to scale up their respective capabilities and produce more complex and specialized output, quickly and effectively, which will make their resultant value-added exports more competitive, internationally. This will be done on priority basis by identifying specific sectoral clusters through the proposed Secotoral Councils.
Commerce Ministry also noted that it was in the process of conducting an impact analysis of DLTL for non-textile sectors, adding that it would formulate a separate policy based on this analysis. Furthermore, financial outlay of textile-related DLTL will be covered separately under Textile Policy.
According to the Commerce Ministry Pakistan’s exports in 2018-19 improved due to a set of policy measures including market-based exchange rate improved export competitiveness by decreasing the cost, in dollar terms, of rupee-denominated inputs, e.g., energy, wages, overheads and indigenous raw materials; and the volatility of exchange rate during the first half of 2019 and second quarter of 2020 increased exchange rate risk for the exporters, since at the time of quoting the price they did not know how many rupees would be realized for a dollar when the export proceeds arrive after 6 to 9 months of production.
Export Development Fund (EDF) will be first among the funding sources. Under the policy, EDF facility will be used to fund most of the ongoing projects and the ones conceived for the future under current STPF.
The sources said, after the operationalisation of Exim Bank a close coordination will be established for providing one-stop facility for the exporters for availing comprehensive export loan and guarantee/ insurance services. This facility will help in pursuing market and product development/diversification initiatives.
On tariff rationalization, Commerce Ministry has said that it is a globally acknowledged that the import tariffs are on higher side. Moreover, studies will be conducted for various sectors to identify the impact of tariff rationalisation process.
Copyright Business Recorder, 2021