Dastgir says package aimed at boosting exports

The federal government with a view to giving boost to continuously declining exports announced on Tuesday trade enhancement initiatives of Rs 180 billion for 18 months, starting from January 1, 2017 to June 30, 2018. The package was first announced by the Prime Minister Nawaz Sharif in the presence of industry and different associations' representatives. Minister for Finance Ishaq Dar and Commerce Minister Engineer Khurram Dastgir also addressed the representatives of local industry.
Later, speaking at a press conference, Commerce Minister Engineer Khurram Dastgir said that under the package duty draw back rates in local taxes and duties for garments would be 7 per cent; textile made-ups 6pc; processed fabric 5pc; yarn and grey fabric 4pc; sports goods, leather and footwear 7pc, carpets 6pc, surgical and cutlery 5pc and tanned leather 5pc. The incentives would be dispensed through the State Bank of Pakistan.
The package also envisages abolition of customs duty and refundable sales tax on import of raw cotton. Customs duty on man-made fiber, other than polyester and sales tax on import of textile machinery, has also been abolished.
The minister said that there would be no condition during first six months of the package, but later on duty draw back would be linked to increase in exports. "If the exporters show 10pc increase in exports in 2017-18, then they would be given duty draw back on full amount," he added. He said that the package has been announced after marathon consultations with the local industry and exporters for which Prime Minister Nawaz Sharif personally held three meetings in Karachi, Lahore and Islamabad. The premier also held five hours of consultation with the industry in September, last year.
The minister said with the implementation of the trade enhancement initiatives, industry's cost of doing business will come down to a reasonable level. He also quoted the PM as saying that the government has extended maximum incentives to the exporters keeping in viewing fiscal situation of the country. Now, it is the responsibility of the exporters to give positive growth in exports as it will help reduce unemployment in the country, besides under-capacity mills will be revived, translating into real growth, he added.
Dastgir hoped that with this package of different stimuli would further fuel exports to the EU which have already increased by 37pc. The package would also help exporters resolve liquidity issues which they have been facing for the last several years, in addition to improving competitiveness with regional countries. Exporters now feel able to compete with other regional countries. The PM has expressed the confidence that the package would help achieve the objective of export-led growth. He said government is trying to reach the target of $35 billion.
Quoting the finance minister, the minister said: "If Pakistan brings its exports to 10pc of GDP, Pakistan will be included in emerging markets." He said that finance minister would clear the refunds of exporters as early as possible. He said FPCCI is also a partner in the new scheme and would monitor growth in exports with the help of chambers, spreading across Pakistan.
Local industry, he said would invest in energy efficient machinery and upgrade existing factories for production efficiency as sales tax has been declared zero rated. Dastgir said that food group has not been included in the package because the government had already extended substantial incentives to agriculture sector in budget 2016-17. The government had slashed prices of urea by Rs 400 per bag and electricity rates were fixed at Rs 5.30 per unit.
The government had also not passed on 43pc increase in petroleum products from December 2015 to December 2017. The financial impact of that decision was Rs 85 billion on the country's exchequer. In reply to a question, Dastgir said that he had recommended the package for 30 months and estimated an increase in exports by $2.5-3bn by June 30, 2019. This implies that the ministry of commerce has projected $1bn increase in exports per annum.
The minister said that banking channels would be operational with Iran within a week's time, adding that with development, Pakistan's food group would also rise. He said no cash incentive has been announced for the BMR. He said that final figures of cotton production are available and total production was 10.336 million bales which is 0.5m bales more than last year, but Pakistan's demand on average is 15 or 16m bales. Cotton is already short in the country. It was the considered decision to allow import of cotton.
To another query, the minister said that eliminating duty on raw cotton would be beneficial for yarn manufacturing due to which its import would also decline and spinning sector would also benefit from this decision. Chief Executive of Trade Development Authority of Pakistan (TDAP) said that their proposed duty drawback rates were 2pc lower than what the PM approved on the demand of exporters.
FPCCI president Zubair Tufail said that the local industry is facing the issue of under-invoicing, especially from China. "We want a balance. Local industry and import should be given equal importance. We need due protection and foreign countries should not be allowed to dump in Pakistan. FPCCI also wants local industry to be protected while signing FTAs," he added.
He hoped that 2017 and 2018 would prove to be years of export. He said the country has achieved economic stability as a result of measures taken by the present government during the last three years. In his speech, Finance Minister Ishaq Dar said the Prime Minister has accepted all demands of the business community. He said the government is providing liberal incentives to the business community and it is now the responsibility of exporters to increase exports significantly. He asked them to increase exports up to 10pc of the GDP.
The commerce minister said Pakistani exports lost competitiveness due to incentives by our competitors, complicated taxation and energy shortages. APTMA chairman Aamer Fayyaz Sheikh thanked the government for announcing a generous package of incentives and said business community would not disappoint the nation.
Patron-in-Chief of PlGMEA, Fawad Ijaz Khan, said that the industry is very happy about 7pc duty draw back on leather garments and goods. The package would increase exports of leather garments and goods by 10pc during 2016-17 and 15pc in 2017-17. He said that he had strongly urged the PM to remove 4pc duty on import of leather and the finance minister has promised to consider his proposal in federal budget 2017-18.