ISLAMABAD - The government’s incentives package to increase the country’s exports is in final stage, which would offer subsidised rates of electricity and gas to the exporters.
“The government is preparing an incentives package to enhance the country’s exports on the directive of Prime Minister Shahid Khaqan Abbasi, which is likely to be announced within next couple of weeks,” said an official. He further said that the government would reduce the rates of electricity and gas for the industrial sectors. Similarly, the government would also repay tax refunds to the exporters, which is their long lasting demand, he added. However, the official said, the exporters would have to show 20-25 percent growth in their exports to avail the package.
The business community is continuously demanding to reduce the power tariff by Rs3 per unit to Rs9 per unit besides reducing gas infrastructure development cess. They are also asking for issuing sales tax refunds on time, reducing cost of doing business, and providing equal opportunities to Pakistani investors in CPEC.
The government also wants to enhance exports further, which recorded healthy growth during first seven months (July-January) of the ongoing financial year, to counter soaring imports. Pakistan’s exports showed growth of 11.11 percent and were recorded at $12.97 billion during July-January period of the year 2017-18. Meanwhile, imports were recorded at $34.5 billion during July-January period of the current fiscal year, 18.9 percent higher than the corresponding period. Therefore, trade deficit was recorded at $21.5 billion.
Meanwhile, the Islamabad Chamber of Commerce and Industry has called upon the government to consider extending PM’s incentives package of Rs180 billion for exporters till financial year 2018-19 in order to improve competitiveness of exporters and promote country’s exports.
“Pakistan’s exports, after touching a seven-year low of $20.4 billion in FY 2017, were now recovering as during the first half of the FY 2018, exports improved by 11.24 percent compared to the same period of last year, which was encouraging,” said Sheikh Amir Waheed, president of ICCI. The PM’s package of Rs180 billion played positive role in turning around the falling exports of the country, he added.
Waheed stressed that government should further extend this package up to FY 2018-19 and broaden its coverage to additional non-textile sectors in order to further improve competitiveness of exporters and ensure sustainable growth of exports. He said since 2003, share of Pakistan in global exports has declined by 19 percent due to lack of long-term planning and other problems. He said Pakistan’s product and market mix was highly concentrated as few low value products were exported to few markets. He stressed that government should focus on diversification of products and markets to give boost to exports. He said govt should transform export products mix from labor-intensive sectors to innovation-based high value sectors like pharmaceuticals, engineering and ICT that would help the country to achieve export-led growth of economy.
President ICCI said that Pakistan was targeting low-end market segments that fetched low prices as the average unit price of top 30 export products of Pakistan was 40 percent less than the average price achieved by China, Turkey, South Korea and India. He said Pakistan should target high end market segments to achieve better results from exports.
Islamabad Chamber of Commerce and Industry said that the country attracted low foreign direct investment in export-oriented sectors due to low competitiveness and other challenges due to which investors preferred to invest in other lucrative sectors like real estate, stock market and power generation. The government should take policy measures to make export-oriented sectors highly lucrative for investment so that these sectors could become attractive destinations for local and foreign investment to put Pakistan on the path of fast economic growth.