Though the government is yet to implement the Rs180 billion incentive package to boost the country’s exports since its announcement in January 2017, the Ministry of Commerce (MoC) has asked the Ministry of Finance (MoF) to immediately start working on the package.
The new secretary of MoC Muhammad Younus Dhagha, who resumed the office after his transfer from the ministry of water and power, has immediately held a meeting with secretary finance to discuss the issues related to the grave situation of the exports. Dhagha stressed on speeding up the process of giving promised incentives to exporters, sources told Pakistan Today.
The new secretary was briefed that there was no immediate and short term solution of increasing exports; however, the declining trend could be slowed down or stopped through short and midterm measures. Dhagha, according to Minister for Water and Power Khwaja Asif, has been tasked to increase exports after the secretary’s good performance at his earlier ministry.
“Though the government makes announcements regarding bailing out the textile industry and other sectors, but practically does nothing when it comes to the implementation process,” an official at MoC said in terms of anonymity, adding that the exports have unfortunately not been a priority of the present government.
On the other hand, sources claimed that MoF has asked State Bank of Pakistan (SBP) to notify the incentives under the bailout package to start implementation of the scheme. The SBP was to disburse allocated fund for the scheme through commercial banks on the realisation of export proceeds.
On January 10, the government, sensing the negative fallouts of dwindling sale of Pakistani products abroad on the country’s economy and its financial health, had announced Rs180 billion incentive package to exporters to boost the country’s exports by around three billion dollars by end June 2018.
Under the package, sales tax, customs duty on import of textile machinery and cotton has been abolished. Under the package, duty drawback rates for textile garments would be 7pc; textile made ups 6pc; processed fabric 5pc; Yarn and grey fabric 4pc; sports goods, leather and footwear 7pc, respectively. This package was to continue for the period of 18 months from 1 January 2017 to 30 June 2018.
Talking to Pakistan Today, Chairman Senate Standing Committee on Textile Industry, Mohsin Aziz said that the bailout package will be useless since demands and recommendations of the textile sector have not been endorsed by the government. Since the announced package lacks timeline, the mechanism as well as budget allocation for duty drawbacks, it will not help increase exports in its current shape. There is no timeline when the exporters would get the amount against their refund claims, he said.
“We have recommended the government to extend the package to five years from the 18 months, withdrawing the 10 per cent increase condition, reducing input cost including power/gas prices, bringing it at par with other regional competitors and addressing the exchange rate concerns and protection of local industry,” he said adding the government has given no reply to the senate committee and textile exporters.
