Rs 75 Billion Pro-Exports Package May Be Announced On January 10
Prime Minister Nawaz Sharif is expected to announce Rs 75 billion package for six major export oriented sectors at different proportions for high and low value added sectors on January 10, 2017 with top priority to the textile sector, well informed sources told Business Recorder. The long-awaited package, sources said, was deliberated in two marathon meetings a couple of days ago.
First meeting was presided over by the Prime Minister Nawaz Sharif in the PM House and attended by the Finance Minister Senator Ishaq Dar, Commerce Minister Engineer Khurram Dastgir, Prime Minister”s Special Assistant on Revenue, Haroon Akhtar Khan, Chairman Board of Investment (BoI), Dr. Miftah Ismail and other senior officials of concerned Ministries. In the follow up of Prime Minister”s meeting, Finance Minister Ishaq Dar chaired a meeting in the Finance Ministry which was also attended by the concerned Ministers and other officials.
According to sources, removal of duty on cotton import, manmade fabric and rebate will be key incentives to be announced by the Prime Minister. Chief Minister Punjab Mian Shahbaz Sharif is one of the major supporters of the package. The government has already slashed prices of gas and electricity for the textile sector. The sources said, participants of both the meetings had agreed that a package is necessary to encourage exporters who are struggling due to international slump in commodities” prices and incentive packages given by neighbouring competing countries like India, Bangladesh and Vietnam to their exporters.
Commerce Ministry, sources said, is sticking to its proposal of 3 percent compensatory rebate for yarn/grey fabric, 4 percent for processed fabrics, 6 percent for home textile/knitwear and 8 percent for garments sector. The proposed rebate for raw and semi-raw exports would be around 4 per cent and value added sectors 8 percent respectively.
It is also expected the government would announce substantial freight subsidy for exporters on the pattern of scheme in Trade Policy 2006-07. The sources said, removal of Regulatory Duty (RD) on key export-oriented industrial inputs including raw material and bringing down custom duties to zero is also likely to be a component of the package. Removal of import duty and sales tax on industrial machinery is also on the cards.
It is also expected that average rebate of five per cent would be made available to the select exporters. Removal of import duty and sales tax on industrial machinery is also on the cards. Duty drawback, bond and export refinance schemes will be simplified to facilitate SME exporters.
The sources said percentage of rebate has not been finalised so far due to differences between the Ministry of Finance and Ministry of Commerce. This issue will be sorted out on Monday (tomorrow) at a meeting to be presided over by the Finance Minister. According to foreign trade statistics released by the PBS, country”s exports slightly improved in November 2016 to $1.762 billion – up by 0.34 percent compared to October 2016, and 6.21 percent compared to November 2015. The declining trend in the goods exports continued in July-November 2016-17 and total exports of the country stood at $8.189 billion – down by 3.94 percent compared to $8.542 billion in the same period last year.
Central Chairman PRGMEA Ijaz Khokhar said that his Association is working out a proposal for the government that would recommend that if duty and sales tax on cotton is removed due to shortage of the commodity, then imported yarn should be given equal treatment.
“Our viewpoint is that two laws cannot be made for one commodity. If duty is removed on cotton import then it should also be zero on yarn so that value added sector can import the commodity duty free,” he added.
Khokhar further stated that Prime Minister should appoint a full time Minister for Textile Industry as early as possible so that he could play a proactive role. All Pakistan Textile Mills Association (APTMA) and other textile sector are anxiously waiting for the package and using different channels to compel the government to make an early announcement.
Kaleem Iftikhar, Chairman Sameer Industries Sailkot said that the country”s export oriented industry badly needs a package as cost of doing business has increased substantially. He further stated that the government should announce a mechanism to refund the claims of exporters in the minimum possible time.