KARACHI: The Trade Development Authority of Pakistan (TDAP) has recommended the government to remove regulatory duties and move towards a uniform tariff regime to make local industry more competitive and increase exports, The News learnt on Friday.
The TDAP, in a report, also favoured reducing electricity tariff for the industry to bring down the cost of doing business.
In October 2018, Federal Board of Revenue (FBR) had imposed regulatory duty in the range of 5-90 percent on 570 importable items including raw materials such as cotton yarn, woven fabrics, ceramic items, paper and paper board, bars/rods and iron products.
The business community had denounced the regulatory duty on a wide range of products including essential items used by average consumer or by domestic industry as raw material.
The stakeholders had argued that it would not only escalate prices of many products being manufactured within the country and supplied to the local markets but would also make Pakistan’s exports uncompetitive due to additional costs.
The report issued by the authority underlines the need to support small and medium enterprises (SMEs) by making their production processes more energy efficient.
Small and medium enterprises (SMEs) usually face constraints in different key business areas, mainly due to market and coordination failures, that may limit their internationalization, the report said.
It added that these areas were related to SMEs’ access to finance, intensity of innovation, human capital, and organisational form.
SMEs face a limited access to credit due to information asymmetry problems i.e. financial institutions usually do not have enough information to evaluate and monitor their projects, the TDAP said in the report.
It further said lack of adequate financial products also hampered access to finance for SMEs due to scale problems related to non-convexities, indivisibilities, and absence of long-term finance.
“Ministry of Commerce and big firms should play a mentoring role for SMEs and their back-end suppliers. Significant portion of Export Finance Scheme (EFS) and Long Term Trade Financing (LTTF) should be dedicated to SMEs and new exporters,” the TDAP report noted.
TDAP has also recommended that policies and measures should be put in place to become part of regional supply chains, while focus should be on potential items identified to expand export basket and cater to global markets demands.
An exporter said it was encouraging to note the government was making efforts to increase exports to China, US, the EU, the GCC, and ASEAN regions and even to far-off African countries.
“However, in order for these efforts to be successful all the stakeholders including the government, exporters, and banks need to work in greater coordination,” exporter said and added in this context, SMEs could play a more effective role in achieving high export growth.
Pakistan’s exports were recorded at $11.1 billion in July-December 2018/19, up 1.7 percent over the last year, while the country’s imports for the period were recorded at $28.1 billion, down by around 3 percent. Resultantly, the country’s trade deficit for the period July-December 2018 clocked in at $16.9 billion, down 5.6 percent over last year.