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March 14, 2020

Ministry for resolution to exporters’ cash flow issues

 
March 14, 2020

ISLAMABAD: Ministry of commerce on Friday underscored needs of improving rebate and duty drawbacks mechanism and ensuring timely fulfillment of incentives to boost exports.

The commerce ministry presented its proposals during a meeting presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh to review the proposals for the facilitation of export-oriented sectors with special focus on small and medium enterprises. The meeting was told that small and medium enterprises could play a more vibrant role in export promotion with provision of certain facilities by the government.

Adviser to the Prime Minister on Commerce Razzaq Dawood gave a detailed briefing to the participants of the meeting on improving the system of duty drawbacks and export rebates.

“(This) could help with the cash flow situation of the exporters and reduce the burden through automation and reduced tiers for verification,” Dawood said in a statement.

Other proposals, presented by the commerce ministry, included updating the lists of rate of rebates offered on different exported items and provision of funds to the State Bank of Pakistan for clearing rebates in a faster manner.

No latest data of stuck refunds available. However, the finance ministry official told The News in December last that customs duty drawback refund claims piled up to approximately Rs300 billion. The government assured the textile exporters then that the claims of Rs10 billion – out of the total outstanding amount – would be cleared within a month.

The meeting was told that 26 sectors, which can provide exportable materials, have put forward their suggestions for the facilitation and promotion of exports from the country. It was told that some of the proposed measures do not even require any monetary contribution from the government.

Shaikh appreciated the work done by the commerce ministry and the inputs given by the Federal Board of Revenue and customs on the proposals. “The government aims to provide ease with maximum degree of automation and transparency to the exporters,” he said.

The finance adviser directed the ministry of commerce to hold further discussions with all stakeholders and prepare draft of proposals for making an effective policy for increasing the volume of exports from the country.

“All possible cooperation in the matter shall be provided by the ministry of finance and the needful will be done in the next budget,” he said. The government is struggling to increase exports as anemic external account sector is currently fed on foreign doses of debts, hot money in government papers, and remittances.

The government, albeit extending electricity tariff concessions to industrial sector, was questioned about the implementation. Textile businesses were voicing concerns over paying bills at rates more than the promised 7.5/kilowatt-hour. They warned that exports target of $26 billion for the current fiscal year would be missed due to the system’s faults. Exports staggered to $22.9 billion in the last fiscal year of 2018/19, down one percent year-over-year. In the first eight months of the current fiscal 2020, exports slightly improved around 4 percent to $15.6 billion.