Government expected to remove export hurdles

LAHORE: Entrepreneurs expect the government to remove hurdles in the way of exports and reduce cost of doing business through simple administrative measures. 

The duty and tax remission scheme (DTRE) facility, for instance, is one example where prudence is required. Textile exporters have to import dyes and chemical, which are not locally produced. This basic industry does not exist in Pakistan. India, China and even Bangladesh have established these industries. 

The dyes and chemicals are subject to income tax, excise and sales tax. However, they can be imported without levies under DTRE. The imported goods have to be consumed within six months for exports. If some quantity is left the exporter has to pay normal government levies on leftover quantities.

The DTRE licence for import is renewed every year at a certain cost. The authorities now refrain from issuing DTRE licence for the entire quantity consumed a year earlier and instead issue licence for 25 percent of the quantity. This way the exporter has to apply four times in a year to get permission of importing duty-free inputs. This means that he has to incur the renewal cost four times a year.  This is an unnecessary hurdle created for exporters.

Commercial importers are supplying the same inputs at a slightly higher price than the duty free cost of dyes and chemicals in the open market. They have a solid network. Earlier, they were making payments of these chemicals and dyes through telegraphic transfer. They used to declare the prices 1/10th of the original price.  They paid nominal duties and offered these products to the processors at very low rates. 

Since October last, the import through TTs was banned. Now they have to channel their imports through banks. The suppliers, in most of Europe and Far East and some from China, even refused to issue low-priced invoices. To overcome this problem, they have acquired the services of third party that take delivery of consignment from the supplier in the exporting country. They then open the consignment and replace the invoices as per the instruction of the Pakistani buyer and ship it to Pakistan.  Custom officials facilitate these importers. The bureaucracy is willingly facilitating under-invoicing, but is not prepared to facilitate the exporters on DTRE.

Another example is related to the export containers in Lahore allowed to enter the city limits to go to Quaid-e-Azam Industrial Estate at 11 pm. This is because the industrial estate that once was at the outskirts of the city is now surrounded by residential colonies. The containers have to leave the city limits by 6 am in the morning.  It takes up to one hour for the container to reach the industrial estate and it has to leave by 5 am to be out of city limits before 6 am deadline. The ships leave Karachi port mostly on Monday and Tuesday.

The exporters want the containers to leave for Karachi on Sunday morning. But, if some exporters have 5 to 6 containers they cannot load all of them on time.

The authorities officially do not allow the containers to leave even if they are five minutes late. This delays the departure till 11 pm in the evening and cannot reach port on time. 

To ensure timely delivery, the goods loaded on the stranded container are airlifted at a huge cost to the exporter. Exporters want official relaxation time for these containers.  

The exporters manage to get the stranded containers rolling against certain cost. The export containers, plying on city roads after 6 am, are testimony to this fact. However, those containers that fail to reach an agreement with the authorities are asked to park them on the road sides. With exports on constant decline, the government should go out of a way to facilitate the exporters and relax departure timing by 30 to 60 minutes.

There are many other malpractices that are difficult to prove like the refund premium. There are some exporters that have millions of stuck refunds as they refused to pay speed money.