Govt relaxes condition for exporters to avail duty drawback

PM’s Trade Enhancement Initiative

ISLAMABAD: Ministry of commerce on Thursday implemented a government’s decision to ease condition for exporters to avail incentives under the PM’s trade enhancement initiative.

“The new version of the package provides a hybrid scheme, which provides 50 percent of the duty drawback to all the exports of the eligible sectors regardless of the enhancement and 50 percent only on 10 percent enhancement,” the commerce ministry said in a statement. 

The ministry implemented the second component of the trade rationalisation strategy that was approved by economic coordination committee of the cabinet on 6 October by issuing the statutory regulatory order (SRO) on PM’s trade enhancement initiative, improving the terms of the earlier scheme. 

The SRO binds the State Bank of Pakistan (SBP) to clear the claims submitted by exporters’ bank within 48 hours.  “The banks on their part will not take more than 15 days to verify and submit the claims to SBP and will credit exporter’s account within 24 hours of release of funds by SBP,” the commerce ministry added.

In January, former prime minister Nawaz Sharif announced Rs180 billion worth of trade incentives for one and a half year to arrest decline in exports. The incentives are for five value-added sectors, namely textile, leather, sports, carpet and surgical goods sectors.

The package, however, promised a conditional duty drawback scheme, which would only allow such facility to exporters who export 10 percent more than the previous year. 

“This made the competitive marketing difficult for the exporters, as any performance less than that would make the facility inaccessible,” the ministry said in the statement.  

Exporters have been demanding of the government to dissociate duty drawback facility with the condition to increase exports.

After a constant decline in the past, exports rose 11 percent to $5.172 billion in the first quarter of the current fiscal 2017/18, official data showed. But, trade deficit widened 30 percent to $9.088 billion due to growing imports during the July-September period.   

Commerce division proposed the government to improve the conditions of PM’s trade enhancement package, which was modified in consultation with the exporters and the relevant ministries. 

The package also provides two percent additional duty drawback facility for exports to non-traditional destinations in Africa, South America, Oceana, central independent states countries and non-European Union countries in order to encourage exporters to target new and far-flung destinations.

 “The first of the three-pronged [trade rationalisation] strategy was implemented by issuance of regulatory duties on imports of luxury and non-essential finished goods by FBR (Federal Board of Revenue),” the ministry said.

The third component i.e. import regulations will be covered by issuance of amended Import Policy Order, which is also expected to be issued this week.”