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October 14, 2018

Govt to unveil new tariff structure for industries next month

Business

October 14, 2018

LAHORE: Government will unveil new tariff structure for the manufacturing sector by the next month to give it a relief from tax burden, commerce adviser said on Saturday.

“Current tariff regime is geared to collect more revenue instead of facilitating the manufacturing sector,” Adviser to Prime Minister on Commerce and Textiles Abdul Razak Dawood said.

“The tariff structure will be presented in the cabinet for approval in the next three weeks.”

Addressing the members of Lahore Chamber of Commerce and Industry (LCCI), Dawood regretted that the current tariff regime marginalised the manufacturing sector.

“In many cases the tariffs on raw materials are higher than the tariffs on finished products,” he said. “This has transferred a number of jobs abroad.” Pakistan Business Council (PBC), in a report, said manufacturing sector that contributes 13.5 percent to GDP accounts for 58 percent of tax collection.

“The role of manufacturing in the economy has declined since 2007/8,” PBC said. “Its rate of growth at under six percent is half that of Bangladesh and Vietnam and significantly below India’s.”

Commerce adviser further said textile and rice are the two sectors that have the potential to accelerate exports in the short-term. The government will first facilitate these sectors to ensure immediate increase in exports as the foreign exchange is badly needed in the country.

Dawood said there will be no refunds for spinners and grey fabric exporters.

“Every sector I have interacted in the last six weeks has complained of stuck refunds.”

The adviser said the Federal Board of Revenue’s chairman assured him to start releasing refunds from November.

“Refunds of smaller amount would be cleared first,” he added. “The idea of first collecting taxes and then refund is absurd. The new government wants to do away with this practice.”

Commerce adviser said the government also focuses sunshine sectors, like engineering and information technology to increase exports.

Dawood further said the country is incurring huge trade deficits vis-à-vis five trade agreements it signed. “Only in case of Sri Lanka there is a nominal surplus.”

Commerce adviser said the government would revisit all the trade agreements and get favourable terms from partner countries.

“In view of our inability to negotiate a viable FTA the government has decided not to sign any new FTA.”

On FTA with China, Dawood said the government has reached an agreement after several meetings with the Chinese Ambassador and favourable terms would be incorporated in the revised FTA. Chinese government suggested that they would announce a number of concessions when Prime Minister Imran Khan would visit China.

The adviser assured the LCCI members that no permission would be granted to import of used tractors in Pakistan.

“The country cannot be made junkyard of used machines. The same principle should be applied on used cars.” On the state of economy, Dawood said the path ahead is difficult, but hoped that everything would be sorted out in the end.

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