Government eyes $6 billion cut in trade deficit, refuses subsidy to sugar millers

ISLAMABAD: Refusing any subsidies for the sugar industry, Abdul Razak Dawood, advisor to Prime Minister on commerce, on Tuesday told the sugar millers they had

no other option but to follow the suit of those exporting sectors that are maintaining their competitiveness without concessions.

“If exporters of rice, yarn, and cement could move ahead without subsidy then the sugar industry would also have to stand up on their own feet,” the adviser said while unveiling government’s plan to slash down trade deficit up to $6 billion in current fiscal year in a press conference at Pak Secretariat.

“The government made plans to export one million tons of sugar without subsidy but they were unable to achieve the target.”

Moving forward, the advisor, who was flanked by Younas Dagha, secretary commerce, also announced that the government had decided to build on the policies like Drawback of Local Taxes and Levies (DLTL) to further increase export momentum.

When asked about exports target, Dawood said that the exports would definitely cross $25 billion mark while $26 billion was realistic target and he had given stretched target of $27 billion.

“Our stretched exports target stands at $27 billion for the current fiscal year and import compression will continue as the trade deficit will be slashed down up to $5 t0 $6 billion,” the advisor said addressing the joint press briefing.

“The trade deficit reduced by $600 million in December 2018 and it was hoped to shrink by $1 billion in January 2019.”

To a question about revival plan for Pakistan Steel Mills (PSM), Dawood said there were three options available before the committee for revitalising PSM including privatisation, lease, or make it viable by ourselves.

“Three parties from China and same number of parties from Russia have shown interest for getting PSM on lease,” he maintained.

To another query regarding EU concerns under its monitoring for GSP plus, he said of a total of ten points, the EU raised concern on three of them.

“The ministry of human rights has made a presentation for making improvements on those points till June 2020,” the adviser added.

When he was asked about $1 billion market access from China, Dawood said that the progress was underway on this facility.

He said that when they came into power they were facing three major challenges including deindustrialisation, declining exports, and widening trade gap. The government, the adviser said, brought changes in duty structure in October 2018 but due to scarcity of time they remained unable to introduce desired reforms in September/October last.

“The government recently introduced the economic reform package which is expected to be approved by the Parliament within next few days,” he added.

He said the government had taken corrective measures and had to face revenue hit of around Rs7 billion due to a reduction in custom duty and regulatory duty; however, it would be generated through collection into Sales Tax with improving economic activities.

He reminded that the government had already reduced power and gas tariff for export-oriented sectors and now it had reduced the duty structure for 10 to 15 identified sectors by reducing the cost of raw material to boost up exports.

These sectors, he said, included footwear, automobile, chemicals, and services sector such as IT. The adviser said the government did not provide any incentives to iron and steel and paper industry as they were studying these sectors before taking any decision.

He said that the government was formulating industrial policy that would be approved by the cabinet.

Secretary Commerce Younas Dagha said the imports compression was underway as the government had banned import of furnace oil and imports on account of petroleum products and other commodities would be squeezed.