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PM approves national tariff policy to attract investment

By Our Correspondent
March 07, 2019

ISLAMABAD: Prime Minister Imran Khan on Wednesday approved the country’s first national tariff policy to rationalise concessions and exemptions on trade and industry and attract investments.

The first-ever national tariff policy aims at ensuring transparency, predictability and institutionalising the entire structure of tariff regime of the country, an official statement said.

PM Khan approved, in principle, the policy, which would be presented before the federal cabinet for its consideration.

Secretary Commerce Younus Dagha said the major objectives of the national tariff policy, which has been drafted after detailed and comprehensive discussions with the stakeholders, is to improve competitiveness through access to raw materials, increase employment opportunities by attracting investment through transparent and predictable tariff regime and remove anomalies in tariff structure that causes distortions.

Businessmen have been seeking cascading tariff structure that entails high taxation on finished products having substitute in the country and lowest on raw materials needed to boost domestic manufacturing.

“A cascading tariff structure for imports where tariffs are highest on finished products domestically produced while being lowest on raw materials and intermediate products not available locally… is essential if Pakistan is to become part of global value chains,” the business advocacy group Pakistan Business Council (PBC) said in a report.

The council estimated a constant decline in manufacturing activities in the country and termed it de-industrialisation. The share of manufacturing sector in the economy shrank to 12.1 percent in 2018 from a high of 17.5 percent in 2005.

The PBC said the National Tariff Commission has to take a more aggressive approach when it comes to protecting domestic industry and it needs to take inspiration from similar institutions in India, Indonesia and Turkey.

“Without significant intervention to reverse this trend of deindustrialisation, Pakistan will continue to be plagued by high unemployment and a low export base as the country continues to focus on either commodities, intermediate goods or low value added finished products.”

The national tariff policy considers tariff as a trade policy instrument, calls for reduction of exemptions and concessions, envisages cascading tariff structures with stage of processing of a product and ensures strategic protection to domestic industry and competitive import substitution.

The new policy also envisages establishment of a broad-based tariff policy centre in the ministry of commerce to formulate proposals for improving tariff structure in pursuance of the objectives of the national tariff policy.

The Prime Minister appreciated the efforts of commerce ministry in formulating a comprehensive tariff policy for the first time in the history of the country which, he said, will greatly restore confidence of the business community by providing for a transparent, predictable and institutionalised structure for tariff setting.

“The economy, especially the trade and industrial development suffered in past due to ad-hocism and unpredictability of tariff structure resulting in capture of the economy by vested interests and rampant corruption,” Khan was quoted as saying in the statement.