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Pak exports could be doubled to $50 bn: Razak

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May 27, 2019

ISLAMABAD: Adviser to Prime Minister on Commerce Abdul Razak Dawood has said Pakistan’s exports could be doubled from $24 billion plus to $50 billion over the medium term but first the stumbling block of bringing change in mentality needs to be addressed.

He said the Ministry of Commerce would oppose any move to abolish zero-rating of five export-oriented sectors in the coming budget.

The PM’s adviser said that the direction of reducing duty on raw material and inter mediatory goods would continue while duty on finished goods would be increased in the upcoming budget. He said that Pakistan has requested Japan for providing duty-free access on 10 to 20 items under Early Harvest Programme (EHP) and the same facility would be offered to them on reciprocal basis.

“I am of the opinion that the zero-rating regime for five export oriented sectors must continue because there is no logic to collect taxes and then issue refunds as it will create liquidity crunch for export industry,” Abdul Razak Dawood said in an exclusive interview with The News here at his ministerial office on Sunday.

The PM’s adviser dwelt upon various issues related to trade and stated that the desired target to jack up exports to $25 billion might not be achieved in the current fiscal year, and argued that the global trend of trade was on decline by 3 percent, while prices also reduced by 7.2 percent. “Pakistan’s exports in dollar term remained flat but the country’s exports were doing reasonably well keeping in view global trends of trade,” he added.

Quantity wise, he said, Pakistan’s exports went up by 7 percent as production line had gone up despite difficult environment. The trade gap was narrowing down as exports were showing steadying trajectory while imports got reduced by $4 billion and overall current account deficit also improved, he added.

He said that the situation on economic front was not as bad as being portrayed by some quarters and they were ready as well to correct things. However, he also conceded that the economic situation must have improved at much accelerated pace. He said that the exports of garments went up by 29 percent, cement 25 percent, basmati rice 21 percent and footwear 26 percent in the current fiscal year.

To a query regarding new Free Trade Agreement (FTA) with China, he said that Chinese side might approve second phase of FTA in August.

“In the second phase of FTA with China, Pakistan has placed safeguard measures that will enable Islamabad to impose countervailing duty if found any domestic industry at disadvantaged position,” he said, and added that the government would slap countervailing duty to protect its industry.

He said that Pakistan’s exports to China stand at $1.7 billion and imports $15 billion and this gap has reduced in recent months and it would further come down after this revised FTA with China. He said the quality and standard of imported items would be ensured and they had already taken steps such the imported products were brought into the country with expiry date of just 15 days but now they were making it mandatory that without 50 percent timeframe the products would not be allowed to come into the country.

On the issue of rampant smuggling, he said the tariff disincentives could discourage and the government would move towards this objective in the coming budget. He said that the country was facing problem of smuggling, under invoicing and mis-declaration and cited example of clothes smuggling from Dubai with Indian stamps and they have made bill of entry mandatory to curb this practice.

Regarding Afghan Transit Trade (ATT), he said that both sides possess their wish of demands, but they see it with holistic approach as good relationship would result into improved trade.

On trade ties with India, he said that it would depend on how they want to keep relations with Pakistan. Indonesia has unilaterally provided duty-free access on 20 tariff lines. He said that Pakistan’s focus would be towards Japan, Korea and Canada for boosting trade relations. Pakistan has requested Japan for duty-free access on selected 20 items such as garments, rice and some others and same incentives on reciprocal basis would be offered to them, he said and added that he would be visiting to Japan in July this year to explore possibilities for boosting trade.

He deplored that Pakistan had turned into trade nation during the last decade that needs to be reversed. He said imports were focused with the purpose to increase tax revenues and wrong policies were pursued where the tariff was reduced on finished products that caused loss to industries. He said that there was anti-export bias that needs to be abolished on immediate basis.

To another query about the IMF programme, he said that exports remained stagnant not because of IMF, but it was our fault that no one had focused to boost exports. The IMF, he said, talked about good governance. He questioned why tough decisions were not taken to pursue reforms’ path that could only help achieving higher growth trajectory on sustained basis.

He said that objective of boosting exports was not a matter of few days, but it would take time to come out from difficult phase. He said that if the government kept on supporting wrong policies it would not help moving towards industrialisation and creation of jobs. He said industrialists belonging to Karachi, Faisalabad and Lahore would confirm that industrial production was improving in Pakistan.

He said that Bangladesh was solely depending on garments but Pakistan’s export products were diversified. He said that the government provided subsidy to export-oriented sector on electricity and gas and it would be continued in coming year.

He said that zero-rating regime for five export oriented industries were removed three times in the past but again restored and this policy must continue even under the IMF programme. “There is no revenue loss of the government because there is no rationale to collect taxes and then refund it after export proceeds,” he added.

On trade ties with Iran, he said that they offered Tehran to go ahead with barter trade in order to remove difficulties in the wake of economic sanctions imposed by the US on Tehran. He aids Iranian counterpart minister is expected to visit Pakistan in July in which modalities of bilateral trade would be finalised. He said that there was no proposal to sign FTA with Japan but efforts were underway to finalise early harvest programme to get duty-free access to selected 20 items. On Turkey, he said that any trade agreement would be difficult because both countries did not compliment but plunge into competition with each other in different areas.

When asked about his differences with former chairman Board of Investment (BoI) Haroon Sharif, he said that he is professional who preferred to resign. “This chapter is closed,” he said.

On GSP Plus status with EU, he said that it helped Pakistan increase its exports to European Union by at least half a billion dollars per annum. He said that the trade officers who were performing well would be granted extension but those who were not doing well, new ones would be selected on merit to boost exports.