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January 12, 2020

Businessmen blamed for causing price hike

Top Story

January 12, 2020

KARACHI: Advisor to the Prime Minister on Commerce, Industry, Textile and Revenue Abdul Razak Dawood claimed on Saturday that "the business community is increasing inflation in the country."

The prime minister's advisor said, "The business community is causing rise of inflation in the country" and asked them to make efforts to reduce it. “We [Pakistanis] do not possess a global vision,” he said while addressing at the Edible Oil Conference. “People criticise our government and ask what good have we done by increasing exports by four to five percent. I assure you, we are moving towards stability and this is the last installment we have taken from the International Monetary Fund (IMF),” he said. Emphasising on the need to curb imports, Dawood said that the country needs to get rid of the ‘import based’ economy to move forward.

Earlier, Dawood told a group of businessmen at the Karachi Chamber of Commerce and Industry (KCCI) that the government will cut duties and taxes on import of raw materials to revive the industrial sector, seeking to lift growth from a 10-year low that has sapped jobs and fuelled discontent in the country. He said the government has decided to reduce import duties and taxes on raw materials for 26 sectors, “as a new industrial policy has been finalised with to reduce the cost of production and provide an impetus to industrial expansion”. “The tariff setting authority has shifted to the ministry of commerce and industries from the FBR (Federal Board of Revenue), and now import tariffs would be part of the industrial policy and not the revenue policy.”

The advisor said a rational policy is in the making with an input from the business community, “and it would be presented along with the upcoming budget”. The “cost of raw material is higher. Wait till the upcoming budget and you would see these costs would come down,” Dawood said. The advisor said the government inherited “a lot of mess and it would take at least two budgets to straighten things up”. “Misdeclaration and under-invoicing by importers caused a revenue loss of $4 billion alone last year.”

The advisor admitted that gross misuse of Afghan Transit Trade (ATT) had caused huge losses to the national economy, as a large number of transit consignments were either pilfered during the transit or the goods were smuggled back into the country. “The transit trade agreement is expiring in 2021, and then it would be revised accordingly,” Dawood said. “We have proposed to fix a quantity restriction on Afghan imports, as well as collection of duty and taxes by Pakistan’s authority on all the ATT imports, which would be transferred to Kabul just like India does to Nepal.”

Talking about the improvements, Razak said economy was getting better, as the current account had turned surplus, fiscal deficit has been brought under control and foreign exchange reserves have shored up. The “economy is faring well but it is still facing challenges and the government is making all efforts to reform the economy,” the advisor said. He said data showed significant growth in meat, poultry and seafood exports. “Around 60 tons of seafood is being exported to Western China alone every week,” he said.

Earlier, the business leaders criticised Prime Minister Imran Khan’s claims that 2020 would be a year of growth, saying that given unavailability of utilities, higher cost of doing business and exchange rate uncertainty, “there could be no business expansion and export enhancement”. “There has been no industrial expansion in years, and without surplus production, one cannot expect increase in exports,” Siraj Qasim Teli, Chairman, Businessmen Group said.

Agha Shahab, president KCCI said import duties in Pakistan are much higher than competitors in the region, which need to be rationalised. “Legal imports were declining, and there is a massive surge in smuggling due to the excessive duties,” Shahab said. “There was a 44 percent increase in the Afghan Transit Trade last year alone.” The business community also asked the advisor to ensure early release of the stuck up refund claims.