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GSP Plus to help Pakistan boost textile exports by $500m per year: Razak Dawood

By Mehtab Haider
March 10, 2020

ISLAMABAD: The EU extension of the Generalized System of Preference (GSP) Plus till 2022 would help Pakistan boost up its textile exports by $500 million on per annum basis, Adviser to PM on Commerce Abdul Razak Dawood said on Monday.

In an exclusive talk with The News here at his ministerial office, Razak Dawood said that the textile sector had exhausted its full capacity and there was now need to undertake BMR (Balancing, Modernizing and Replacement) as well as new investment to construct new factories for meeting increased requirements.

He said the government was going to unveil the Strategic Trade Policy Framework (STPF) on coming Thursday soon after getting approval of the cabinet. “The tariff rationalization will also be approved during the ongoing month but it will be made public on the eve of next budget for 2020-21,” Adviser to PM on Commerce Abdul Razak Dawood said. The adviser also disclosed that the government would maintain the existing tariff slabs in the upcoming budget with zero, 3 percent, 6 percent, 11 percent and 20 percent. He said the government had brought 1,635 products from slab 3 percent to zero in the last budget, so more items would be brought down into lower slabs of zero, 3 percent, and 6 percent. The last two slabs of 11 percent and 20 percent would not be altered in a major way in the coming budget, he maintained.

The adviser dwelt upon different issues including extension of GSP Plus status and its potential impact on Pakistan’s trade and its related challenges, finalization of Strategic Trade Policy Framework (STPF) and upcoming Tariff Policy during his talk. On the GSP Plus status, he said that Pakistan’s textile exports to the EU in the aftermath of getting GSP Plus status doubled from $4 billion to $8 billion during 2014 to 2019. “Now our estimates suggest that Pakistan’s exports to EU can go up by additional $500 million on per annum basis,” he added.

The adviser said that the European Union assessed that Pakistan’s range of textile products did not expand despite doubling its exports, so there was a need to expand the export base by including more new areas of textile products to boost up exports. The exports of yarn and grey clothes were witnessing downward trends but the garments, hosiery and home textiles were achieving double digit growth in exports in the range of 16 to 18 percent. He said that Pakistani exporters would have to focus on new areas such as men suiting and women dressing in order to boost up exports. He said that when this government came into power in 2018, everyone was talking about de-industrialization and shrinking base of manufacturing sector but now the textile sector had exhausted its capacity and exporters were finding it hard to meet the requirements of export orders. “Now the time has come where we need to focus on BMR and establishing new factories,” he maintained. On the STPF, he said that the cabinet would consider approval of this policy in the next meeting scheduled to be held on coming Thursday and then it would be announced on the same day. When asked whether it would be three year or five-year policy, he said that the cabinet would take a decision about it but it would be three to five years policy. When asked about the exports target, the adviser refused to share its details and asked to wait till the policy was approved by the cabinet. Regarding the National Tariff Policy, he said the new tariff rationalization would be approved within the current month but it would be implemented from the next budget for 2020-21. The existing tariff slabs would remain unchanged at zero percent, 3 percent, 6 percent, 11 percent and 20 percent in the coming budget. He said that tariff of lower slabs would be further cut down in order to spur growth and promote economic activities.