Monday December 05, 2022

Coronavirus’ damaging impact on exports: Govt’s financial team, exporters deliberate today on host of issues

March 20, 2020

ISLAMABAD: In the wake of adverse impact of COVID-19 on Pakistan’s exports, the PTI government’s top financial managers and leading exporters of the country will today (Friday) put their heads together to find out ways on how to resolve the host of problems, including the chronic issue of the liquidity crisis that has aggravated manifold mainly because of delayed payments of export proceeds and halt of shipments to Europe, USA and other main economies by the buyers.

The suspension of collection of sales tax, restoration of zero rating and speed refund of sales tax are the main issues, which are to be brained stormed in the meeting. The exports are on way to decline and it can be gauged by the fact that in the month of February, the production of export industry was at 100 percent that has now alarmingly tumbled to 18 percent. Pakistan will not be able to catch up the export target of $24 billion as during the March-June period, exports may go down by 50 percent. The meeting is being held keeping in view the direction of prime minister who in his speech to the nation also mentioned that the government will take care of exporters and to this effect the government functionaries will hold talks with the IMF for relief to export industry.

Adviser to Finance and Revenue Dr Hafeez Shaikh, Adviser to Commerce, Textile, Industries & Production and Investment Abdul Razak Dawood and Governor Sate Bank of Pakistan Reza Baqir will hold crucial talks with top notches of export industry and would pave way to resolve the issue of liquidity crisis the export industry is facing. This has been stated by Adviser to Commerce, Textile, Industries & Production and Investment, Abdul Razak Dawood, in an exclusive talks with The News here on Thursday over the damaging impact of coronavirus on exports. Dawood also disclosed that the commerce ministry had decided to allow import of all items related to coping with the wave of coronavirus with zero duty and conveyed to the Ministry of Health to list the names of items. And to this effect, a formal notification will be issued in two to three days.

Coming to exports of the country, the adviser highlighted saying that in the month of February, exports went up by 13.6 percent, which increased to 14 percent by March 15, had started going down and it was expected that the increase will end up at 5 percent by March 5. He said that export orders are very much there but at the same time buyers have asked exporters to stop further production for exports and complete the work in progress, which is why the shipments have been stopped to EU, USA and other economies. Buyers in EU, USA, UAE and other countries have asked the Pakistani exporters not to further use raw material for more export consignments.

Dawood, while quoting the buyers in EU, USA, UAE and other main economies, stated that they (buyers) have intimidated that their markets and big shopping centers, ports and docks are closed down and they have no space left with them to import items and keep them in their storages as keeping the items in their storages will cost them high. This situation is not confined to Pakistan only as all the regional economies such as Vietnam, Bangladesh and India are also facing the same situation i.e. halting of their export shipments because of zero demand of buyers. Dawood, however, pinned hopes on China where the number of victims and deaths because of coronavirus are going down and if this situation is tackled on sustainable basis, then Pakistan and China will be in a position to restart the trade by end of April.

He said that under the State Bank of Pakistan rules, export proceeds are bound to be deposited with the central bank in 180 days, but in the wake of delayed payments by buyers to exporters, the export industry wants the State Bank of Pakistan to enhance the period from 180 days to 360 days. Dawood said if the deposit period of export proceeds with the central bank gets increased, then exporters will have an elbow room to readjust their finances. He also said the export industry wants relief in turnover tax by 0.5% from 1.5% to 1%. He also disclosed that the export industry wants the suspension of sales tax collection till the COVID-19 spread is over.

The adviser also highlighted the fact saying the commerce ministry has cleared payment of Rs9.6 billion to exporters in the head of DLTL.

He also mentioned that the commerce ministry also cleared the payments of Rs17.6 billion in the month of December hoping that this action of commerce ministry will provide solace to exporters.

The adviser, however, admitted that the issue of sales tax refunds is haunting the exporters since long. FASTER — the system to refund by the FBR is not working and this issue will be figured out in detail in the meeting. The export industry also wants extension to one year in ERF (export re-financing scheme). The adviser also mentioned saying that the DTRE facility which is available to exporters only should also be extended to indirect exporters.

He also highlighted another demand which asks for elimination of duties and sales tax on machinery, raw materials and intermediary products for exporters to boost exports.