Tariff rationalisation to start with six sectors in August: Dawood

ISLAMABAD: The government will initiate tariff rationalisation exercise from six economically-important sectors from next month, commerce adviser said on Monday, as the government completed two years in the office with exports on a downward trend.

Adviser to the Prime Minister on Commerce and Investment Razak Dawood said the tariff rationalisation process would start soon after the Eid break. He was chairing a meeting at the ministry of commerce, which was attended by secretary commerce and National Tariff Commission chairperson.

“We will begin by examining iron and steel, plastics, engineering, pharmaceutical, chemicals and textile sectors,” Dawood wrote in a tweet. “I look forward to interactive sessions with all stakeholders in order to prepare a constructive roadmap to develop our export-led ‘Make in Pakistan’ program.”

Dawood emphasised the importance of tariff rationalization for improvement of competitiveness of domestic industry including the exports sector through duty free access to imported raw materials and intermediate goods, which will eventually increase employment opportunity in the country by attracting investment in manufacturing sector.

The adviser said the stakeholder consultation process should lead to a constructive roadmap to develop export-led ‘Make-in-Pakistan’ program. He directed the officials to lessen the distortion in domestic price structure by reducing the burden of excessive protection. He directed the National Tariff Commission to conduct detailed studies and suggest three years tariff rationalisation roadmap.

National Tariff Commission will first identify the complete value chains. It will then identify potential stakeholders, collect data from the primary and secondary sources, visit relevant industries, chambers and associations for collection and verification of data, conduct public hearings and prepare a three years tariff plan. And finally, the proposed three-year tariff plan will be submitted to Tariff Policy Board for approval and inclusion in annual budget.

Exports declined around seven percent to $21.3 billion during the last fiscal year of 2019/20, according to Pakistan Bureau of Statistics. Government attributed declining exports to lockdown amid the global pandemic. But even if lockdown impact on two months – April and May – is neglected, exports would show a flat growth year-over-year. Exports amounted to $22.9 billion in FY2019, down one percent year-over-year.

The government was criticised for its neglect to industrialisation and inability to implement policies for revival of exports that contribute less than 10 percent to gross domestic product. The inconsistency in policies and ignorance to ground realities raise concerns of businessmen.

The government has been talking about tariff rationalisation since last year to improve industrial production competitiveness in the global market and ease of doing business.

During the current year’s budget making process, it was again decided that once the budget was over and things settled down discussions would start with stakeholders to prepare a three-year roadmap for tariff rationalisation in August.

In June, Dawood told The News that the government decided to rationalise duty/tariff structure for more than 30,000 raw materials and intermediary goods in the budget for fiscal 2020/21. The government would abolish additional customs duty and regulatory duty on 30,000 items of raw materials and this would have negative annual revenue impact of Rs14 billion, he said.

Dawood said the government would have to change its reliance from importation to other taxes, such as sales tax and income tax as Pakistan’s 45 percent taxes are collected at import stage, while in India it stands at 21 percent, Bangladesh (28 percent) and developed world (10 percent).

Adviser said the government wants to achieve the objective of industrialisation through rationalization of tariff. This reduction in import duty will help boosting economic activities and jacking up dwindling exports. “This exercise will help us boost up “Make in Pakistan” branding and will result into jacking up exports,” he said then.