Towards exports-led growth

AT long last, government has realised problems and bottlenecks being faced by our exporters as a result of which exports have been declining for the last three years. Prime Minister Nawaz Sharif, on Tuesday, announced an attractive package of incentives for business community and now it is up to the businessmen to perform and deliver on this weakest component of national economy.
Rs 180b hefty package envisages zero duty on import of cotton and man-made fibre besides abolition of sales tax on import of textile machinery. In addition, rates of duty drawback have been fixed as per demand of exporters. It is satisfying that the package has been announced after a consultative process with all stakeholders and, therefore, there is no reason that it should not work and result into substantial increase in exports. It is understood that there can’t be genuine progress and development until and unless the country increase its exports meaningfully to earn enough foreign exchange to meet its FE requirements. Presently, the country is largely depending on foreign inflow including bilateral and multilateral loans and project aid. We have a semblance of progress and development only because of significant increase in remittances by overseas Pakistanis and a fall in price of oil in the international market, otherwise decreasing exports and increasing imports would have pushed the country to the verge of an economic crisis and it would have been difficult for the country to spare anything for development except to pay back the already contracted loans. However, government will have to monitor the situation closely and review the package as per ground realities. In the past, we have seen that business community took full advantage of concessions but miserably failed to increase production or exports. This also happened in case of the amnesty scheme announced for business community by government with much fanfare but it produced nothing. Abolition of customs duty and sales tax under the next package is understandable but there are genuine apprehensions that duty drawback facility could be misused as in the past. Instead, it would have been more appropriate to take measures to ensure substantial reduction in cost of doing business and cost of inputs for production.

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