The agriculture sector forms the backbone of Pakistan’s economy
KARACHI: It is heartening to note that over the years, the Government of Pakistan has offered numerous valuable incentives to accelerate industrial growth and economic revival in the country. Most of these initiatives promise big benefits for the essential industrial sectors. However, weak strategies, poor execution and delays may reduce the advantages or even create challenges for the industry and consumers.
The Prime Minister’s Trade Enhancing Incentives recently announced a package of Rs180 billion to quell the declining trend in exports. Through this package, sales tax and customs duties have been abolished on the imports of textile machinery, cotton and man-made fibre, along with duty drawbacks on sports goods, leather and footwear industries. However, these incentives may prove to be counterproductive due to complications associated with export subsidies and duty drawbacks. This package gives an unfair advantage to the big players. The smaller players, with a smaller market base in foreign countries, end up as losers because they are not eligible for these incentives. Hence, most of these industries have not been able to reverse the declining trend in exports.
Another example of weak execution is the recent subsidy announced for the fertiliser industry in the National Budget 2016-2017. It is surely a great initiative to reduce prices for farmers, as the GST on fertilisers has been reduced from 17 per cent to five per cent. However, the long delay in the reimbursement of funds to fertiliser producers and importers has created serious cash flow challenges for them. Fertiliser companies were forced to temporarily arrange costly funds to manage this financial transaction. The government’s complex procedure for verification of subsidy claims has unnecessarily prolonged this transaction.
As an industry professional, the subsidy is a great gesture by the government to provide relief to its people but in order to receive fruitful benefits from such schemes, the government should also devise simple and swift processes to pass on maximum advantage to the ailing industry. The agriculture sector forms the backbone of Pakistan’s economy. Therefore, government priorities should be circled around transforming the supporting industry and farming community in the best possible manner.
Ammar Muzaffar
Published in The Express Tribune, February 20th, 2017.
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