ECC delays decision on relief for exporters in Rs180b export package

Allows export of 0.5m tons of sugar with subsidy of Rs10.70 per kg

ISLAMABAD: The federal government put off a decision on waiving a key condition that required exporters to achieve a 10% increase in shipments to qualify for the incentives offered under the government’s Rs180 billion export package.

A lack of consensus among stakeholders was the reason behind the delay in the decision, which had been sought by the Ministry of Commerce and Textile.

However, the government allowed export of half a million tons of sugar while approving a subsidy of Rs10.70 per kg to compensate for the losses being sustained by exporters due to low prices of the commodity in the international market.



The Economic Coordination Committee (ECC) of the cabinet took these decisions in a meeting chaired by Prime Minister Shahid Khaqan Abbasi. Owing to the condition of showing 10% increase in shipments over the previous year, the exporters cannot file their claims before October 2018 - four months after the end of current tenure of the PML-N government.

In other words, the exporters can claim benefits of fiscal year 2017-18 in the next fiscal year.

They voiced fears that the new government coming into power after the next general elections may refuse to honour these commitments, officials said.

In January this year, former prime minister Nawaz Sharif announced the Rs180 billion export-boosting package, particularly for textile.

The package had been offered to make Pakistani products competitive in international markets as heavy indirect taxes imposed over the past four years, high electricity tariffs and a strong currency had put them at a disadvantage.

The Ministry of Commerce also wanted to expand scope of the package to agricultural products. However, sources said the finance minister objected to the proposal due to its budgetary implications.

The finance ministry has allocated only Rs4 billion in the 2017-18 budget under the Rs180 billion package.

“The ECC has directed to improve the package further while considering other available options,” said Commerce and Textile Minister Pervaiz Malik while talking to The Express Tribune.

He said the ECC desired that a comprehensive package should be presented in order to enhance exports, restrict imports and control the runaway trade deficit.

The prime minister directed that a committee should be constituted comprising representatives of the Finance and Commerce Divisions as well as Federal Board of Revenue. It will analyse the impact of the package and propose changes to its scope and coverage, according to a statement released by the PM Office.

It stated that the package had contributed significantly to putting the country’s exports again on the growth path. Despite urgency, matters are moving at a snail’s pace at the bureaucratic and political levels. The trade deficit in first two months of the current fiscal year widened to $6.3 billion, up 33.5%.



The government has been considering various steps for the past many months, but did not take any meaningful measures to arrest the deteriorating situation on the external front.

Sugar exports

The ECC noted the availability of 2.788 million tons of sugar in the country and authorised the commerce ministry to allow export of 500,000 tons to sugar mills.

The federal government will pay Rs10.70 per kg in subsidy to compensate for the losses, though there is no budgetary allocation.

The Pakistan Sugar Mills Association had sought permission for export of 1.5 million tons with a subsidy of Rs19 per kg.

The premier directed that the existing inter-ministerial committee should regularly review sugar stocks, export and price mechanism and make recommendations to the ECC in case of any abnormal price hike in the domestic market.

The ECC also approved extension in the processing period for export of wheat/wheat products from August 31 to October 30, 2017.

It gave the go-ahead to a proposal of the Petroleum Division that sought re-allocation of up to 15 million cubic feet of gas per day from Jhal Magsi field to Oil and Gas Development Company and its sale to a third party selected through competitive bidding.

Published in The Express Tribune, September 15^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.