No major relief for export sector

Exporters say budget 2020-21 is discouraging for traders

Shahram Haq June 13, 2020
PHOTO: Reuters

LAHORE: budgetThe fiscal budget 2020-21 has nothing to offer for Pakistan's export sector as few measures announced by the federal government are not impressing, said the exporter's community.

However, they added that the measures announced to demolish import duties on different raw material will help local manufacturers, and if they are importing raw material to produce finished goods for exporting purpose, it will provide them some relief.

Federal Minister for Industries and Production Hammad Azhar in his budget speech pointed out various measures that the government intends to take for the relief of exporters and importers.

Sharing details, the minister publicised that an increase of up to 270 days has been granted in days of receiving foreign exchange from exports revenues.

The government also regulated that the exporters can now directly deliver their shipping documents; export rebate will also be transferred into exporter's bank account directly.

Pakistan's exports are once again turning towards a downward trajectory. During the July-April 2019-20 period, the country's exports stood at $19.7 billion, recording a decline of 2.4% compared to the same period of last fiscal year.

The export revenues after witnessing consecutive dips in previous government's tenures rose to $23.2 billion in 2017-18 only. Meanwhile, in 2018-19 exports settled at $22.97 billion.

"This is an uncooperative budget in current circumstances, as no opportunity can be seen for recovery," said Shehzad Ali Khan, former chairman of All Pakistan Textile Mills Association (Aptma).

He apprised that exports are likely to remain stagnant for the next year since no incentives have been provided to the textile sector, which contributes around 60% to the total exports. "I think that small export-oriented business houses will collapse in the coming days due to lack of liquidity and only big business groups will survive in the prevailing situation," Khan added.

Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Regional Chairman Sohail A Sheikh termed the budget speech "disappointing for the exporters".

"Our most concrete demand for restoring the zero-rated regimes was not addressed in this budget. Small and medium apparel export industry has been continuously complaining about running out of cash to pay wages to their workers, and other expenses, which could be handled if the government would have restored zero-rated regime," Sohail said. He added that the country's exports had contracted by almost 50% while home remittances also declined significantly due to closure of global markets, for the time being another 25% decline in exports is expected.

He, however, highlighted that there were some encouraging announcements for the importers. "Zero duties on import of raw materials will help local manufacturers; and import substitute industry will benefit from this initiative," Sohail declared.

Lahore Chamber of Commerce and Industries (LCCI) President Irfan Iqbal Sheikh lamented that no special package has been announced in the budget to boost exports and to remove the hurdles that hamper the growth of this sector.

"No policy has been announced to reduce the energy cost that is one of the biggest reasons of high industrial input cost," he said, adding that demands of interest-free loans to small and medium enterprises (SMEs), further improvement in refunds system, removal or reduction in withholding tax, end to advance tax at import stage and help in certification for SMEs remained unaccepted in the federal budget.

Published in The Express Tribune, June 13th, 2020.

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