Razak says export base is ‘far too narrow’


ISLAMABAD: Prime Minister’s Trade and Investment Advisor Abdul Razak Dawood said on Friday that the Ministry of Finance will release the final figure for funds for customs duty drawback on local taxes and duties (DLTL) for fiscal year 2021-22 with the Ministry of Commerce, “after his, the size of the envelope is finalized. “

The Finance Division has indicated that it is ready to allocate Rs 20 billion to the DLTL scheme for 2021-2022, but this will not be enough to meet the requirements of duty drawback schemes for the textile and non-textile sectors. The Ministry of Commerce wants 40 to 50 billion rupees for this purpose.

In an interview, when the trade advisor was asked about the exact allocation for DLTL, he said that the finance ministry told him that the planned allocation for DLTL for fiscal year 2021-22 was being discussed. ‘further reflection.

“I cannot share any number to assign for DLTL until the Finance Division gives the final number,” he added.

The effort of the Department of Commerce is to get maximum allocation for DLTL, but as the Department of Finance says it does not yet know the size of its envelope and only when they will know the size of the l ‘envelope that they will give us the final DLTL number,’ he added.

Razak Dawood said Pakistan’s export base is “far too narrow” and limited to textiles, leather, surgical instruments, etc. The country must opt ​​for new sectors and support will be extended to the pharmaceutical industry, engineering (two wheels, three wheels, refrigerators, etc.) washing machines, cutlery, mobile phones and transformers), processing of food and diversification in the textile sector, he said, adding that the tariffs on raw materials of more industries will be reduced in the next budget.

He further revealed that tariffs will be reduced for import-substituting industries, which over time will increase production and start exporting oversupply and competing with other countries.

On how the trade gap will be handled when the import of raw materials increases due to a reduction in tariffs, he said the raw materials will be used to fuel industrial production.

Reducing tariffs on raw materials means minimizing anti-export bias, in addition to fueling production and job creation, Dawood said.

In response to a question on how the Commerce Ministry’s budget proposals will support the STPF and textile policy, Razak Dawood said his budget proposals would certainly fit into both policies. He further argued that the textile policy was almost wiped out but remained stuck due to energy prices. Now, after discussion with Finance Minister Shaukat Tarin, it has been agreed to set the electricity tariffs of 9 cents per unit for exporters and gas at $ 6.5 / MMBTU for the next fiscal year. However, he hopes that when this case is presented to the Prime Minister, its period of applicability will be extended.

In response to a question about imposing regulatory duties (RD) and additional customs duties (ACD) instead of increasing normal tariffs, he said that the finance ministry’s goal is to increase receipts and he prepared such proposals, but precisely the amount of duties. The Ministry of Commerce agrees to be discussed before the budget is presented.

“I don’t think increasing tariffs is the right approach. As a principle I am also against additional tariffs and as a matter of principle I want R&D to be imposed only to protect the local industry, ”he continued.

Razak Dawood argued that increasing the normal duty or imposing RD gives two different signals, adding that RD means that protection is required for a particular industry for a certain period of time and when the situation is normal it will be withdrawn. . He said there should be no increase or decrease in additional duties for the industry.

The guiding principle, he added, is that tariffs on raw materials should be zero or at most 3 percent, intermediate products 6 or 11 percent, and finished products 20 percent.

In response to the question to what extent industrial growth and increased exports will be possible through tariff rationalization, Razak Dawood replied that he did not have empirical data, but added that since Pakistan removed all import duties on raw jute he started. competing with Bangladesh. Pakistan now exports jute articles for around $ 35 million.

Razak Dawood asserted that he cited the export target of $ 28 billion by projecting that the textile sector’s exports would increase from $ 13 billion in 2019-20 to $ 16 billion in 2020-2021 and the sector textile has pledged to increase its exports to $ 20 billion. . If the textile sector provides $ 20 billion, then $ 8 billion will be added from other sectors.

However, he said the export target for 2021-22 will be finalized after receiving the May 2021 export figures. He gave no projection on imports in 2021-2022.

“There is no doubt that imports have increased this year, but I do not know whether Pakistan will import wheat, cotton or sugar and what the price of petroleum products will be,” he said, adding that the import of machinery will certainly increase.

Copyright recorder, 2021

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