Can an incentive package alone reverse the trend of decline?
Better late than never, seems to be the government’s watchword in matters of national importance and the economy. So, three years down the line, and a little more than an year before the elections, the PM has thought fit to announce a generous package of incentives in a bid to boost the country’s continually falling exports, now down to $ 20.8 billion from $24.5 billion in 2012-13. Quality was never a factor, as our finished products easily compete with the world’s best, in textiles, finished leather and garments, sports goods and surgical items. The spanner in the works was – and still remains – the high cost of doing business and a regular availability and quality of electricity and gas for industries. Coupled with political instability and uncertainty – which can suddenly close down business activity for days, as in Karachi – taxation lacunas and bureaucratic red tape have edged out our exports in efficiency, competitiveness and meeting contractual obligations, from the global market. Neither the European Union’s gesture of Generalised System of Preferences-Plus status for Pakistan in 2013, which allowed 20 percent of our exports into European markets at zero tariff and 70 percent at preferential rates, nor the artificial measure of currency devaluations tried in the past, could raise our sagging exports.
The biggest encouragement in the Rs 180billion package is for the pivotal textiles sector, offered a 7 percent rebate as cash support of Rs.58 billion on garments, 6 percent or Rs.39 billion on home textiles, 5 percent or Rs. 16.5 billion on yarn, and 4 percent or Rs.12 billion on grey fabric. As a further stimulus of Rs. 22.5 billion, import duty and sales tax on raw imported cotton stands abolished, waived on man-made fibre while 10 percent sales tax on imported textile machinery has been removed. For the non-textiles sector, the total cash support is Rs. 22.5 billion.
While the incentives will please the business community and add to PML-N’s share of votes, one wonders if these will really give a boost to exports.
