ISLAMABAD, Pakistan: The trade deficit of Pakistan as on March 1, 2019 was US$ 21.523 billion.
In a written reply, the Minister for Commerce and Textile told the Senate that as per the Pakistan Bureau of Statistics (PBS), Pakistan’s total imports and exports during the last six months (i.e. September 2018-February 2019) remained US$ 26.867 billion and US$ 11.462 billion respectively.
Present position of balance of trade of Pakistan
The Minister for Commerce and Textile told that House that following measures have been taken by the government to enhance Pakistan’s export;
Exports enhancing measures;
Revision of Export Enhancement Package: In order to improve competitiveness of the export sector, and encourage non-traditional exports of the country, Prime Minister had announced a support package of Rs 180 billion for the period January 2017 to June 2018. The package was extended for another period of three years vide SRO 711 (I)/2018 dated 8-6-2018, i.e. from July 1, 2018 to June 30, 2021.
Under this package, new export sectors such as Transport equipment, Auto parts & accessories, Machinery incl. electrical machinery, Furniture, Stationery, Fruits & Vegetables, Meat and meat preparations including poultry have been included. The support through drawback of local taxes and levies will promote product diversification and enhance competitiveness of the exports.
Moreover, for market diversification, additional incentive has been provided to promote exports in to the non-traditional markets.
Reduction in the Cost of Production: Gas tariffs for LNG has been lowered for Punjab based industry to bring it at par with other provinces. Further, the gas prices for “export industries” including jute, carpet, textile, sports’ goods, leather and surgical goods, have not been increased.
Economic Package to support industrial growth: Commerce Division has been working with the industry to develop a comprehensive plan to increase their competitiveness. One of the major impediments for export sectors was its higher duties on the import of raw materials and intermediate inputs.
In this regard, a series of consultative sessions was held to identify sectors and products that require immediate relief in terms of reduction in the import duty in their inputs and raw materials. In the first phase, Custom Duties and Regulatory Duties on 236 Tariff Lines (TLs) of raw materials and intermediate products have been reduced. In the second phase, a list of 40 TLs were further incorporated in the Finance Act 2019 (Supplement-I). In the second phase, tariff reduction plan has been approved for 12 sectors. The amendment in the tariff schedule has been introduced in Finance Act 2019-Supplement, whereas, the Regulatory import duty for the export-oriented industries have been reduced vide SRO 190(I) 2019 dated February 11, 2019.
Payment of DLTL and Sales Tax Refund: The payments of Export Enhancement Package claims were pending due to which exporters were facing the liquidity crunch. After rigourous consultations with the Finance Division, State Bank of Pakistan and AGPR, a mechanism has been developed to expedite the payments to the exporters. It has been decided to settle the outstanding claims of exporters under DLTL/PM package schemes as on 31-12-2018 through cash payment (1/3rd) and issuance of Promissory Notes (remaining 2/3rd).
Moreover, by March 2019, the government has disbursed Rs 21 billion of Sales Tax Refund & Rs 10 billion DLTL, to enhance liquidity of the exporters.
Policy Rate for Export finance: The rates on SBP’s financing schemes for export refinancing and fixed investment are still unchanged at low levels, despite the 425 bps hike in the policy rate over the past 12 months. The purpose is to support the export-oriented sectors.
Market Access by China on Yarn, Rice and Sugar: China has granted one timebuying arrangement of US$ 1 billion access to Pakistan in yarn, sugar and rice. As a result of this access, Pakistan’s exports to China are likely to get boost of around US$ 400 million.
Market Access by Indonesia: Ministry of Commerce, as a result of hard negotiations and concerted efforts, succeeded in seeking unilateral market access from Indonesia on 20 tariff lines of its export interest. A notification to this effect was issued by Government of Indonesia on February 13, 2019. Exports on these 20 tariff lines will fetch sizable export revenues as Pakistan’s global export in these lines amounts to US$ 4 billion whereas Indonesia’s global import in these lines amounts to US$ 600 million.
New markets: To further diversity export markets, a “Look Africa” policy has been launched by the Commerce Division to promote and facilitate trade to new markets.
Export Promotion: In order to promote exports to new markets, Trade Development Authority of Pakistan is undertaking various export promotional activities through trade exhibitions and delegations.