MCCI proposals: trade policy be framed keeping in view high markup, gas, power tariffs

The Multan Chamber of Commerce & Industry (MCCI) has asked the government to frame its next trade policy keeping in view the high rates of electricity, gas, and mark-up and higher tariff of utility services, and it must reflect acceleration in exports and reduce imports to minimise the budgetary deficit.
The President of MCCI, Anis Ahmed Shaikh, said that industries have not been functioning in a healthy atmosphere due to the high cost of production owing to high mark-up, electricity, and gas rates, and labour wages. In its proposals regarding new trade policy the MCCI said in its budgetary proposals that government should seriously look into the higher mark-up issue with the Minister of Finance.
The banks are incurring huge profits thus widening the gap between the poor and the rich. The MCCI president said that trade policy for 2009-10 should reflect acceleration in exports and reduce imports. It should be free of all bureaucratic hurdles and red-tapism. It should aim at generating maximum job opportunities, increase foreign exchange and achieve positive trade balance.
The MCCI suggest following incentives to promote exports: The free trade agreements should be made on equal footing, keeping in view the trade balances of the respective country. The chambers should be consulted so that the local industries may not be affected.
All environmental, energy conservation, pollution control, recycling and all other industries using industrial and city waste as their raw material be allowed at least five year sales tax, excise and income tax exemption. The High tariff rates of electricity and water be reduced for industries There should also be separate over-loaded tax free tariff of utilities for export industry, and burden of normal tax should be removed from utility bills.
The private sector of power generation be allowed for distribution. This will have healthy competition and the power will be available at cheaper rates to industrial consumers. Machinery and its spare parts should be allowed to be imported completely at zero rate which are not manufactured locally Fruit tin packing industry in southern Punjab does not exist.
It must be zero rated for all taxes. In case this industry is set up in this area it will enhance exports. Yarn and fabrics should be included in the list of export refinance scheme of State Bank of Pakistan. Cost sharing based power generators should be available on easy instalments on 2 percent or 3 percent mark-up rate by the government to cover up the shortage of electricity to current load shedding in the country.
The MCCI stressed the need for early completion of M-5 Faisalabad-Multan motorway for economic development of southern Punjab. It has suggested that for the development, promotion of engineering industry, particularly automotive parts manufacturing industries, and to promote the export of engineering goods it is suggested that the following incentives be provided to the engineering industry which has capability to achieve high value-addition.
Engineering units be allowed export processing unit facility on export of 25 percent of their production for the first three years. After that, engineering units should be allowed this facility on export of 75 percent of their production. The industries using industrial and city waste as their raw material, their finished products be given exemption from income tax, sales tax and excise duty for a period of eight years throughout the country, Setting up of science and technology university in southern Punjab as announced, Export of value-added engine parts be allowed 20 percent export incentive to boost export.
(There is no duty drawback on these parts). Neighbouring country China is providing 29.7 percent incentive on these parts since December 2008. The economic survival of the country depends on its foreign exchange earnings. Every country in the world, whether developed or under-developed, is making frantic efforts to gain a major share in the world trade. Pakistan is a developing country and export is the only answer to strength its economy.
To boost the country's exports and to achieve national export target, following measures are suggested: Tax relief for all exporters. However, new entrant in export trade have to face considerable problems in early stages. To encourage the newcomers and small exporters it is suggested liberal tax relief be given to them.
EXPORT RE-FINANCE SCHEME: The mark-up rate on export be made more attractive. Under Part-II of export refinance scheme the exporters are required to export goods worth two-times of their export finance limit, which should be reduced to 1.5 times.
The period of validity of export refinance, provided by the State Bank of Pakistan be enhanced to 8 months for Part-I, instead of six months, and two years for Part-II instead of one year. This incentive would help them to boost exports without any fear of penalty to be imposed on delay in exports under export refinance scheme. Establishment of export development bank.
To facilitate and maximise Pakistan's exports it is suggested to establish an export development bank. The development bank will help in boosting exports and to provide specialised services to the exporters. In various countries of the world such banks are operating successfully and contributing in boosting exports in various countries.
EXPORT DOCUMENTATION: Procedure for export should be made simple and efficient. Instead of lengthy documentation, a single form should be designed for all export purposes ie bill, e-form, duty drawback claim, sales tax refund and R& D etc. It should be reduced to one single page form.
NO DUTY NO DRAWBACK SCHEME: The no duty no drawback scheme is ideal for exporters as it does not tie in any funds for duties on imported material for export orders. However, implementation of the system is complex. The enrolment procedure is complicated as various processes such as receiving application, conducting survey, determining wastage, issuing pass books etc are handled by different departments within the collectorates of survey and export, and the exporter is required to keep multiple records at manufacturing plant which adds to the administration costs.
The MCCI has suggested that the procedure must be simplified so that a government department could accept the responsibility of handling all aspects of the scheme. It also suggests that separate record keeping at the plant be discouraged for the clearance of raw materials.
The duty/obligation of the commercial counsellors/attaches and secretaries placed in Pakistan's missions abroad must be judged and target of exports must be fixed for them. They should be responsible for exploring new markets, fresh buyers , and establishing display centres.
The MCCI has further suggested that commodity-wise targets be given for exports in their respective countries after due discussions with different stakeholders. They should increase volume of the national exports to the countries of their accreditation after due discussion with different stakeholders.
The information given by the commercial/trade division of Pakistan's embassies abroad is not very accurate. Even addresses are not correct, and they did not update the lists of foreign buyers for the last two decades. It complains that exporters, manufacturers always waste their money and time to contact the buyers who do not exist. The subsidy of 50 percent in air freight be considered on regular basis.
Immediate release of funds to preserve and export fruits, vegetables and horticulture: More than 70 percent of produce comprises of perishable commodities which go waste .The surplus production of mango, kinnoo and other fruits requires special cold storage for their protection and export, for which Pakistan has massive markets.