EDITORIAL: It’s no surprise that the government is extremely keen to promote exports and is striving to provide the necessary stimulus for their growth. It has tried to help individual sectors expand enough to capture a larger share of the international market and offered duty concessions, among other steps. And even though it has stepped on a few toes in the process it has been open to suggestions from stakeholders, even out-of-the-box ideas that might have a good chance of translating into improved earnings. As such the latest initiative of the Federal Board of Revenue (FBR) to club all export schemes together in a unified scheme to facilitate exporters from the next fiscal year seems like a very good effort because it will put all incentives at the same place so exporters don’t have to look all over the place for them. That it has taken this long for such sense to find its way to the finance ministry’s decision-making circles is no small surprise, considering that the government has been trying to do something about exports since forever.
Yet now that this step has been taken, it has to be implemented in the correct manner to avoid once again running in the wrong direction because of what usually turns out to be an easily avoidable policy flaw. It will be very important, for example, to treat export of goods and export of services at par so whatever incentives are given to one are also extended to the other. This is a small concern since the ordinance that was promulgated, concerning prior actions for the International Monetary Fund (IMF) programme, removed certain exemptions and provisions for export of services. And since this new initiative is hopefully going to come into effect from the start of the next fiscal year, which is not very far away at all, the government should sit down with the Fund to review that list in a hurry.
Exports are exports at the end of the day and they should be treated at par whether they concern goods or services. Surely, nobody in government or industry wants such a well-intentioned and nicely worked out policy measure to be misdirected. Whether this was the brainchild of the new finance minister or the one before him is not clear, and doesn’t matter nearly as much as how it is going to be carried out. Whatever remains to be worked out needs to be done very quickly because the government does not have the luxury of time here. The budget is only days away and so far, according to reports, the FBR has only got as far as circulating the draft of the new scheme among stakeholders for comments. No doubt a lot of ideas are now going to flood the Board, and it will now have to be very choosy in a very short amount of time. That, needless to say, is far from the most desirable way to get stakeholders on board for what is very clearly a very important step on the part of the government.
Still, everybody understands the most important concerns on everybody’s minds and since the government is clearly very serious about doing whatever it can to help exports, it is expected to tick in all the right boxes before pushing the final button. It knows very well that it cannot get into the habit of counting on the bulge in remittances to put makeup on the reserves. Sooner or later the pandemic will go away, people will start spending on things like travel once again, and the party will come to a sudden and unpleasant end. And unless exports are ready to step up and fill the gap by then, it will be the fiscal deficit that will be left with a bulge and nobody will enjoy it.
Pakistan’s export sector did pretty well, especially compared to regional countries’, after the first wave of the pandemic. It is now expected to carry that momentum into the post-lockdown phase of the third wave as well. Hopefully, the government has done enough homework to push this scheme through by the time of the budget, but it must continue its interaction with all stakeholders of the export industry even after it starts working. Everybody knows of course that, appreciated as all such efforts are, it will actually take a lot more to add value to our export basket and catch a big enough share of the trade market to make a meaningful impact on the reserves. Yet these are very important building blocks on that long road. Hopefully, the process of evolution and expansion of the export industry will begin very soon; if it hasn’t already begun.
Copyright Business Recorder, 2021
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