Govt takes step to spur forex inflows thru export boost

ISLAMABAD: Finance Minister Miftah Ismail has emphasized increasing exports and stated that there would be no tax on those companies that would export 10 percent of their production.

Speaking at the “Leaders in Islamabad-Business Summit 2022”, the finance minister said that every company has to export 10 percent of its products, adding that he would like to ask big business houses if they are making imports worth $200 million how he would have the dollars; so they have to export something. The finance minister further stated that there is also a need to strike a balance between income and expenditure by living within means to put the country on the path of self-reliance and growth.

He also lamented that the country is not at that place where it should have been after 75 years while other countries in the region have gone far ahead of Pakistan as far as economic development is concerned. He said that this means that there was some flaw or defect in the policy and approach and suggested four principles – live within means, increase exports and agriculture production, and focus on education.

The finance minister said that Pakistan’s budget deficit and the current account deficit have been the problems as in recent years, the budget deficit has almost doubled. He added that the budget deficit for the ongoing fiscal year is projected at Rs4 trillion, whereas, the last fiscal year was closed with a deficit of Rs5.2 trillion.

The finance minister said that the budget deficit eventually converted into the current account deficit when the country borrows from other countries for its financing as the private sector does not have money, after investment, to lend to the government.

The finance minister said external borrowing is not a bad thing if it is used for productive purposes as was done by his party’s government by installing power plants that doubled the electricity production but industrial production was not increased and power was being consumed by marriage halls.

He said either taxes have to be increased or expenditure would be reduced in order to live within the means. What is the reason that Bangladesh and India had many times more foreign exchange reserves compared to Pakistan, he asked, adding that the beginning of self-dependence starts when one decides to live within his own means.

He said that the only thing he could have done immediately was to restrict imports to stop the outflow of dollars as the increase in exports would have taken a much longer time and stated as a result of the slowdown of imports there was around $700-800 million more in the inter-bank market.

He said that it was also unfortunate the increasing reliance of the country on imports and nothing was being exported as a majority of the manufactured products of the country are being sold at home due to protection, instead of exporting.

Only one sector has been exporting so there is a need to increase exports, Miftah Ismail stated that almost all the major companies have been selling their manufactured products in Pakistan because of profit margin. So, the second principle is to increase the exports to earn foreign exchange reserves and those companies that would export 10 percent of their production, there would be no tax on them.

He said every company has to export at least 10 percent of its production. He said that it would ask big business houses if they are importing$200 million from where he would get the dollars; they have to export something.

Another area the country is required to focus on is to increase farm productivity as the country imported over 1.1milliontons wheat to meet the requirement and for strategic reserves with the cost of $450 million, he said.

Ismail said that there is a need of focusing on educating children and stated that it was a matter of shame that half the children are out of schools and both provincial and federal governments, in this regard, have failed miserably. He said that even the private sector has also failed to provide education to the children. This is a national obligation but as a nation, we have badly failed and urged the business community to open schools for providing education to the children.

Copyright Business Recorder, 2022