FPCCI organises interactive session on national tariff policy draft

KARACHI:  The Research and Policy Division of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) organised an interactive session on National Tariff Policy draft at FPCCI Head Office Karachi through Video conferencing  Islamabad and  Lahore offices.

The session was presided by Engineer Daroo Khan, President FPCCI and was attended by representatives of different sectors including Vice Presidents FPCCI Muslim Muhammedi, Arshad Jamal and Noor Ahmed Khan, Advisor to President Syed Mazhar Ali Nasir, Former Vice Presidents, Zahid Saeedand Shakeel Ahmed Dhingra. Chairman R&D and Academia Committee of FPCCI Senator Abdul Haseeb, Former Director General FBR Syed Tanveer Ahmed, Engr. M A Jabbar Chairman FPCCI Central Standing Committee on “R&D Seminars & Conferences”, 2019 and other prominent businessmen also attended the interactive session.

The Participants discussed National Tariff Policy draft prepared by Ministry of Commerce and expressed unanimously their point of view that the aim of tariff policy should objectively promote and protect the domestic industry instead of considering it a revenue source collection measures. The draft paper from Ministry of Commerce providing data information was noted by the participants that Pakistan ranked third in world amongst 68 countries with export of US$ 20 billion where there are high Tariff and Taxes. The participants further noted that the share of exports in GDP has declined from 13.5% in 2010 to 8.2% in 2017 as the products become uncompetitive in international markets. The participants also noted information from the draft mentioning that the impact of tariff liberalization in Pakistan from 2001-2014 from 20.62% to 8.92% resulted in increase of Pakistan’s exports from US$ 9.2 billion to US$ 25.1 billion and the impact of tariff increase  from 2014-2017 from 8.92% to 10.09% declined Pakistan’s export from US$ 25.1 billion to US$ 20.4 billion.

The participants were of the view that the validity of these co relationships mentioned in the draft, in isolation of other factors may not be justified and needs further deliberations to understand the circumstances surrounding the economy which together have caused decline in exports.

The participants appreciated the proposed initiative by government to deliberate this issue in respect of the competing and comparative advantages which economy of Pakistan inherits, which can become basis of tariff rationalisation. The participants also discussed that the tariffs policy should be part of trade policy to offer predictability to attract investments in manufacturing sector.

The participants suggested that the tariff regime should be simple, time bound assured with gradual changes so that SMEs and emerging sectors which are entirely dependent on import of manufacturing inputs for manufacturing finished products can sustain developments. The participants urged that the National Tariff Policy draft 2019 should be discussed and worked out in respect of sectorial analysis so that tariff protection become the basis of investments in manufacturing sector.

Furthermore, the rationalized approach with inputs from the stakeholders and different subsectors of industry should conclude to a transparent processed outcome of rationalised tariff policy, at least on medium term basis with carry forward indications for long term policy. The participants concurred that the principle of cascading should preferably be given priority in proper structuring of National Tariff Policy. The discussion also focused on the need of standard tariff slabs with 0% for Base line Materials & Raw Materials, 5 to 10% for intermediate goods, 15% for semit-finished goods, 20 to 25% for finished goods & consumer goods.

The participants also agreed that a Tariff Policy Board (TPB) as is suggested in the draft be constituted for the implementation of National Tariff policy. However, the participants recommended that the TPB should include FPCCI and its four nominees from private sector so that a public private partnership based Board is developed to strengthen the required cause of developing National Tariff Policy.