Panel expresses serious concern about existence of 'SRO Culture'

The 'panel of economists' of the Planning Commission has expressed serious concern over the existence of 'SRO Culture' in Pakistan which facilitates some business units to clear consignments on special concessionary rates of customs duty.
The final report of the "panel of economists" issued on Tuesday said that through the arbitrary application of statutory regulatory orders (SROs) some entrepreneurs manage to secure special deals on rates of import duties affecting the level playing field for those without appropriate access to decision makers.
The report also observed that the process of tariff reform to lower the level of protection available to industry was an issue that was addressed only half-heartedly.
The deregulation of industrial investment before trade liberalisation was also a case of wrong sequencing. The result was that a major portion of the manufacturing sector continued to focus on the domestic market and thrived under the protection provided by what came to be known as the 'SRO Culture'. Resultantly, the growth of one domestic industry created the market for another. Growth was, therefore, neither influenced by nor predicated upon international comparative advantage. All kinds of industries with varying degrees of efficiency flourished. The crisis of the industrial structure today is an outcome of this piecemeal opening up of the trading sector followed by too rapid an adjustment when this sector was actually liberalised under the IMF programme of the late 1990s, not giving industry adequate time to adjust to this change.
The process of tariff reform to lower the level of protection available to industry was an issue that was addressed only half-heartedly. A major part of the industrial sector was able to lobby successfully for the retention of the regime of SROs to provide repeated bailouts and postpone the introduction of an incentive system that encouraged efficient producers who could compete internationally on the basis of comparative advantage and the strengths of their business model and practices. Through the arbitrary application of SROs some entrepreneurs managed to secure special deals on rates of import duties affecting the level playing field for those without appropriate access to decision makers.