The Pakistan Tanners Association (PTA) has expressed concern over a persistent decline in foreign direct investment from 3.67 percent of the gross domestic product in 2007 to 0.55 percent in 2013, with minimum 0.38 percent in 2012, while there has been hardly any significant joint venture during the past couple of years, mainly because of lacking advantageous policies.
PTA former chairman Agha Saiddain told this to Business Recorder here on Wednesday.
He said, "Pakistan's exports are also witnessing a downward trend from 13.21 percent in 2007 to 12.74 percent of the gross domestic product in 2013, with minimum 12.33 percent of GDP in 2012, making the trade balance more negative for the country. The figures of textile exports of Bangladesh, Cambodia, Vietnam and Sri Lanka - non cotton producing countries are much higher than Pakistan because of the better policies of their governments."
"As far as exports of leather and leather products are concerned, China, India and Bangladesh registered a considerable increase of four percent, 18 percent and 32 percent. Pakistan's leather exports have declined by 1.63 percent during the July-February 2014-15, compared to the corresponding period of last year. If revolutionary changes will not be introduced, the country could become dependent and perpetual borrower forever," he mentioned.
"At present the government is sitting on sales tax amount of 110 billion rupees and 26 billion rupees export development surcharge. Delay in Sales Tax and Customs Duty Drawback refunds have dried up the liquidity of exporting units and many factories have either closed their operations or at the verge of closure. It is a fundamental principle of export policy of any country to keep it free from all duties and taxes direct or indirect. It is the responsibility of a sensible government to unload duties and taxes from exporting goods, he added.
"The second well-known principle is that exports are not revenue earning sector. Exports are to earn foreign exchange to meet our foreign exchange requirements for imports. The main objective of the export sector is to maintain a balance of payments of the country and generate employment. We are trying to generate revenue from export sector which may lead us to a disaster in the future. The third principle of export policy is to provide uninterrupted energy supply - for example gas and electricity - at competitive prices. Presently, our export sector is facing gas and electricity shortages and the prices are also high. He said, "The gas prices in Pakistan are much higher as compared to those in regional competing countries. For example per MMBTU gas price of various countries are; Bangladesh ($1.90), India ($4.20), Sri Lanka ($3.66), Vietnam ($4.33) against $7.32 in Pakistan (including taxes and other charges). The fourth principle of export polices is to keep cost of doing business low. But in Pakistan the cost of doing business has gone up because of an increase in minimum wages, social security 7 percent of wages, EOBI 6 percent of wages, stamp duty 0.2 on export, import documents, EDS 0.25 percent on exports, WWF duty on electricity 2 percent, line losses/ theft Rs1.5 per unit."
The IMF in its 6th Review pointed out to the government that Pakistan's exports are no more competitive and accounted the rupee appreciation for stagnation of exports. The Review also revealed that the rupee has gained 1.2 percent over the last quarter against dollar and Real Effective Exchange Rate has continued to appreciate that has reached to 10.6 percent. Major currencies of world dropped against the US dollar and from April 2014 to March 2015, the percentage drop is Euro (26.446 percent) Turkish Lira (22.030 percent) Indian RP (17.739 percent) Brazilian Real (43.363 percent) Mexico Peso (16.782 percent) Indian Rupees (6.690 percent) respectively, he added.
Agha said, "Presently, all policies are against the export sector and have laid down foundation to squeeze exports further in the future. The common factor behind the regional countries' export growth is that exporting goods shed all taxes, direct or indirect within the borders of the country from which exported."
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