The Lahore Chamber of Commerce and Industry (LCCI) President Irfan Iqbal Sheikh has urged the government to abolish regulatory duties and additional customs duty on raw materials for export oriented sector so as enable the local industry to make itself more export competitive.
He was speaking at a meeting of Conveners of the LCCI Standing Committees here on Tuesday. He said that most of the issues could be dealt with an increase in exports for which Pakistan needs to enhance export competitiveness. All raw materials for export oriented industries must be reduced to zero besides slashing the custom duties, he added.
He said the decrease in custom duties on intermediary products for export oriented sector will help import quality materials, components and machinery from the rest of the world at the same duty rate at which it imports through different FTAs. The Sales Tax Rate of 17 percent is exorbitantly high and must be reduced to make our industry more competiative.
The LCCI President said that the country's industry has not remained competitive in the international market because of the high cost of doing business. This is reflected by the stagnation in the exports of the country which are hovering around US$ 24 billion despite the GSP plus status. The industry in Pakistan is hampered by relatively higher energy tariff as compared to our regional competitors (Bangladesh, India and Vietnam) which needs to be reduced in order to increase the competitiveness, he added.
He said that electricity tariff for Industry (apart from a few selected industries like textile) is 13 cents/kwh, which is more than India (8 cents/kwh), China (8 cents/kwh), Bangladesh (9 cents/kwh) and Vietnam (8 cents/kwh). This tariff for entire industry should be brought down to 9 cents/kwh to make our industry competitive with the regional economies.
Irfan Iqbal Sheikh further said that current gas tariff for industry (6.5$/mmbtu) is higher than India ($3.4/mmbtu), Bangladesh ($5.2/mmbtu) and Vietnam ($4.2/mmbtu). This tariff should be brought down to $4/mmbtu to enhance competitiveness of industry, he said.
Sheikh said that aquifer charges of Rs 100,000/month for 1 Cusec for industries extracting water through tube wells is on the higher side and should be rationalized.
He said that minimum wage rate in Pakistan (US$ 112/month) is higher than India (US$ 72.67/month) and Bangladesh (US$ 63.26). The government should design and implement a Productivity Linked Wage System on the model of Malaysia to ensure that increase in wages is commensurate with higher productivity, thus enhancing competitiveness within the enterprise.
He said that as the countries around the world are moving swiftly towards smart regulations, electronic portals, one-window approval, Pakistan would have to adopt a similar course. This would not only facilitate the export oriented industries but create a better perception of the country as an investment destination through improvement in doing business ranking.
He said that the commercial sections of the embassies need to work more efficiently; prepare fresh market research reports in their concerned country and send those reports to all the chambers of commerce in Pakistan. They should also play a pivotal role in developing liaison between Pakistani manufacturers and importer of that country. In the case of any conflicts, the commercial section needs to become a bridge between the two parties in order to resolve the conflict swiftly, he said.
He urged the standing committees' conveners to analyze every nook and corner of their relevant sectors so that a quality set of proposals can be compiled and forwarded to the government.
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