President Sialkot Chamber of Commerce and Industry (SCCI) Mohammad Ishaq Butt has said that in the present economic crisis, all possible facilities are required from the government especially to the export sector to fulfil their foreign orders, for which reduction in mark-up rates is imperative. Due to energy crisis, inflation and other related problems, the industry is on the verge of closure, he said.
Talking to media persons here on Wednesday he said that the hike in interest rate has increased the cost of production in Pakistan leaving its merchandise uncompetitive in the global market. Refinance Scheme was introduced in 1975 as a special incentive to give boost to exports of the country at the difficult time.
Simultaneously, the government provided incentive in the shape of rebate on average at 35 percent on all exportable items to boost the exports. The results were most positive and export sector flourished immensely, he added. Initially mark-up rate of refinance was 2.5 percent, which remained at 3 percent for considerable period of time. However, all of a sudden its rate was increased to 13 percent, which devastated the export sector. As a damage control measure, the refinance rate was reduced to 8 percent.
He emphasised that reasonable refinance rate greatly helped the export sector and the funds were used for up gradation of and development of the export industry. The funds were utilised keeping in view the refinance rate of 3 percent but at the time of pay off, the rate was 9 percent, which is highly unjust and undue financial burden on the exporters.
Mohammad Ishaq Butt said that today the circumstances are even worst and the export sector is finding it difficult to survive and needs best support from the government to carry on the business. This is a performance-based finance which banks allow after very stringent scrutiny. Present rate of mark-up is 9.00 percent. Increase of around 6 percent has adversely affected the export sector and, therefore, needs immediate revision. The President SCCI said that the rate of refinance must be reverted to 3 percent for the exports to sustain and grow, otherwise the prospects seem alarming.
Mohammad Ishaq Butt further said that rate of finance of Foreign Bill Purchase is around 17.5 percent. To facilitate the export sector its rate should also be brought down in the single digit of maximum 9 percent. Reduction in rates of Refinance and Foreign Bill Purchase is important for the exports to survive in this most difficult period in the country's history, he added.