EDITORIAL: It’s shocking to say the least that exporters of seasonal fruits have once again failed to meet their winter export orders due to non-payment of sales tax refunds pending since 2022 in addition to the usual bureaucratic hurdles created by FBR (Federal Board of Revenue) field formations.

Since this hurts exports as well as the national exchequer, it raises a number of very urgent questions.

One, how on earth was such a situation allowed to develop where exports of seasonal fruits – a usual, annual exercise – had to come to a halt and there was still no facilitation by the concerned RTO (Regional tax Office)? Quite to the contrary, it’s been reported that the RTO failed to clear exporters’ claims for two whole years without any sort of explanation whatsoever.

And two, why has it taken the FBR so long to issue a letter to the chief commissioner RTO to “resolve the issue on top priority basis”? Also, since this issue eats into export earnings at a very, very fragile time for the exchequer, and has been lingering for two good years, shouldn’t someone higher on the food chain in Islamabad have taken note of it as well?

We’re in a make-or-break IMF bailout programme, after all, and the Fund’s surprise visit just last week – however much played down by the government – revealed how missing revenue targets can put the facility in peril right at the beginning. Surely, the government realises, despite all the optics, that a suspension of the EFF (Extended Fund Facility) at any point before its completion would trigger a crisis of confidence in the Pakistani economy and toss it head first into sovereign default.

Yet all this just goes to show the low priority given to exports despite the urgency of the situation. There has never been effort to revamp the sector and add value to the export basket; and even a historic collapse in the rupee over many years could barely nudge exports up a percentage point or two. A similar disregard for FDI (Foreign Direct Investment) has all but pushed it out of the calculations for the current account (CA). In fact, often enough it is remittances that lead the CA, outpacing exports as well as foreign investment. No wonder, then, that we are chronically dependent on loans, grants, and bailouts to stay solvent.

The government should not let this matter of stalled sales tax refunds harming seasonal exports slide under the radar. There should not only be a thorough, transparent investigation, but the long arms of the law should also be seen delivering justice and punishing FBR field formations and RTOs responsible for this unforgivable mess.

It’s largely because such things are eventually brushed under the carpet that the bureaucracy has become the very definition of inefficiency, incompetence and unchecked corruption. But now things have gone too far. Pakistan’s fruits and vegetables exports fetch substantial foreign exchange – total fruits and vegetable exports were for FY2023-24 was only USD 0.8 billion; despite unforeseen setbacks like the Russia-Ukraine war and unexpected increase in freight charges.

Now they’re being held hostage by FBR’s incompetence and face cash flow problems despite a handsome number of export orders in hand. This situation demands very serious and urgent action from the government. Pakistan must increase export earnings or perish given its compromised balance of payments situation. Yet, far from working on expanding exports, the government’s own departments are compromising the little export earnings that we already enjoy. This is unacceptable.

Copyright Business Recorder, 2024