LAHORE: The government is targeting exports of $28 billion next fiscal year as it plans to extend the duty-free import regime to more raw materials in the upcoming budget to support the manufacturers.

Speaking with Dawn, Commerce Adviser Abdul Razak Dawood said the country was expecting its export revenues to jump to over $24bn this fiscal year.

The nation’s exports jumped by over 13.5 per cent to $20.9bn in the first 10 months of 2020-21 from $18.4bn a year ago, according to the Pakistan Bureau of Statistics (PBS) data for the period between July and April.

The textile and clothing exports posted a growth of over 18pc in 10MFY21 and Mr Dawood hopes the textile and clothing shipments to jump to $16bn by the end of June. “You see textile and clothing exports will fetch an additional $3bn — equal to half of the money the country had borrowed from the International Monetary Fund (IMF) in July 2019 under a 39-month bailout package. So I am very hopeful that growth trend in exports will sustain going forward. I am also discussing with the finance minister the possibility of cutting customs duties on more raw materials. Today 40pc raw materials are coming into Pakistan at zero duty. We want to make import of all raw materials duty-free in next few years,” he contended.

Mr Dawood said his ministry planned to encourage export diversification to reduce the country’s reliance on textiles alone. “In next budget we intend to focus on pharmaceutical, engineering, processed food and footwear exports by reducing taxes on import of their raw materials to make them competitive internationally.”

In the engineering sector, we are looking at exporting two- and three-wheelers, washing machines, refrigerators, transformers, etc. In textiles, the adviser is looking at encouraging production and export of garments for women, an area where Pakistan does not exist at all, as part of product diversification plan.

He recognises that Pakistan’s exports have significantly increased this year, widening the trade deficit and bringing pressures on foreign exchange reserves. But he said the imports had increased mainly because of higher food, especially wheat and sugar, and raw material imports.

The imports during 10MFY21 rose 17.8pc to $44.7bn against $38bn last year, expanding trade deficit to $23.8bn. The increase in imports, said the adviser, is attributable to higher food — sugar and wheat — imports, rising global oil and commodity prices, and increased inbound shipments of industrial raw materials for import substitution and exports.

“I don’t support luxury imports; we have in the last couple of years taken a few actions to stop imports of such items by increasing taxes and imposing stringent regulatory requirements. This has helped local food industry immensely and increased shelf space for local products. We will continue this policy in the next budget as well and raise duties on luxury imports.”

He said the government was pursuing a two-pronged trade policy to substitute imports and boost exports. “Import substitution is critical to create surplus for exports. Gradually we are seeing export culture taking roots in the country and policy formulation. Our survival lies in increasing our exports,” he argued.

TEXTILE POLICY: He said the textile policy will be announced soon once the differences over energy rates are sorted out. He said the textile industry had performed well this year and is investing heavily in new technology and capacity expansion taking advantage of the cheap credit made available under the SBP’s Temporary Economic Recovery Facility (TERF). “They have increased exports because we gave them regionally competitive electricity rate of 7.5 US cents a unit, which was later increased to 9 cents a unit till June 30, 2021.

Published in Dawn, May 28th, 2021