ISLAMABAD - After reducing the gas tariff, the PTI-led coalition government is mulling to reduce the electricity tariff for the export-oriented sectors to reduce the cost of doing business in the country in order to enhance the exports.
“There is no other option than to reduce the cost of doing business in order to enhance the exports,” said an official of the ministry of commerce and textile. He informed that Economic Coordination Committee (ECC) of the Cabinet may decide to reduce the electricity tariff for the five exports oriented sectors, textile, leather, sports goods, surgical goods and carpets. The official said that ECC could be proposed that tariff rationalization surcharge currently at Rs 3.10/KWh and financial surcharge at Rs 0.48/KWh may be withdrawn.
The government has not increased the gas prices for exports oriented sectors as it did for all other sectors including domestic. The gas price would remain at 600 MMBTU for the exports oriented sectors. Similarly, the government would provide imported LNG to private sector at subsidized rates. The government would provide subsidy of Rs44 billion on not increasing gas prices and giving LNG at reduce rates to exports oriented sectors.
A delegation of All Pakistan Textile Mills Association (APTMA), led by its chairman Aamir Fayyaz, recently met Finance Minister Asad Umar and demanded incentives for the exports sectors, especially textiles. The delegation demanded of the government to reduce the cost of doing business in the country in order to enhance the exports. It also proposed withdrawal of customs duty and sales tax on import of raw materials, sales tax refunds, and extension of duty drawback scheme for 5 years and maintaining market-based exchange rate. The PTI government assured the APTMA to address all their concerns to enhance the exports of the country.
The PTI led government wants to enhance the exports in order to control the widening current account deficit of the country. Finance Minister Asad Umar on Tuesday informed the media that external account deficit has reached a dangerous level with stagnant exports and the country has been taking more loans to repay the debt. The government has decided to enhance the exports of the country to $27 billion in ongoing fiscal year 2018-19 from existing $23.4 billion of the previous fiscal year. Finance minister estimated current account deficit in the range of $18 to $21 billion during current financial year from $18 billion of the previous year. The massive increase in current account deficit eroded foreign exchange reserves of the country.
Pakistan’s exports have gone up by 5.05 percent to $3.66 billion during first couple of months (July and August) of the current fiscal year. On the other side, the country’s imports have grown by only one percent to $9.8 billion during July-August period of the year 2018-19. Therefore, the trade deficit was recorded at $6.17 billion in two months, according to the latest data of Pakistan Bureau of Statistics (PBS).