July 28 - Aug 03, 2008

Pakistani businessmen have called for taking steps on urgent basis to reduce the cost of doing business which is necessary to help increase the country's exports apart from remaining competitive in the globalised competitive environment.

They told PAGE that economies of both developed and developing countries are facing pressures mainly due to soaring oil prices, food inflation and other negative effects. The Pakistani businessmen have full abilities to work even in difficult situation; therefore, the government must take them into confidence to evolve a comprehensive strategy to facilitate the businessmen.

Former President of the Federation of Pakistan Chambers of Commerce and Industry and country's leading businessman Iftikhar Ali Malik told this scribe that although the country's economy is facing internal and external pressures the difficult situation could be tackled through a joint strategy of the government as well as businessmen.

He claimed that Pakistan has a lot of potential for both local and foreign investments and with right approach and business friendly decisions, all the challenges can be faced.

Iftikhar Malik, who is also Vice-President of SAARC Chamber of Commerce and Industry (SAARC CCI), appreciated certain measures announced in the Trade Policy and hoped that these measures will help implementing South Asian Free Trade Agreement (SAFTA) in true essence. He also appreciated the provision of duty draw back up to 1% for 14 sectors including Gems and Jewelry and exemption of 16% sales tax on Gold, Diamond and Gems and precious Stones and said that it will help promoting value addition in these sectors and particularly in Gems and Jewelry and precious stones, Pakistani manufacturers could seek expertise from India to boost the export of valued added items, likely to increase from $ 200 million by the end of the current fiscal year. He also hailed the decision regarding DTRE and said the companies working under this scheme will be benefited to import goods for re-export purpose.

Regarding import of CNG buses from India, Iftikhar Ali Malik said that the government should select only those Indian assemblers who give guarantee to invest in Pakistan, establish manufacturing plants, transfer the necessary know-how to local vendor industry and also ensure buy back arrangements.

Malik who is also a former chairman Pakistan Automobile Spare Parts Importers & Dealers Association said that permission to import second hand prime movers buses under T.R. and special purpose trucks in the Trade Policy 2008-09 has proved that successive governments have failed to implement the deletion programme. "Had Pakistan diligently followed its deletion programme, it would have become self sufficient likened to Japan making vehicles like Hino, UD Nissan," he added.

He noted that Pakistan has been made paradise for the automobile assemblers which had not passed any worthwhile technology to the Pakistani Vendor Industry though it has adequate in house engineering facilities to produce such parts. Quoting the example of Massey Ferguson UK Tractors, he said it has achieved over 90% deletion.

Malik who has over thirty years experience of the engineering industry said that those Asian countries which strictly implemented their deletion programme have now acquired the technical know how to manufacture complete vehicles with the help of local vendor industry. He was of the view that the Japanese should also be asked to base their next automobile units in Pakistan on Local Vendor Industry to benefit the development of small industries.

FPCCI Zonal Chairman Azher Syed Butt told PAGE that although some business friendly steps like subsidies on mark up, simplification of the documentation, zero rated facilities for the import of industrial raw material and the accelerated depreciation for the import of machinery have been announced in the trade policy, but these steps are not sufficient to achieve competitiveness in the international markets.

Azher Syed Butt said that in the trade policy no steps have been announced for energy, textile and other important sectors. Textile sector being the backbone of country's economy is the only sector which can provide immediate solution to reduce the trade gap, he said, adding that the energy crisis in Pakistan is severely damaging the overall economy. He was of the view that decline in export of textile products was mainly due to energy shortage, increase in gas tariff, increase in cotton prices in the international market, high cost of capital and insufficient infrastructure. This calls for urgent attention by the government to the problems afflicting this sector. ''We were hoping that government would announce new package or would continue R&D allowance to support textile sector. In the trade policy, such measures are missing'', he said.

He further said that increase in the import bill, which crossed $39.9 billion mark, was the result of increase in the prices of oil and petroleum products in the International market, import of wheat to cope domestic demand, increase in palm oil prices in the international market, import of raw cotton due to crop crisis and of fertilizer.

He urged the government to redress problems confronting to the countrymen on priority basis and take the economic challenges seriously.

Moreover, State Bank of Pakistan has asked the authorised dealers to immediately launch campaign for realisation of overdue export proceeds. They are also advised to submit a progress report in this respect within a week after issuance of this letter. The Central Bank has observed that despite State Bank's clear instructions, a substantial amount of export proceeds are overdue which has been viewed seriously. Under related instructions and an undertaking on E-Form, the dealers are also bound to ensure repatriation of proceeds on due date.

Attention of the authorised dealers is invited to provisions of Foreign Exchange Regulation Act-1947 and State Bank's rules and regulations governing timely realisation of export proceeds as contained in various paras of Chapter XII of FE Manual, 2002 (8th Edition).