ISLAMABAD: Finance Minister Senator Mohammad Ishaq Dar has announced to continue zero-rate sales tax for export sector in fiscal year 2017-18.
In his budget speech on floor of the house, he highlighted relief measures for textile and other export sectors, which included:
(1) Mark-up rate on Long Term Financing Facility stands reduced from 11.4 percent to 5 percent;
(2) Duty free import of textile machinery is allowed;
(3) Uninterrupted supply of electricity and gas is ensured for the textile sector;
(4) Technology Up-gradation Fund (TUF) Scheme 2016-19 for the textile sector has been introduced;
(5) Prime Minister’s package for exporters was announced in January 2017 in which the centre-piece is the textile sector;
(6) The government made five export oriented sectors – including textile, leather, sports goods, surgical goods and carpets – as part of zero-rated sales tax regime last year. This will continue during the next financial year;
Similarly duty free import of textile machinery will continue.
All the measures announced in FY 2016-17 will be continued in FY 2017-18. Maintaining the past tradition of supporting the textile sector, following measures are proposed in the FY 2017-2018:
(1) To stabilise cotton prices in the country, a system of cotton hedge trading for the domestic cotton will be initiated in consultation with stakeholders;
(2) In consultation with public and private stakeholders, the government will launch Brand Development fund for textile sector;
(3) The approval process of establishment of 1,000 stitching units has been completed and its implementation will start during FY 2017-18 and shall be completed in three years;
(4) Textile Ministry will launch the first ever online textile business/trade portal for textiles using B2B (business to business) and B2C (business to consumer) mode. This will bring Pakistan textiles’ value chain in line with global marketing practices.
Pakistan’s exports have suffered due to slow-down in global trade and reduction in commodity prices. To increase exports, the government implemented a number of initiatives which will also continue for the next year:
(1) Mark-up rates of Export Refinance Facility have been reduced from 9.5 percent in June 2013 to 3 percent in July 2016. In addition, the mark-up rate on Long Term Finance Facility has been gradually reduced from 11.4 percent in June 2013 to 6 percent in 2015. These initiatives have resulted in reduction of input costs for exporters.
In addition, new initiatives are as follows;
(1) The custom duty on raw-hides and skins will be reduced to zero;
(2) Stamping foil used in producing high value added finished leather will also be exempted from customs duty;
(3) Rice exporters are facing difficulties in marketing due to long distances from their potential market. In order to facilitate the export of rice, it is being decided in principle to allow warehousing of rice outside Pakistan. Ministry of Commerce, State Bank and Rice Export Association of Pakistan will develop details of this scheme.
