Despite an effort of the government to enhance exports in 2015-16, the country’s exports declined by 12.11 per cent to $20.802 billion during the last fiscal year (2015-16) from $23.667 billion during the same period of the previous year.
The Ministry of Commerce announced the trade policy after a delay of almost 9 months in March and set a target of $35 billion of exports by 2018, but analysts and businessmen claim the government’s export target will be hard to achieve in such circumstances.
In the recently announced budget for 2016-17, the Finance Ministry gave some incentives of rebate and zero-rated sales tax to top five important textile sectors to enhance their exports in the next two years. These five sectors export almost half of the total goods exported from Pakistan, especially to the European Union (EU), America and other countries.
“The exports of the country are in line with the expectations as we were expecting the goods exports of the last fiscal year to be about $21-$22 billion,” an analyst said. “The exports are almost $21 billion while the imports have gone down by a mere $2.32 per cent during the fiscal year. The exports receipts are the major indicator to keep the government’s external account stable. The country also received about $19.9 billion through the workers’ remittances last year which will cover the current account of the country, the analyst said.
However, the businessmen said that the Trade Development Authority of Pakistan (TDAP) did nothing last year except to hold exhibitions in Tajikistan and some other Russian states. Punjab faced the worst power and gas shortage during the last fiscal year. After a hue and cry of the business community, the government provided some relief to the industry during the last three months of the previous fiscal year. The government announced the import of Liquified Natural Gas (LNG) to fulfill the demand of the industrial sector in February 2016.
On month-on-month basis, the country’s exports decreased by 9.88 per cent and stood at $1.651 billion in June 2016 compared to $1.832 billion in May 2016, Pakistan Bureau of Statistics data revealed on Friday. However, on year-on year basis, the exports declined by 8.73 per cent in June 2016 compared to $1.809 billion in June 2015.
Meanwhile, the country’s total imports fell by 2.32 per cent to $44.765 billion during July-June this year from $45.826 billion during the same period of last year.
On year-on-year basis, imports increased by 2.27 per cent in June 2016. The imports were recorded at $4.467 billion in June 2016, which stood at $4.368 billion in June 2015. On month-on-month basis, the imports of the country increased by 11.45 per cent to $4.467 billion in June 2016 compared with $4.008 billion in May 2016.
The trade deficit in July-June 2015-16 increased by 8.14 per cent to $23.963 billion from $22.159 billion during the same period last year. In June 2016, trade deficit increased by 10.04 per cent on MoM basis due to increasing imports.
Through the budget announcement for 2016-17, five major export oriented sectors were given zero rated sales tax regime to facilitate the export-oriented industry. This decision of the government was welcomed by the textile industry and its trade bodies.
The step will go a long way to help promote the country’s exports which have been stagnant for a long time, a businessman said. The notification is an indication of government’s seriousness to put the economy back track, which would boost the trust of not only local businessmen but would also give a good message to the foreign investors.
Zero-rated sales tax regime for value-added textile sector would certainly bring down the industrial cost of doing business and Pakistani products will be able to win their due share in the international market. This initiative of the government will encourage businessmen to supplement the government endeavours aimed at the economic revival of the country.