Seven PBC members export goods worth $1.75 billion in FY2018

KARACHI: The Pakistan Business Council (PBC) on Wednesday said seven of its members shipped export cargoes worth $1.75 billion in the last fiscal year of 2017/18, representing 72 percent of the total exports among the top ten contributors.

With several of its members ranked amongst the top 100 exporters, PBC members generated $3.5 billion, representing 37 percent of the exports of the top 100 ranking, a PBC statement said. The aggregate contribution to exports of the entire membership of the PBC was estimated at $4.8 billion, accounting for every fifth dollar of the nation’s exports.

The PBC advocates for job creation through value-added exports in the country, and whilst celebrating the export success of its members, has urged the government to adopt a “Make in Pakistan” approach for generating jobs, promoting further exports, and encouraging import substitution.

“The role of manufacturing in the country has declined; manufacturing is growing at a much lower rate than our neighbours, Pakistan is losing its share in world exports and the rate of investment is half that of India and Bangladesh,” it stated.

The PBC has said that the manufacturing sector carried 58 percent of the tax burden while contributing 13.5 percent to the gross domestic product of the country.

It also said that the GST rate of 17 percent encouraged evasion.

The formal sector has been converted into unpaid tax collectors with high reliance on withholding taxes. Under invoicing, smuggling and counterfeits undermine the industry, it said.

The fiscal policy does not encourage scale through capital formation, accumulation and consolidation.

Cascading taxes on inter-company dividends result in an effective tax rate of 55 percent for shareholders of holding companies. “The corporate tax rate is twice that for individuals, discouraging corporatisation,” the PBC statement added.

It pointed out that the trade agreements were poorly negotiated, which were leading to rapid growth of imports of even basic items of daily use. Energy cost was twice that of Bangladesh, a country which has more than doubled its share of world exports in the last decade or so.

The PBC reminded of refunds, and said exporters were denied refund of taxes, which impacted their working capital and until recently, the exchange rate was uncompetitive.

“The net result of all this is that Pakistan suffers from recurring external account crises.”

The 13th International Monetary Fund programme in 28 years looks imminent, it warned.

PBC urged the incoming government and opposition to unite for addressing the fundamental flaws that lead to the recurring cycles of crises. “We should encourage the export of goods and services, not the off shoring of jobs that result from high reliance on imports.

Nearly two million people reach the age of employment every year and there are 5-7 million unemployed and under-employed in the country,” the statement said.

Published in Business Recorder