Pakistan is planning to remove duties on many raw materials used by exporters, reported Bloomberg.
This was revealed by Abdul Razak Dawood, commerce and investment adviser to Pakistan’s prime minister in an interview with Bloomberg.
This will make them more regionally competitive and help the economy escape a recurring boom-bust cycle.
Razzaq told Bloomberg that duties on imported raw materials, which were removed on more than 1,600 products last year, will be further reduced or eliminated in this year’s budget. He’s “very hopeful” the government can continue supplying discounted energy to export-based factories.
The report further stated that shipments from the South Asian nation have been sluggish– ranging between $20 billion-$25 billion per year — over the past ten years or so, a time when other developing economies like Vietnam and Bangladesh have seen their export sectors thrive.
However, the devaluation and import-duty cuts have improved Pakistan’s competitiveness, with exports expected to rise by $1.5 billion this fiscal year and next to a record $26 billion, according to Dawood, who also advised the government in a similar role from 1999-2002.
Dawood further stated that more than half of Pakistan’s exports are textiles, with the industry now operating near maximum capacity.
The biggest textile firms — including Interloop Ltd., Nishat Group and Sapphire Group — are looking to expand, said Dawood.
The European Union, which takes about one-third of Pakistan’s exports, has extended favorable access to its markets for two more years. Pakistan’s exports to Europe grew by 30% in the two years after it received favorable access in 2014, but the pace has slowed since then.
Dawood also expects a free-trade agreement with China, which took effect in January, to boost overseas shipments by at least $500 million annually.
“There is a global slowdown right now but Pakistan’s exports are showing very, very good results,” Dawood said. “I’m hoping this will be the first indicator of an upward trend.”