NEW YORK – Pakistan is considering offering tax breaks to variousindustries with export potential as the country looks beyond textiles toboost outbound trade, Abdul Razak Dawood, the prime minister’s adviser forcommerce and investment, has said.
In this regard, he told Bloomberg News, an international financial newsservice, that an export policy will be announced next month.
Growing exports from the current over $20 billion a year is Pakistan’s planto increase foreign exchange earnings and end a chronic boom-and-bustcycle, it was pointed out.
“I am in favour of limited time-bound incentives,” Dawood was quoted assaying in the Bloomberg interview, indicating a three- to four-year periodfor tax breaks. He opposed concessions for the textile industry, saying“they have gone to the point that it is a drug.”
Textiles currently account for about 60% of Pakistan’s total exports. Thenew plan complements the State Bank’s aim to offer cheap credit toexport-oriented industries to diversify that basket.
“If we want to go to $100 billion or $200 billion exports like Malaysia orThailand, you ain’t gonna do it on textile,” said Dawood, who waspreviously chairman of Lahore-based Descon Engineering Ltd.
Pakistan’s exports, particularly textiles, became competitive after therupee’s devaluation and duty cuts, Dawood said, citing a 36% jump inquantity of garments shipments. “It means that we are getting market share,we are taking somebody’s market share.”
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Pakistan’s trade deficit narrowed 33% to $9.7 billion in the five months toNovember, as imports dropped by 18% and exports rose 5% in the same period.
Dawood said he sees outbound shipments growing to $24.5-$25 billion thisfiscal year ending June from $23 billion last year.
Pakistan is pinning hopes on a new free-trade agreement with China to growoverseas shipments by at least $500 million annually, the report said.
The agreement, which takes effect next month, will help Islamabad reduceits trade gap with Beijing from the current $12 billion, according to datacompiled by Bloomberg News.
Dawood said he is seeing interest from Chinese companies that want to setup factories in Pakistan and use them as a hub for exports. For low valueadded engineering products “we are much cheaper than China now,” Dawoodsaid, adding that the plan for the next China international importexhibition is to have only an engineering pavilion.“We got to get out of the textiles syndrome,” he added.
