News Desk |
In the first week of January 2019, Govt of Pakistan offered reduced electricity tariffs and uninterrupted supply of RLNG (Re-Liquified Natural Gas) to five key export-oriented industries. Asad Umar, the then finance minister, took the step to facilitate and boost exports. Five industrial sectors that are considered “Zero Rated” were facilitated; these included Textiles, Leathers, Sports, Surgical Goods and Carpets.
Now other sectors of industry want similar treatment. They argue that Govt should have a generalized “Export Policy” applicable to all sectors instead of traditional five areas. The Power Division of the Ministry of Energy had notified, in January 2019, reduction in the power tariff by three rupees per kilowatt hour for the above mentioned five zero-rated industries.
Notification by the government bound all power producers including the Karachi Electric (K-Electric). The zero-rated five industries are now getting electricity supply at the rate of Rs. 7.5 per kWh (kilowatt hour). Standard domestic industry is, however, getting electricity at the rate of Rs. 22/kWh (per Kilowatt hour).
The decision of government was lauded by the Pakistani exporters. Chairman of All Pakistan Textile Manufacturers Association (APTMA), Gohar Ejaz appreciated the step taken by the government and said that the promise Prime Minister Imran Khan had made has been fulfilled.
Ejaz said that the govt was bound to act because numerous industries were shut down in Punjab due to expensive gas and electricity. He hailed the govt’s decision and wished it to go a long way in providing relief to the industrial sector.
Need for a generalized Export Policy?
However, there are other sectors of industry trying to build export markets. They now demand a uniform export policy for all industry instead of the one that has a narrow focus on some sectors. Rashid Ahmed Siddiqui, Chairman of Afeef Group, Karachi, spoke with Global Village Space.
He argues that if the PTI government is serious in facilitating exports then it must come up with an Export Policy to facilitate all sectors. Afeef Group currently owns three industrial units manufacturing packaging materials mainly for food industry.
Afeef Packages Pvt Ltd the main concern is one of the largest in Pakistan. It is the biggest packaging unit in terms of product variety. Its competitors include well-known industry names like Packages (pvt) Limited from Lahore and Saima Packages, Yaqeen Art Press and Merit Packages in Karachi.
Export of packaging material to GCC countries & EU
Afeef Zara Packages is a new addition to the Afeef Group; established in the last 2 years it has managed to raise its exports from a mere Rs. 25 million to Rs. 700 million in just over two years. It now aims to raise it further to Rs. 1.5 billion per year within the next 12 months.
Siddiqui, Chairman Afeef Group, explains that Group’s export markets are in GCC countries (Middle East) and Europe. In GCC they face competition from India and China and across Europe they face competition from India and Turkey. But they are at a disadvantage because Indian manufacturers are getting electricity at the rate of Rs. 0.08 per kWh (Single Digit rates) as compared to Rs. 0.22 per KwH in Pakistan. (Double Digit Rates).
Afeef Zara Packages is also exporting food packaging products for Pizza Hut in United Kingdom. Siddique demands that the government needs to bring out an Export Policy facilitating special electricity tariffs for all potential exporters instead of just five traditional sectors (Textiles, Leather, Sports, Surgical Goods and Carpets) covered in the notification of January 2019.
Procedure and policy against Export Certificates issued by Customs
Siddique points out that the govt can have a very simple procedure to implement this policy initiative. He suggests that the government notification, under Export Policy, to electricity providers like K-Electric should permit concessional rates for all industry units that provide export certificates issued by the Customs.
Such Export Certificates contain all necessary details required under the regulations of Federal Board of Revenue (FBR) and the exporters can submit proof of exports by the State Bank of Pakistan clearly stating all the export remittances that took place. Exporters of the five traditional industries are already availing the concessional rates upon producing the said certifications. All that is needed is to broaden the policy to include all exporting units – irrespective of the sector.