Op-ed: Fee hike in exports has left Pakistani businesses rattled

This decision will leave Pakistan’s fruit and vegetable export far behind Bangladesh. Bangladesh is exporting more than 70 varieties of vegetables to 53 countries including Kingdom of Saudi Arabia, UAE, Singapore, Malaysia, Hong Kong, and UK, writes author.

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The recent increase in the fee for obtaining Phyto-certificate, mandatory for the export of perishable items, by 800 per cent without comparing with the fee structure in other countries and ignoring the views of stakeholder, has created a major hurdle in our fruit and vegetable exports.

This new fee structure implemented in September 2020 by Pakistan’s Federal Ministry of National Food Security & Research (MNFSR) is indeed detrimental to our fruit and vegetable exports. Had the decision been taken after reviewing the rates prevalent in other countries and in consultation with the All Pakistan Fruit & Vegetable Exporters, Importers and Merchants Association such decision could have been avoided.

Read more: Agriculture sector has $100 billion export potential: President ICCI Sardar Yasir Ilyas Khan

It may be mentioned here that despite the pandemic, Pakistan’s exports of fruits and vegetables witnessed an upward trend. According to the latest statistics available at the Pakistan Bureau of Statistics (PBS), export of fruits rose 3.8 per cent during the previous fiscal year while export of vegetables recorded a substantial increase of 28 per cent. Fruit exports brought $431.27 million while export of vegetables generated an additional $300 million for the country.

Naturally, the decision to increase the fee for Phyto-certificate at a time when exports are crucial to Pakistan’s economy is indeed ridiculous

Instead of giving some benefits to the exporters, keeping in view the remarkable performance, the government has created a massive hurdle by imposing an additional increase of 800 per cent in the cost of exports , especially at a time when ‘Horticulture Vision – 2030’ prepared by Pakistan Fruit and Vegetable Association (PFVA) has set export target of $6 billion in ten years.

Consequences of the fee hike

Naturally, the decision to increase the fee for Phyto-certificate at a time when exports are crucial to Pakistan’s economy is indeed ridiculous. This certificate is issued to indicate that consignments of plants, plant products or other regulated articles meet specified phytosanitary import requirements and are in conformity with the certifying statement of the appropriate model certificate. Thus, this decision will leave Pakistan’s fruit and vegetable export far behind Bangladesh. Bangladesh is exporting more than 70 varieties of vegetables to 53 countries including Kingdom of Saudi Arabia, UAE, Singapore, Malaysia, Hong Kong, and UK.

It is pertinent to mention here that export performance for the developing countries is generally believed to have pivotal role in providing the much-needed impetus to economic growth.

Presently, Pakistan is exporting fruits and vegetables to the USA, Europe, Middle East, Far East, India and Sri Lanka. Mangoes, kino, apples, dates, pine nuts, oranges and guavas are a few well exported fruits and among vegetables potatoes, onions, mushroom, garlic, chilly etc. are exported.

Read more: Op-ed: Focus on export, FDI requires paradigm shift in Pakistan’s foreign policy

With the arbitrary increase in the fee, exporters now must pay Rs 2,500 per item per container for the issuance of Phyto-certificate against Rs 300 earlier, which means an additional burden of 800 per cent. The cost of exports is further compounded as there are many export consignments and each container require separate Phyto-certificate. With this sudden increase, without taking the stakeholders in to confidence, will the Pakistan exporters be able to compete with its competitors?

A comparison of fee for the certificate with other countries shows that in India, it is $1.36 or Rs 228, while it costs $0.87 or Rs 140 in Sri Lanka and $0.24 or Rs 40 in Bangladesh. Therefore, it goes without saying that the fee hike of Rs 2,200 will significantly multiply the cost of export consignments, which will make it very difficult for exporters to compete in the international market. In fact, the amount of Rs.300 being charged for this certificate was already the highest.

Read more: Japan eager to import famous Pakistani exports like mangoes, rice, and textiles

It may be mentioned here that since the exporters have to dispatch their products by air instead of ship due to the outbreak of Covid-19, the cost of export all over the world has gone up. As such, the exporters have to bear the additional cost of air freight which is a bit too exorbitant compared to ship and now, with such a phenomenal increase in the fee of the certificate, which is a must requirement for export, leaves the exporters with no choice but to leave the market open for the competitors.

Therefore, the managers responsible for preparing fiscal policies must not only study the policies of other countries but also take their exporters into confidence so that practical policies can be hammered out.

It is pertinent to mention here that export performance for the developing countries is generally believed to have pivotal role in providing the much-needed impetus to economic growth. As such the government is rightly striving to enhance exports of fruits and vegetables. But then the increase in fee without an in-depth study of the post Covid-19 export trends seems to be pretty much unrealistic which is bound to be counterproductive.

MNFSR must be considerate of the exporters

The managers in MNFSR as expected, have turned exporters’ hope into despair. The exporters now see the increase in fee as adding fuel to the fire. They are of the view that this decision has sparked fear of a complete discontinuation of export of fruits and vegetables through the air route. According to the fruit and vegetable exporters the present cost of Phyto-certificate was far higher than the profit earned on an item.

Read more: Pakistan Economy: History and Required Reforms 

Perishable goods which include fruits and vegetables decay rapidly and thus, need to be shipped under strictly controlled temperature and storage conditions which are expensive. The governments, therefore, give some extra concessions to the exporters of perishable agricultural produce by reducing transaction and handling cost. They also try to match their taxation policy and fee structure with competing countries to survive in the international market. Therefore, the managers responsible for preparing fiscal policies must not only study the policies of other countries but also take their exporters into confidence so that practical policies can be hammered out.

Khawaja Amer is a freelance journalist. He has worked in major international & national papers including Khaleej Times and The News International. He contributes frequently to Dawn and Express Tribune. The views expressed in this article are the author’s own and do not necessarily reflect Global Village Space’s editorial policy.


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