PBC's main recommendations for the STPF 2018-23 are:
- The STPF should holistically cover both aspects of trade ie exports and imports. In the context of the latter it should also support import substitution, which, with a domestic market of over 200m consumers, can over time, lead to scale and export competitiveness.
- The STPF should have the complete buy-in of all the relevant ministries. This would require a comprehensive policy alignment to remove the impediments undermining domestic manufacturing. In the absence of this alignment, the STPF 2018-23 would meet the fate of failed STPFs of the past.
- Its implementation should be overseen by a high-level body ideally led by the PM.
- The MOC should renegotiate the FTA with China to gain ASEAN terms for Pakistan's exports and defer further import tariff concessions to encourage the Chinese to rectify the huge trade imbalance by relocating Chinese manufacturing to Pakistan.
- The MOC should pursue trade agreements with countries such as Turkey and Thailand with proper care so as not to hurt domestic jobs.
Based on the aforementioned, PBC is of the view that the National Tariff Policy just announced, needs to have the full buy-in of all government ministries.
Whilst cascading tariffs are conceptually a move in the right direction, specific impact of these on different industries requires time beyond the one week envisaged in the MoC's consultative process. PBC would like the distortions to the 2005 tariff structures, in particular through the imposition of retrogressive Regulatory Duty and other revenue-chasing surcharges to be considered in detail. Without this there is a danger of over-simplification.
PBC also believes that changes in the trade and tariff policies should be accompanied by steps to curb under-invoicing and smuggling, withdrawal of the "full and final" tax regime, steps to encourage capital formation, accumulation and investment that leads to scale and competitiveness and reduction in energy costs.
A "Make in Pakistan" approach requires the holistic alignment of policies well beyond those within the purview of the MOC. The PBC, nevertheless, welcomes the MoC's initiative to outline what it can do to create jobs and promote value-added exports.
The Pakistan Business Council is a private sector business policy advocacy forum set-up in 2005 by 14 (now 70) of Pakistan's largest businesses including multinationals.
PBC members have substantial stakes in Pakistan's manufacturing and services sectors. Its members and their associated companies contribute more than 11% to Pakistan's GDP and close to 20% each of taxes collected and exports from Pakistan. More information about the PBC, its members and its areas of advocacy can be found on our website: www.pbc.org.pk.-PR