LAHORE: Exporters resent non-implementation of incentives

LAHORE: Indecision on economic policies has become a hallmark of governments, particularly the present one, as conflicting promises made to different stakeholders create false hopes which finally end in despair.

Entrepreneurs point out that businessmen the world over plan their business strategies on the basis of economic policies of their government. Incentives provided by their government are used as a leverage to boost sales and productivity. In fact, these incentives are invariably passed on to the buyers to keep their markets intact.

Lahore Chamber of Commerce and Industry??s former senior vice president Farooq Iftikhar says subsidies and grants adversely impact the efficiency of business. However, he adds these incentives sometimes become a necessity when governments of competing economies provide concessions to their exporters or domestic suppliers to help them stay globally competitive.

For instance, he says, India and China provide 9-13 per cent subsidies to their textile exporters which help them ward off the impact of global recession and maintain their market share. Similarly, Bangladesh provides five per cent rebate to its value added sector on purchase of locally-produced yarn apart from many other incentives.

He says Pakistan??s value added sector was granted six per cent research and development grant but that came late as damage to their exports had already been done by incentives granted much earlier to value added exporters in China, India and Bangladesh.

Clothing exporter Sheikh Zafar Mehmood says the government not only withdrew six per cent R&D support but also suspended budgeted payments under the head for 2007-08. Later, different economic managers promised that the grant would be restored and many formulas for its distribution were discussed with various stakeholders but nothing has happened so far, he says.

A similar incentive scheme with lower percentage was announced in the new textile policy this year, but it has not been implemented even after six months. ??It is better not to announce any incentives if they are not to be provided when badly needed by the exporters,?? he adds.

Syed Nabeel Hashmi, an engineering entrepreneur, regrets that the incentives announced in the trade policy for the engineering sector have not been implemented at all. The government for a long time had remained indecisive about supporting the engineering sector and when it announced these after a long delay they are not being implemented, he says.

Technology Upgradation and Skill Development Company??s former chairman Almas Hyder says the latest example of making issues linger is that of yarn. He says any prudent economic manager well versed with the textile scenario would have taken prompt action by either restricting yarn export or leaving it to the market forces.

An unambiguous policy in this regard, he says, would have given a clear signal to both the spinners and the value textile sector to operate within policy limits.

Instead, he adds, the federal government has asked the Trade Development Authority of Pakistan to monitor yarn export which gives a ray of hope to the value added sector that the government may intervene in case of excessive exports.

He points out that the data that the TDAP has been advised to monitor is already available with various export monitoring agencies of the country including the State Bank. This directive, he adds, is just an eye wash because the value added sector needs low-cost yarn immediately as they have accepted orders based on cheap yarn.