The Pakistan Business Council (PBC) has cautioned the government against terminating the Export Facilitation Scheme (EFS), as this would cause serious harm to the export sector, affect the economy, and expose Pakistan to trade imbalance.
The EFS is essential for the export industry of Pakistan, particularly for value-added exports. Instead of abolishing the scheme, given the problems in enforcement, the PBC opines that the government needs to work towards better regulatory controls and enhanced supervision by customs and the Federal Board of Revenue (FBR). Offenders need to be given harsh punishment, they said.
PBC Chief Executive Ehsan Malik stated that eliminating the EFS would be an economic catastrophe. He wrote to the finance, commerce, and planning ministers, requesting them to facilitate value-added exporters, enhance regulatory transparency, and enhance the competitiveness of Pakistan’s exports globally.
Malik also spoke about grievances expressed by the local spinning sector. They have complained that imported yarn is being sold in the domestic market on a tax-evaded basis by some value-added exporters, reducing the competitiveness of local spinners. Malik reasserted that this is not the EFS’s fault but an enforcement lapse by customs and the FBR.
Rather than canceling the scheme, Malik called on the government to act by boosting the monitoring of customs and the FBR. He added that technologies such as blockchain, electronic invoicing, and audit trails could be used to track down every kilogram of imported yarn. This would enhance the system without hurting the export industry.
Finally, Malik highlighted that local spinners need to concentrate on product quality and cost structure to compete on the international market. If Pakistani yarn can compete on the international market, it should also be exported, earning the country foreign exchange, as is the case with the value-added textile industry.
