Rs. 2.5 Billion Released for Prime Minister’s Export Incentives Package

The government has released Rs. 2.5 billion for the implementation of “Prime Minister’s Export Incentives Package” bringing the total to Rs. 16.5 billion.

Official sources revealed that exporters have submitted claims of about Rs. 23.5 billion to the State Bank of Pakistan (SBP) so far. The SBP still had Rs. 600 million available, but exporters’ claims are currently being verified and would be released after verification.

Besides this, the government has released Rs. 3 billion for non-textile sectors so far, covered in the PM package, sources added.

The Economic Coordination Committee (ECC) of the cabinet had amended the PM Package in October to further facilitate the textile sector, and now 50 percent of the drawback will be provided without condition of increment. The remaining 50 percent will be provided if the exporter achieves an increase of 10 percent or more in exports during fiscal year 2017-18 as compared to fiscal year 2016-17.

To further facilitate the exporters and diversify the market, an additional 2 percent shall be allowed for exports to non-traditional markets including: Africa, Latin America, non- EU countries, Commonwealth of Independent States and Oceania.

On December 12, Ministry of Textile and Commerce (MTC) introduced major changes to facilitate duty drawback of local taxes including:

  • Revolving limit to be provided by Finance Division to SBP.
  • Speedy verification of claims through Federal Board of Revenue’s (FBR) electronic data access to the SBP.
  • Elimination of textile associations’ role in the claim verification process.

In this regard, the Ministry had issued a notification i.e. “Duty Drawback of Taxes Order 2017-18”.

Under the new procedure for claims issued by the ministry SBP, in consultation with Ministry of Commerce and Textile, shall devise a mechanism to ensure prompt clearance of drawback claims in compliance with this order.

The units can file claims for the incentives in the form, as devised by the SBP, and submit it to the authorized dealer. The authorized dealer will scrutinize the claim as per the procedure regulated by the SBP. Claims found in order would be submitted to the field offices of SBP- Banking Services Corporations (SBP-SSC) within two weeks, after receiving the claim from the unit with an undertaking in the prescribed manner.

SBP will scrutinize the claims and release the amount of claim to the authorized dealers within 30 days by debiting the relevant government’s head of accounts. The Finance Division will provide a revolving limit to the SBP in this regard. SBP will then request for further release of funds to Finance Division once the limit of 80% is utilized.

The authorized dealers will credit the amount of claim received from SBP within twenty four (24) hours to the unit. FBR will provide electronic data to SBP for expeditious verification/ scrutiny of claims.

However, the value added textile export associations have expressed dissatisfactions over eliminating the “role of associations” under new Duty Drawback Taxes Order 2017-18.

In a joint statement, they stated that the government has taken a one-sided decision without consultation of the associations. This step by a democratic government is highly undemocratic, as the associations are the elected platforms of industry’s stakeholders.

The ministry is taking associations for granted and has closed their eyes towards the imperative role played by the associations, as specified in the notification issued on 20th October 2017. The associations used to certify the authenticity of the information provided by the exporting units and verify the claim documents.

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