KARACHI:
The Pakistan Business Council (PBC) has issued a stark warning, stating that abolishing the Export Facilitation Scheme (EFS) would be a disastrous move with severe consequences for the export industry, economic growth, and the country’s ability to address its widening trade deficits.
The PBC emphasized that the EFS is not merely a policy but the foundation of Pakistan’s value-added export sector. Rather than scrapping the scheme due to enforcement shortcomings, the council urged the government to enhance regulatory controls, improve oversight by customs and the Federal Board of Revenue (FBR), and impose strict penalties on those who violate the rules.
In a letter addressed to the finance, commerce, and planning and development ministers, PBC Chief Executive Ehsan Malik described revoking the EFS as “economic suicide.” He stressed that the key to economic prosperity lies in empowering value-added exporters, ensuring transparency in regulations, and enabling Pakistan to compete effectively on the global stage.
**Addressing Enforcement Lapses**
Malik highlighted concerns raised by the domestic spinning industry, which alleges that some value-added exporters are illegally diverting imported yarn into the local market without paying sales tax. This practice, they argue, undermines the competitiveness of local spinners.
However, Malik pointed out that the issue stems from enforcement failures by customs authorities and the FBR, rather than flaws in the EFS itself. “Scrapping the scheme due to enforcement lapses is akin to demolishing a bridge because of a few loose planks,” he said.
Instead of dismantling the EFS, Malik recommended that the government take robust measures to strengthen oversight. He proposed implementing end-to-end traceability systems using technologies like blockchain, digital invoicing, and mandatory audit trails to ensure accountability for every kilogram of imported yarn.
**Call for Global Competitiveness**
Malik also urged the domestic spinning industry to focus on improving the quality and cost-efficiency of its products to compete internationally. He argued that relying solely on the local market is not a sustainable strategy. “If Pakistani yarn is internationally competitive, it should also be exported, helping Pakistan earn foreign exchange, just as value-added textiles do,” he added.
The PBC’s statement underscores the critical role of the EFS in supporting Pakistan’s export sector and calls for a balanced approach that addresses enforcement issues without jeopardizing the country’s economic progress. By strengthening regulatory mechanisms and fostering global competitiveness, Pakistan can safeguard its export industry and reduce its vulnerability to trade imbalances.
