Lack of sectoral policies harming economic growth: experts

LAHORE: Experts say that though the implementation of policies was an issue in Pakistan, the government delays in decisions on long term sectoral policies also kept potential investors at bay while creating an uncertain environment.
They point out that the auto sector was awaiting long term auto development policy since 2013; the textile sector was promised a comprehensive textile package in a day on September 11 by the prime minister, a minor part was announced last week. The tile manufacturers’ complaint about zero duty on under invoiced Chinese tiles is yet to be addressed. The tyre sector is operating much below capacity and has withheld all investment plans as imported tyres are being cleared at even below the cost of raw material. The LPG distributors complain that after decline in global LPG rates the government has kept the well head price of LPG much higher than global prices; resulting in high LPG imports while its local production remain unsold due to high cost. They said the pharmaceutical sector is still awaiting a viable pricing and registration policy.
Experts further pointed out that all the above sectors have huge investment potential that could also create thousands of direct and millions of indirect jobs. The planners, they added concede in meetings with stakeholders in each of the above sector about the genuineness of their issues, but after years of interaction the problems remain unsolved.
“The inaction on the part of policy makers is taxing the viability of each manufacturing sector of the country,” said an executive member of Pakistan Association of Auto Parts and Accessories Manufacturer (Paapam). He said in case of auto, the first long term auto policy was announced for 2007-2012 period. Even this long term policy was tinkered on several occasions to the utter dismay of investors; still he added there was a policy document to guide them. An auto policy should have been announced for the 2013-18 period, and the prime

minister did promise a new auto policy at a Paapam function in 2013, but there has been no progress.
He said the auto sales are increasing and soon are expected to consume full capacities; however, he added the existing players are reluctant to invest in the absence of any auto policy. New entrants too are awaiting the long term auto policy document.
Textile sector entrepreneur Adil Butt said that the partial concession of imposing duty on Indian yarn has annoyed the value added sector. He said governments in Pakistan traditionally act under pressure without evaluating the realities on the ground. Higher duties have never resolved the dumping of goods problem in Pakistan. He said in case of under-invoiced prune items, the government should fix an ITP based on the export price of the same product from Pakistan.
He said the increase in duties would work if they are collected on actual import value and not on under-invoiced values. At the same time, he added the domestic spinners should be warned that if the domestic rates of yarn exceeded the export rates of the same yarn, the government would withdraw the regulatory duty.
A representative of tyre manufacturers said that the car tyre manufacturing capacity in Pakistan is about 30 percent of the domestic demand. The quality of its tyres is better or at par with that of the developed world’s famous brands. The prices, he added are at par with the actual export prices of tyres from China and India. He said after payment of duties these tyres should be expensive than local tyres. However, these products are sold at lower rates than Pakistani brands because they are highly under invoiced. He said the prices at which these tyres are imported are lower than the raw materials like rubber, carbon black and steel consumed in each tyre.
He said low import prices not only lower the incidence of import duty but also highly dilute the impact of 17 percent sales tax that domestic producers have to pay.
All Pakistan LPG Distributors Association Chairman Farooq Iftikhar said after numerous meetings with the ministry of petroleum officials and OGRA it was agreed that the prudent policy of matching the LPG wellhead prices with the ARAMCO rates was agreed on. Still, he added the wellhead rates of LPG in Pakistan remain 20-30 percent higher than ARAMCO rates. He said imported gas comes at zero duty and 17 percent sales tax levied is the same as levied on local LPG. He said the local gas costs more than imported LPG which sells more.