LAHORE– The All Pakistan Business Forum, appreciating the government’s various incentives for the industry, has asked the authorities to also announce some tax relief, reducing sales tax ratio and import duties on industrial raw material so that cost of production could be dropped.
APBF President Syed Maaz Mahmood said that the SBP is providing liquidity to banks and Development Finance Institutions for onwards lending to SMEs at discounted rates under different refinance schemes and it is the government responsibility to get it implemented fully.
He said that in the wake of slowdown in global demand due to the novel coronavirus, the State Bank has introduced relaxations for exporters to help alleviate the current crisis. The central bank already offered two lending programmes of Export Finance Schemes and Long-Term Financing Facility to banks worth Rs660 billion for extending cheap credit lines to exporters, which is a good step.
Now the government should take steps to improve the atmosphere of ease of doing business for SMEs, giving them more confidence for smooth production amidst slowdown triggered by the coronavirus fear.
APBF President Syed Maaz Mahmood said that it is right step of the central bank for a cut of 150 basis points in the policy rate last month. However, there is also need for announcing some incentives for the local industry, as steps for exporters cannot be beneficial in present circumstances due to cancellation of orders by the foreign buyers. Presently, the government should support the domestic industry so that demand and supply balance could remain intact in the country.
He said that amidst weaknesses in private capital inflows the Central Bank’s decision to cut a sizeable policy rates will spur growth, infusing confidence in the business community and propel economy which was hostage to the past policy of austerity.
He complained that lending to private sector by the commercial banks has not picked up pace. He called for supporting the SMEs and credit to the private sector which is sliding, stopping flight of capital, improving tax machinery and curbing speculation of different sectors.
There is no doubt that the SBP has taken new measures because Pakistani exporters are facing problems due to declining demand for their products in the international market and difficulties in executing existing orders due to rapid spread of coronavirus in the global markets. These measures will prevent liquidity problems and exporters will continue their operations, he added.
The APBF President said that facilitation measures cover almost all aspects of export business and include relaxation in matching amounts under EFS, extension in time period to ship goods, relaxation in conditions for LTFF, realization of export proceeds and extension in the time period for import of goods.
Maaz Mahmood said that realizing that Temporary Economic Refinance Facility was too little under the circumstances, the State Bank announced another relief package to support exporters affected by the loss of demand due to the COVID-19 threat and avoid liquidity crisis in the export sector.
He observed that the latest announcement was largely meant to ease the conditions under these schemes.
According to the latest circular, exporters availing the EFS could now export one-and-a-half times of the borrowed funds, down from two times as was previously the case. Time period to meet performance was also extended from end of June to December 31, 2020. Exporters benefiting from EFS could now also ship their goods within 12 months of availing credit, from the previous half year timeframe.
He said that with a view to avail credit through LTFF, SBP has also reduced the eligibility condition for exporters to 40 percent or dollar 4 million of total sales from all the borrowings between Jan-Sept, 2020 from 50 percent or dollar 5 million, which is a good step.— PRESS RELEASE
