Withdrawal of export scheme would devastate industry, PBC warns

ISLAMABAD: The Pakistan Business Council (PBC) has issued a stark warning, cautioning the government that withdrawing the Export Facilitation Scheme (EFS) would severely harm the country’s export sector and hinder economic growth.

The council believes that such a move could lead to deeper trade imbalances, further weakening Pakistan’s financial standing.

The EFS, according to the PBC, is more than just a policy – it serves as a crucial support for the nation’s value-added export industry. Rather than scrapping the scheme due to enforcement challenges, the council suggests that the government should instead focus on tightening regulatory frameworks, improving oversight by customs and the Federal Board of Revenue (FBR), and implementing strict penalties for those found violating the rules.

Ehsan Malik, Chief Executive of the PBC, underscored the significance of the scheme in a letter addressed to key ministers overseeing finance, commerce, and planning. He emphasised that the real road to economic prosperity is through empowering value-added exporters, ensuring regulatory clarity, and striving to compete with global standards.

“The government should fix the gaps in enforcement rather than punishing the export sector,” Malik urged.

Concerns have emerged from the domestic spinning industry, which claims that some value-added exporters are illegally diverting imported yarn into local markets without paying the required sales tax.

This, they say, undercuts local spinners, making them less competitive. Malik, however, pointed out that this issue stems from failures in enforcement by customs and the FBR, not from the EFS itself. Scrapping the scheme, he warned, would be like tearing down a bridge over a few loose planks.

Instead of dismantling the EFS, the PBC suggests the government introduce more robust measures such as enhanced customs and FBR oversight, implementing traceability mechanisms like blockchain technology, digital invoicing, and mandatory audit trails to track every kilogram of imported yarn.

Malik also called on the spinning industry to improve its product quality and cost competitiveness to better compete on the global stage. If Pakistan’s yarn is internationally competitive, he argued, it should be exported as well, helping the country earn foreign exchange, much like the value-added textile industry.

The PBC’s message is clear: strengthening enforcement and modernising systems is the way forward, not dismantling a scheme that is critical to Pakistan’s export success.

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