Revoking EFS Could Harm Pakistan’s Exports & Economy
The Pakistan Business Council (PBC) has warned that revoking the Export Facilitation Scheme (EFS) could cripple Pakistan’s export industry, lead to mass unemployment, and widen the trade deficit. In a letter to federal ministers, PBC CEO Ehsan A. Malik described the scheme as a lifeline for the value-added export sector, enabling businesses to import high-quality raw materials tax-free and remain globally competitive.
Key Concerns & Potential Impact
- Loss of Export Competitiveness: Without EFS, exporters would be forced to use higher-cost, lower-quality local raw materials, making them uncompetitive in global markets.
- Declining Foreign Exchange Earnings: A weakened export sector would reduce dollar inflows, worsening the current account deficit.
- Rising Unemployment: The disruption could lead to factory closures and job losses, worsening the economic crisis.
- Trade Imbalance Risks: Pakistan’s export target of $60 billion in three years would be at risk, leaving the country vulnerable to rising trade imbalances.
Global Comparisons & Industry Concerns
The PBC cited successful export facilitation policies in Vietnam, Bangladesh, and India, emphasizing that these nations have used similar duty-free import schemes to boost exports.
While the domestic spinning industry has raised concerns over the misuse of imported raw materials, the PBC argues that the issue stems from enforcement failures by customs and tax authorities, not the EFS itself.
Proposed Solutions Instead of Revocation
Instead of dismantling the EFS, PBC recommends:
- Stronger enforcement through blockchain technology & digital invoicing.
- Mandatory audit trails to ensure transparency.
- Harsh penalties for misuse rather than scrapping the scheme altogether.
PBC’s Final Warning
PBC cautioned that dismantling the EFS is not an option and urged the government to focus on strengthening compliance measures rather than eliminating a proven success in export growth.