Effectiveness And Impact of Tariff Rationalization on Small and Medium Enterprises and Firm-Level Survey on Effectiveness of FBR Export Facilitation Schemes

Effectiveness And Impact of Tariff Rationalization on Small and Medium Enterprises and Firm-Level Survey on Effectiveness of FBR Export Facilitation Schemes

Partners: National Tariff Commission; World Bank Group

Duration: April 2022-December 2022

Location: Khyber Pakhtunkhwa, Punjab, Sindh

Team Members: Vaqar Ahmed, Ahmed Khavar, Asif Javed, Syed Shujaat Ahmed

Background

The senior leadership at National Tariff Commission has engaged with World Bank Group and Sustainable Development Policy Institute (SDPI) to explore possibilities of conducting firm level survey to assess: a) effectiveness and impact of tariff rationalization on small and medium enterprises (SMEs), and b) benefits of FBR facilitation schemes for exporting firms. In the case of latter there have been recent changes and it is important to see if early (intended) results have started to emerge. It is equally important to note that both (a) and (b) are linked as any efforts towards tariff rationalization will not lend optimal gains unless conducive measures are also undertaken through FBR schemes.

FBR had notified Rules for new Export Facilitation Scheme 2021 on 14th August, 2021. This Scheme is expected to continue with existing schemes like Manufacturing Bond, DTRE and Export Oriented Schemes for at least another two years. The existing old schemes shall be phased out in next two years and will be fully replaced by a consolidated Export Facilitation Scheme-2021.

Those eligible for this scheme include exporting firms (including manufacturers-cum-exporters, commercial exporters, and indirect exporters), common export houses, vendors and international toll manufacturers. The beneficiary firms shall be subject to authorization of inputs by the Collector of Customs and Director General Input Output Organization (IOCO). Inputs may include all goods (imported or purchased locally) for manufacturing goods for exports. No taxes will apply on imported inputs and local inputs shall also be zero rated. Under this new process, authorization and utilization period has been enhanced to five years instead of the previous two years. This is expected to reduce the compliance and transactions costs for utilizing this scheme.

Activities

1. Conduct desk and literature review 

2. Draft sampling technique and distribution of sample across Khyber Pakhtunkhwa, Punjab, and Sindh provinces.

3. Carry out survey in Khyber Pakhtunkhwa, Punjab, and Sindh provinces. 

4. Data analysis for both the surveys and report writing.