TRADE DEFICIT GOES DOWN
Aug 10 - 16, 2009
Pakistan's trade deficit during the financial year 2008-09 has marginally narrowed by $3.873 billion and closed at $17.040 billion as compared to the deficit of $20.913 billion recorded during last fiscal year.
According to statistics, the trade deficit during the year 2008-09 has shown negative growth of 18.52 percent as compared to the deficit of last financial year. The imports into the country during the period witnessed 12.87 percent negative growth by declining from $39.965 billion in 2007-08 to $34.822 in 2008-09.
Exports from the country during the time were recorded at $17.781 as compared to the export of $19.052 during last financial year, showing a decrease of 6.67 percent. However, during the month of June, imports into the country were increased by 30.27 percent as compared to May 2009. Imports during June 2009 were recorded at $3.339 billion as against imports of $2.561 billion during May 2009.
Exports during the month under review witnessed increase of 2.52 percent by going up from $1.499 billion during May 2009 to $1.537 billion during June 2009. As compared to the same month of last financial year, imports declined by 17.01 percent whereas the exports showed decline of 19.43 percent. In June 2008, imports were recorded at $4.023 billion whereas the exports totaled at $1.908 billion.
Exporters who are overburdened by high cost of doing business in the country asked the government to pay immediate attention to address this problem. According to estimates, exporters pay indirect taxes, estimated to be around 9 percent of the cost of production.
The government has planned to spend Rs 35.22 billion on the initiatives announced in the Trade Policy Framework 2009-12. It may be mentioned that Trade Policy 2008 had proposed a study to calculate the burden of these taxes, and recommended an interim relief to 14 sectors in the shape of additional duty drawback at 1 percent of export value.
Leather sector, which has been reeling from the impact of the economic crisis, welcomed the three-year trade policy (2009- 12). The sector did not receive any incentives despite the fact that exports from the sector fell by 29-percent in the previous fiscal year. According to export figures, shipments from the country fell to US $17.8 billion in 2008-09 from $19 billion in 2007-08, down by 7 percent, while imports also dipped from $40 billion to $34.8 billion, a negative growth of 13 percent.
According to Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) Chairman, Fawad Ejaz, the main difference of this trade policy is that like former policies it is not overly textile centric. As per the trade policy for the leather sector, government would release funds for research and product development to hire experts, which will help a lot in improving exports and has set a target to achieve 6 percent growth in the current fiscal.
According to High Commissioner of Pakistan in Malaysia, Lt. General (Retd) Tahir Mahmud Qazi, the new trade policy encompasses a provision of insurance cover for visiting buyers including Malaysian that would help restore investors' confidence. Commenting on the salient features of Trade Policy 2009-12, he said it aims to set the country on the path of sustainable high economic growth through exports. The policy is set in a three years Strategic Trade Policy Framework (STPF), which is hoped, would result in the enhancement of export competitiveness of Pakistan to enable Pakistani companies overcome the shocks of international economic crisis through a set of integrated and holistic policy and measures.
He said the policy envisaged to launch various measures to reduce the cost of doing business in Pakistan including launching of a scheme to compensate inland freight cost to traders of cement, light engineering, leather garments, furniture, soda ash, hydrogen peroxide, sanitary wares including tiles, finished marble, and onyx products.
A scheme will be launched for picking up the full cover for Pakistan for their valid insurance policies. The scheme will be funded from Export Investment Support Fund and managed by National Insurance Corporation.
He said Pakistan also imported man made fiber from Malaysia, in order to encourage trade with Malaysia. The trade policy has proposed custom duty to be zero rated on import of Manmade Fibers other than Polyester Staple Fiber besides, Customs duty on import of sizing chemicals will also be withdrawn.
Tahir Qazi said Malaysia also imported seafood from Pakistan. In order to facilitate this trade, the trade policy has proposed grant of 25% freight subsidy for export of live seafood products exported by air.
According to the High Commissioner, there is a huge scope between Malaysia and Pakistan to forge strategic ties to develop Halal Business. In this regard, Ministry of Science and Technology of Pakistan will setup a Halal Certification Board.
However, until that time, the government would support the cost of Certification by 50%, he added.
He said Malaysia is also involved in the oil and gas sector in Pakistan and to facilitate foreign companies involved in oil and gas and petroleum sectors the government has allowed import of second hand plant and machinery equipment required for their projects in Pakistan and age limit of oil rigs have been increased to 20 years. In addition, the government has allowed the import of twenty eight (28) specialized machinery and transport equipment by actual users, including in used condition, provided they fulfill emission standards and have sufficient productive life.
He said amongst various measures to facilitate foreign investors, the government has also decided to allow industrial importers to import new, refurbished and upgraded machinery on the basis of trade-in with their old, obsolete machinery. Likewise, export of their old and obsolete machinery for trade in with new, refurbished or upgraded machinery would also be allowed.
The government will also undertake and coordinate all the necessary measures to facilitate the provision of lower cost, more efficient and reliable trade facilitation services in promoting exports and import.