GOVT. OF PAKISTAN TRADE POLICY

The federal commerce minister Chaudhry Ahmed Mukhtar announced the trade policy for 1996-97 on July 15. The export target has been fixed at US$ 10 billion, export finance facility has been extended and conditions of obatining authorization for exports have been minimized. However, it has not specified the details of some crucial issues, trade with India and anti-dumping measures to protect the local industry.

The minister specified the following objectives of the new trade policy as:-

* meeting the obligations towards globalization of trade under WTO and preparing the country for new challenges and opportunities.

* making the industry competitive to meet challenges of free trade,

* increasing Pakistan's share in the international markets,

* diversifying exports

* achieving quantum jumps of exports through value-addition, aggressive marketing,

* making procedures, rules and regulations more transparent and simpler to apply.

The minister also confessed that while the country managed to achieve various targets of export performance in some areas it also failed in achieving desired targets in certain commodities due to the following reasons:-

* levy of regulatory duty on imports

* allegations of use of child labour

* loss of competitive advantage of cheap cotton

* additional duty on PSF

* delay in duty drawback payments

* anti-dumping and countervailing charges and duties

* increase in freight

It is not true of the present government only but also true of all the previous governments that most of the policies were governed by adhocism, shortsightedness, failure in implementing the decisions made and making timely decisions to adjust to fast changing global environment. The result is that Pakistan has lost credibility and the companies have become defaulters for no fault of their's mistakes.

Take the example of regulatory duty. It was imposed to avert a problem resulting from mismanagement of resources and spending beyound means. However, instead of withdrawing this duty the government decided to continue it in the present budget. The other example is, as agreed with IMF also, the government was required to lower the tariff but has neither done this in the last budget nor the present one. This decision had only one objective: to increase the revenue from duties on imports.

Even president Farooq Ahmed Leghari while giving his key note address at a conference in Karachi objected to this attitude of regulators of the country's economy.

Chaudhry has said in his address " since the process of liberalization is now almost complete, I am hoping that in future it may not be necessary to present a traditional kind of annual trade policy, where announcements are made about restricting or liberalizing imports and exports of specific items. Instead, we will be able to focus more on macro issues which could help us in enhancing our share of trade in the world markets."

However, industrialists and traders are very skeptical of any such decisions because if their past experience. The government announced almost 9 mini-budgets, changed its cotton policy and imposed regulatory duty resulting in breach in credibility. As a chief executive of a transnational company has said "we do not need any incentive to work in Pakistan but certainly demand adherence to the policies. By the time we get the approval to go ahead on any project from our head office, the parameters change so drastically that we once again need the approval and the vicious circle continues. If we can successfully operate in countries where conditions are worse, we could operate in Pakistan better." This should be an eye-opener for the government and the regulators of the economy of this country.

Mr. Shabbir Ahmed, Chairman, Pakistan Bedwear Exporters Association (PBEA), giving his views on new trade policy, said "I can hardly see any incentive in new trade policy which could help to boost the country's export."

"We were hopeful that the government in the budget 1996-97 or in the trade policy will come out with a scheme allowing exporters to retain 40 per cent of their total export proceeds and the balance of 60 per cent is kept by the central bank," he added. This would have helped the country to narrow its trade gap as exporters after this would have been asked to meet their import bills needed for value addition from their own source.

Another chief executive said that with the introduction of so many and so heavy taxes, it would not be possible for the country to achieve the export target of US$ 10 billion. He added, if you do not classify me insane, it would be almost impossible to achieve this target and we would be lucky if we succeed in even getting half of the desired exports. The imported products have become cheaper in the local market. If we cannot compete with these in the local market, how are we supposed to be competitive in the international markets.

Highlights

— The policy aims at facilitating trade and boost export of value added items.

— The policy will do away with a host of NOCs and authorizations which were required from the Commerce Ministry and EPB.

— The condition of, export of cement through public sector agencies only, has been removed.

— Export of cement clinker which is a semi finished product will also be exported in the same way.

— Export of cement will be allowed only by sea.

— Condition of obtaining authorisation of the Commerce Ministry for the reexport of imported goods, in their original or unprocessed form has been removed.

— The extent of value addition for the reexport of imported goods, in their original or unprocessed has been decreased from 10 to 2.5 percent.

— Special facilities will now be available for exports to neighbouring countries by sea an air.

— Canning of food products manufacturing of audiovideo cassettes, floppy diskettes, kitchen utensils and other products of plastic materials are allowed duty free imports of material on a temporary basis, provided these are subsequently exported.

— Export of carpets as personal baggage has been allowed on production of proof of foreign currency encasement only, doing away with requisite of export permit from Commerce Ministry.

— Import of factory ships and fishing vessels for processing and preserving fishery products will be allowed at a concessionary' import duty of 10 percent.

— Import of secondhand fishing trawlers is allowed under conditions applicable for the import of other secondhand ships.

— Export of electric fans has been allowed without getting Pakistan Standards Institute Certification.

— Exporters of electric fans having ISO 9000 certification will be exempted from the condition to conform to the standards prescribed by the imported country.

— All the electric fans are being made importable. Under 199596 Import Policy order, import of fans (table, floor, wall, window ceiling) is banned, except fans up to 88 watts.

— Used/refurbished CNG and LPG cylinders are being made importable subject to safety certificate by the Department of Explosives.

— The import of sugarcane seeds and banana suckers will be subject to prior approval of the Department of Plant Protection.

— The authorised Customs authorities will now deal with applications for permission to reexport frustrated cargo.

— The Ministries have been clearly mentioned for seeking authorisation to determine entitlement for import of certain chemicals/raw materials importable by industrial consumers.

— A shell life of 75% at the time of import against the present 50 % has been prescribed for allopathic drugs and pharmaceutical raw materials.

— The checks of Commerce Ministry on the export of bonafide personal baggage has been removed. Customs officials have been empowered to decide on the bonafides in such cases.

— It recommends to the State Bank of Pakistan to consider to extend export finance facility, permissible for 180 days on synthetic and artsilk textile products, to cotton textile goods, nontextile export items and minerals.