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Export of non-traditional items

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Promoting the exports of information technology

Special Correspondent, Islamabad
Nov 15 - 21, 1999

The total volume of international market of software products is reported to be between US $600-700 billion per annum. USA is the largest market for software and internet trading products accounting for over 55 per cent of the world's total trade followed by Europe and Asia Pacific Region. The trade in this sector is not restricted to software products only, but also includes many professional services e.g. medical transcriptions, system integration etc. The world trading patterns are changing rapidly and shifting from conventional methods to "Internet Trading". The worldwide electronic commerce (E.Commerce) which currently is US $70 billion per annum is projected to increase to ten times by the year 2002. Pakistan's share in the international software trade is insignificant (US $4-5 million per annum) and measures need to be taken to get a share out of this market potential. Realizing the enormous potential for export of software, Government of Pakistan established "Pakistan Software Export Board" (PSEB) on 15th June 1995 which is functioning under the administrative control of Ministry of Communications. PSEB was created to act as a catalyst for development of the indigenous software industry capable of entering the export markets.

The main reasons for the nascent development of Information Technology are (i) shortage of educated and trained manpower in all disciplines of IT industry encompassing low-tech services to high-tech software development, (ii) lack of infrastructure for interaction of software industry at national and international level, (iii) inadequate marketing efforts in major user countries of software industry to obtain market intelligence and orders for the local software industry, (iv) lack of venture capital and difficulty in obtaining export re-finance on account of inadequate collateral and lack of flexibility in the operations of PSEB.

In order to promote export of information technology following are recommended. (a) Ministry of Education and University Grants Commission in coordination with the provincial governments should be directed to prepare a master plan for the development of educational facilities in Information Technology at high schools, colleges and universities. Ministry of Education should also coordinate the promotion of software development in vocational training institutes and poly-technic institutes. (b) The Information Technology and Software Parks should be developed in major cities that should be located in city hubs/centers, in high rise buildings, and properly, equipped with the required telecommunication facilities etc. (c) PSEB should be provided adequate funds to be operationally effective and autonomy in operation to be able to perform the role of a catalyst in the promotion of software industry in the country. (d) Commercial sections of the Pakistan Missions would be directed to remain on the look out for software export opportunities and remain in touch with Export Promotion Bureau EPB/PSEB. New trade officers posted abroad should be provided adequate briefing on the opportunities of software export potential. EPB should support effective participation in international software exhibitions/fares. (d) Pakistan Telecommunication Company Limited (PTCL) should further aim to reduce the rates for international connectivity when they have commissioned

the high capacity submarine fiber optic cable and introduced new technologies especially enabling bandwidth sharing. (e) Venture capital may be provided for promotion of software export. Also the conditions of collateral for availing export refinance may be relaxed.

Fruits and vegetables

Pakistan's exports of fruits and vegetables currently are centered on a few items such as Kinno, Mangoes, Dates, apples, Pine nuts, Onions and Potatoes etc. The exports in this sector are showing a continuous increasing trend as is evident from the following: US $62.02 million in 1995-96, US $89.14 million in 1996-97, US $90.28 million in 1997-98 and US $101.05 million in 1998-99. On the pattern of Quality Review Committee of rice of EPB/Rice Exporters Association of Pakistan (REAP), a Committee/Board maybe constituted from the members of the Fruits and Vegetables Association for quality control of export of fruits and vegetables. One window operation facility may be provided at Karachi airport through scanning machine and regulatory checking at one place. Ministry of Food and Agriculture and Provincial Departments of Agriculture who are presently responsible for research to improve quality and variety of fruits and vegetables may be directed to establish close coordination with Export Promotion Bureau for the development of export oriented varieties.


The global export of jewelry values around US $15.84 billion per annum, while trade of gemstones is estimated around US $4 million per annum. Pakistan's share in these exports is negligible. Most of the mines of gemstones (Aquamarine, Beryl, Emerald, Garnet, Peridodate, Ruby, Topaz, Tourmalines) are mostly located in NWFP and Northern Areas and in some parts of Azad Kashmir. Some gemstone mines in NWFP are auctioned to private parties. All these mines are lying closed since 2-3 years. Opening of these mines needs to be negotiated by the provincial governments for start of mining and supply of gem for local sale or export.

It is recommended that all gem mines auctioned by the Government of NWFP to private parties be opened. It is important for local sale or export. These mines are lying closed since the last 2-3 years for various reasons, some possible maneuvered by the private parties to avoid payment of dues to Government of NWFP. The regulations by the provincial governments over gem mining needs to be strengthened so as to avoid undocumented production (which is extremely lucrative for smuggling) and pillage and wastage of gem deposits caused by unscientific and unplanned mining activity. Directorate of Mineral Development, Government of NWFP needs to comply adequate manpower to discharge these functions. The confidence of gem buyers is extremely important in trading. Countries having sustained gem production and regular sale channels also renew their efforts periodically to restore consumer confidence. Consumers, whether at retail end or wholesalers require full information on origin and treatment, if any conducted on the gemstone. This testing and certification is only possible if a gemological laboratory accredited by government or industry is established. Export Promotion Bureau should establish the laboratory in NWFP. Pakistan gemstones presently do not have a regular client base since there has been no regular supply channel. The government needs to build a client base by holding well publicized regular (biannual at least) gem fairs within Pakistan where EPB would prepare stalls in minutest details including artificial lighting, display counters etc necessary for exhibiting stones that should be rented out to private parties. This arrangement would introduce Pakistan gems duly certified by gemological laboratory to the world wholesalers and build confidence for regular source of supply.


The export of jewellery is around US $4 million per annum mainly to Dubai, USA and UK. The jewelry industry has, however, retained its

underground mentality, is fragmented, produces substandard products and has no technical capacity to catch up with international standards. The designs produced by the jewellers are very traditional and are made in 22 carat. No hall marking or branding system exists. The world on the other hand demand 18, 14 and 8 carat jewellery with new and lightweight designs. The giftware market is negligible.

The following measures are proposed for promotion of jewellery exports. Gold in the domestic market is available at 1 per cent higher price than the international market. In addition, the exporter has to pay half per cent withholding tax; quarter per cent export development surcharge, and export refinancing at 8 per cent per annum. In order to provide incentive to exporter it is proposed that duty drawback at the rate of 3.5 per cent may be allowed. Development of design institutes that may gradually be affiliated with some international institutes to obtain recognition. EPB has assumed lead role in the operation of the Gems and Jewellery Institute at Karachi that is now headed by a highly qualified professional in the design and manufacture of jewellery. Similar institutes should be established in Lahore and Peshawar. Export Promotion Bureau should maintain regular contact with the World Gold Council that is a private sector organization for the promotion of gold jewellery. Export Promotion Bureau should promote participation of jeweller's association in international fairs and initially to target a limited number of countries for export promotion. Export Promotion Bureau should also encourage improvement in quality by the introduction of a voluntary testing system based on ISO 9000 certification.


Marble is produced in NWFP and Balochistan. Export of Marble and Onyx products that are value added items have declined from US $17.8 million in 1996-97 to about US $410 million in 1998-99. Marble industry needs to be organized and given proper incentives. Most of the mines are located near the Iran-Balochistan border and remote areas that lack infrastructure facilities like roads, water and electricity etc. These are major impediments to the mining activity. There is a general problem of law and order in the mining areas. Due to export of marble and onyx block, the local manufacturers do not get quality raw material with the result that the quality goods cannot be produced which effects value addition. Training institutes for imparting training to the artisans of marble and onyx are not available. Associations of marble and onyx exporters are not effective. It has no organization to promote or train members of its trade or to effectively market their products. The Board of Investment may prepare introductory brochures for inviting foreign investment in consultation with the Governments of NWFP and Balochistan for marketing marble blocks for mechanized mining and export. Provincial governments may be advised to encourage latest technology (wire cutting or laser) in block excavation replacing use of dynamite to improve mining efficiency. The provincial governments may maintain law and order in the mining areas. Training institute in Karachi may be established by the Export Promotion Bureau to develop skills and provide training in this field. Duty drawback rate may be increased from the present 3.5 per cent to 6 per cent on value added goods other than marble and onyx blocks.