A review of trade performance of last six months
From Shamim Ahmed
Jan 03 - 16, 2000
Although it has not made any significant impact on the figures of trade
deficit already recorded, the exports have certainly increased during the last 2 months
giving hope that exports and imports may be balanced during the six months of the current
fiscal year. A trade deficit of about 729 million dollar has, however, already been
registered during the first 5 month with imports at 4 billion and exports slightly over
3.3 billion dollars.
Commerce Minister Abdul Razak Dawood told the pressmen here last week
that the country's exports are rising and in November the exports of the country increased
by 14 percent as compared to the same period last year. During the last five months the
exports have registered a 7 percent increase. He said "the situation looks healthy
and we are optimistic that we will be able not only to achieve the export target for the
current financial year but would also exceed it because we have surplus agricultural
products". But he said we will have to diversify our trade and not to depend alone of
the export of textiles and leather goods. We have to expand our export base. He disclosed
that the export promotion bureau is being reorganized and the new chairman of the bureau
would be appointed shortly with the sole responsibility of expanding base.
Exports marked a handsome growth of 14.1 percent in the month of
November 1999 indicating revival of good days for the recession-hit export industry in
During last month exports amounted to $714 million as against $626
million in the corresponding period last year, showing $88 million growth, while imports
increased by 9.3 percent last month and totalled $849 million compared with $777 million
in the same period last year.
In rupee terms, exports and imports increased by 16.2 percent and 13.5
percent respectively during the period. In November last exports improved by 5.6 percent
and imports 8.4 percent as compared with exports in October last. However, during first
five months of 1999-2000 the exports of the country improved by $264 million (7.9 percent)
and imports grew by 12.1 percent. During July-November this year exports stood at $3,331
million as against $3,067 million in the corresponding period last year while imports
amounted to $4,060 million against $3,623 million in the same period last year. In rupee
terms exports grew by 12.3 percent in five months and imports 19.1 percent.
The trade deficit swelled to $729 million in the first five months,
showing an increase of 36 percent ($193 million) if compared with the same period of last
fiscal when the deficit was at $536 million. The deficit is very close to the official
projection of $800 million trade deficit for 1999-2000. It increased by 65.1 percent in
rupee terms during this period.
A Commerce Ministry official said that with the entrance of raw cotton
and rice in a big way the exports of the country would further increase in the days ahead.
He hoped that during the next six months the exports will match the figures of imports and
thus the over all trade deficit would remain within the targeted range.
The source in the Commerce Ministry said the bumper cotton crop will
help us in achieving our export target of 9 billion dollar through increase in export of
both raw cotton, textiles and clothing and rice. The government has taken a number of
policy measures to promote exports. Several fiscal dispensations have been made in the
Trade Policy for fiscal 1999-2000 mainly to facilitate exporters in their production,
export promotion and to help reduce cost of production for making exports more competitive
in world markets.
Exports have also been made to make exports truly zero-rated with
regard to taxes and duties. Customs duty drawbacks are provided and drawback rates have
been updated keeping in view the higher cost of imported inputs both in unit price terms
and current exchange taxes.
For refund of sales tax on exports, a system of full refund has been
put in place. Concessionaiey export finance is provided to exporters and Export Credit
Guarantee Scheme (ECGS) is being strengthened to cover exporters against is being
strengthened to cover exporters against 'political and commercial risks'. The ECGS
insurance policy will also serve as collateral for bank credit.
Indirect exporters, supplying intermediate goods and providing services
to manufacturer/exporter, have also been provided export finance facility. All direct and
indirect exporters have been allowed to import their requirements under the no
duty-no-drawback system, the customs manufacturing bonds and several temporary importation
schemes, without payment of duties and taxes. A special income tax regime is already in
place for exporters and its coverage has been extended to the services export sector as
While so predicting the forthcoming improvement in export earnings the
source seems to have been encouraged by the visible signs of the expected rise in the
export of cotton and rice, in view of the much brightened prospects of these crops this
year. There can be no denying the chances of better performance of the export sector not
only from bumper agricultural yields, but also from the evident indication of overall
improvement in the country's economic health in view the wide-ranging measures, as being
currently put in place by the country's new economic management team. However, mere
abundance of primary commodities in the agriculture sector alone is no real guarantee of
the kind of quantum jump Pakistan should presently be looking forward to, all other
factors remaining undisturbed. As it is, much of the prospects of export boost have
remained obstructed by the serious liquidity crunch faced in the aftermath of the
post-blast sanctions and further compounded by the largely inadequate manner in which the
unfavourable situation was sought to be met. Now that efforts are on to consolidate the
country's economic potential, with special emphasis on addressing the adverse factors, one
can hope that both the visible and invisible deterrents to the growth of exports will
taken due care of. That things are moving in that direction is strongly indicated, among
other things, by the intention of the new government to place the long-ignored reliance on
agriculture to ensure economic recovery even from the short-term measures. And this should
be quite in tune with the classic approach of a country with a predominantly agricultural
economy as happens to be the case with Pakistan. The new strategy that is already on the
anvil will, one hopes, encompass every aspect of streamlining this key sector in such a
way as to radiate confidence from its performance on a lasting basis. The country has seen
years of export boost from this sector in the past too, but only to witness a slump in
subsequent years. This may be largely attributed basically to the flawed approach toward
agriculture. Whatever attention it has occasionally received has remained based on ideas
other than strengthening agriculture in the larger context of its place in the economy.