A thoughtful planning and
conducive environment is required
From Shamim Ahmed
Apr 17 - 23, 2000
The trade deficit during the first nine months of the current fiscal
year (July-March 2000) has crossed $ 1.3 billion against the target of $ 800 million for
the full year. According to the latest estimates the trade deficit during the current year
may settle around $ 1.5 to 1.6 billion. This is despite the fact that exports have shown a
growth of about 10 per cent during this period as compared to the last year.
However the encouraging performance of exports was overshadowed by a
sudden rise in the oil import bill. At the time of announcement of the federal budget in
last June, economic managers of the country estimated that the trade deficit in 1999-2000
would be around $ 800 million. The oil product prices last year was in the range of 10 to
12 per barrel and the government made projections and that it can reach around 18 per
barrel by end of 2000. But the cut in oil production internationally jacked up the prices
and it reached the lifetime high of $ 30 per barrel. The increment was over 300 per cent.
The low oil prices helped the government during the last fiscal and the
trade deficit was around $ 1.570 billion. Similarly, it earned nearly Rs. 72 billion as
development surcharge, one of the main sources to improve the revenue collection.
But during the current fiscal, oil imports have reached $ 1.669 billion
and analysts believe that by the end of this fiscal, the bill would be over $ 2.5 billion.
This showed that the import of oil would soared by $ 1 billion as compared to $ 1.458
billion in 1998-99. The rise in the petroleum prices made a great setback and the revenue
collection from this source in the running fiscal would expected to be below Rs. 40
The good cotton production in 1999-2000 improved the textile exports
from the country and from July-February the textile products shipped worth $ 3.550
billion, showing an increas of 11.60 per cent as compared to the corresponding period last
year. The rise in the cotton production to 9.7 million sales and rise in textile exports
encouraged the textile entrepreneurs and they decided to make fresh investment in the
It will however, be seen that whatever increase has been noted in
exports is mainly became of a bumper cotton crop. The efforts to boost export of non
traditional items and diversification of exports for which various incentives have been
provided by the present government have made little success.
Commenting on the situation, the Minister for State and Chairman Export
Promotion Bureau said that both the government weaknesses and irresponsible behaviour of
the exporters was responsible for unsatisfactory performance of exports. The Minister for
Commerce, Razzak Dawood hinted at policy changes to improve the performance in the export
sector. Talking to newsmen in Islamabad he said the government has also decided to close
down commercial offices in few countries which have shown disappointing performance. He
said new export markets were being explored and special attention was being given to Iran,
Iraq, Syria, Jordan, Libya and a few countries in Latian America which was a potential
market. The Finance Minister Shaukat Aziz recently announced that the federal government
will announce an export-oriented policy, backed by protection, covering areas in
agriculture, small and medium sized industries, oil and gas and information technology,
and establishing a micro-credit bank.
Most of our export promotion efforts have failed for the simple reason
of being guided by the lure of profit alone and hurriedly launched in a style of placing
the cart before the horse and wanting to make its wheels move too. The renewed emphasis on
export promotion, as witnessed lately, should serve as an indication on of its growing
awareness among the people who matter both in the government and the business community.
For exports' sustained growth the economy has to produce export-worthy
goods to compete in the international market. Not much has been seen by way of reform in
this aspect of economic recovery. Non-traditional items can increase exports but the issue
of export diversification has remained a subject of endless discussions at various fora
without much results on the ground. No concerted effort has been made to explore and
penetrate new markets. This area must get the support of a proper institutional
Import substitution of POL and its products, edible oil and wheat must
also be implemented as promised in the economic revival programme. Precious foreign
exchange can be saved through this strategy, though it must be borne in mind that the
country's import bill will grow if and when the economy's growth picks up pace. Savings by
slashing edible oil and wheat imports may provide some relief, but the real difference in
the trade balance will be made when exports grow by at least ten per cent every years if
not more. The potential is there. Needed is thoughtful planning and conducive environment.