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July 16 - 22, 2001

Trade deficit narrows to $1.52bn

Pakistan's trade imbalance during the outgoing fiscal 2000-01 narrowed down to 1.52 billion dollars as against 1.75 billion dollars deficit in fiscal 1999-2000.

The official trade figures released on Monday, revealed that Pakistan's export earnings exceeded for the first time the coveted figures of 9 billion dollars and ended up at 9.14 billion dollars, showing an increase of 12.66 per cent.

Imports during 2000-01 increased by 3.44 per cent to 10.66 billion dollars compared to 10.31 billion dollars a year earlier.

A 19.5 per cent rise in the oil import bill amounting to 3.35 billion dollars was the main contributing factor in trade deficit suffered during the last fiscal year. Minus this, the overall trade balance is in surplus by more than two billion dollars.

$10.1bn export target in new trade policy

Pakistan's new trade policy has been announced on Monday which seeks to achieve a conservative export target of $10.1 billion and contain imports at $11 billion during fiscal 2001-2002.

The policy announced on the radio and television also offered incentives and rewards for exporters to diversify products and markets with main focus on South America and Eastern Europe. The import target was set at the same level of last year while export target was nudged up by $100 million to $10.1 billion from last year's $10 billion.

The minister for commerce and industries Razzaq Dawood admitted that poor export performance last year was due to the "inability to create export culture and overall investor-friendly environment" besides drought and unfavourable exchange rate.

The main thrust of the trade policy is to reduce the anti- export bias and lower the maximum tariff to 25 per cent from 30 per cent and pursue the demand-led strategy to get a greater market share in major products like textiles, leathers and rice.

The development of sectors like fisheries, fruit and vegetables, gem and jewellry will continue but greater focus would be diverted on engineering, chemical and ceramics in view of tariff reforms.

While correcting major structural weaknesses and fault-lines, the minister announced to expedite refunds and market the Duty and Tax Remission for Export (DTRE) rules. To supplement this, the scheme of common bonded warehouses has been revived to reduce carrying costs of exporters as these warehouses would become virtual Duty Free shop for inputs.

The exporters with at least 10 per cent growth over last year's exports would be allowed to retain 50 per cent of additional exports in their local foreign currency accounts to use it for the purchase of machinery, equipment, raw material and payment of commission and promotional expenses.

Exports to Western Europe decline

Pakistan's exports to Western Europe have dipped this year despite 22 per cent devaluation of the rupee, falling international prices and record overall volume sales of merchandise, signalling the initial impact of the downturn in industrial economies on foreign trade. Europe accounts for 30 per cent of the total exports.

Figures for 10 months of current fiscal when compared with corresponding period of the last year show that earnings from three major markets, the UK, France and Germany have dropped. The strategy of deeper penetration in traditional markets has not worked in these countries.

Yet, exports to the US have picked up. The impact of the slowdown of the world's largest economy is apparently not visible. The US is Pakistan's largest export market, absorbing about 20-25 per cent of total earnings for the past few years. There was a slight fall in sales to Canada.

Duty cut

The scope of Pakistani exports to Saudi Arabia has increased after the Kingdom has reduced import duties from 12 per cent and 7 per cent to only 5 per cent.

According to a report dispatched by Pakistani Consulate in Jeddah to Export Promotion Bureau (EPB) on Thursday, this market has become very attractive for exporters as there is no duty or levy other than the 5 per cent import duty.

Only those items will have import duty of 20 per cent ad valorem in the Kingdom which are locally produced.

Rice import

The Philippines' National Food Authority said on Friday it would consider importing rice from Pakistan next year, a move expected to foster more competition among its Asian suppliers.

"They (Pakistan) can now join our tenders next year," NFA head Anthony Abad told Reuters by phone. The NFA, the only firm allowed by Philippine law to directly import the staple grain, recently informed Pakistan it would accept rice from that country in its future tenders.

Kinoo exports

The government of Iran has extended transit facility for Pakistani kinoos through its territory for Turkmenistan and other Central Asian Republics up to March 20, 2002.

This has been communicated by Pakistan's commercial counsellor in Tehran to Export Promotion Bureau (EPB). The facility was earlier granted till the end of previous Iranian year i.e. March 20, 2001. But keeping in view of potential of kinoo and other citrus fruits exports to Central Asian States through land route, commercial section, Embassy of Pakistan, Tehran successfully convinced authorities to extend the facility up to March 20, 2002.

EU curbs on textile quota

The third round of talks, held between European Union (EU) and Pakistani officials over the lifting of textile quotas, did not move ahead as both sides were stuck to their previous stand, official sources said.

The EU had been demanding duty reduction to 17.50 on imports from its member states, in return it had offered five per cent duty on Pakistani textiles.

The three-member EU mission, who visited Islamabad, last week is reported to have left without achieving any progress in the talks initiated early this year.