EPB must setup display centres in CAS and Middle
East to help exporters
By Akram Khatoon
Former President FWBL
Dec 03 - 09 , 2001
Despite positive results obtained through concerted
efforts on the part of Export Promotion Bureau and exporters
themselves to boost exports during the year ending June 2001, country
is yet faced with new challenges arising out of China's entry into
World Trade Organization and expiry of Agreement on Cotton &
Textiles (ACT) in 2005 and above all situation emanating from 11th
September's act of terrorism in USA and Afghan War which needs
strategic approach not only to maintain the present growth rate in
exports but also to achieve long term objectives of rectifying
country's balance of payment position and eliminating external debt
China's entry into World Trade Organisation would
entirely change the pattern of global trade.
Pakistan having major reliance on exports of cotton
& cotton textiles items may find China as a strong competitor and
it is rightly apprehended that any further shock to this sector would
upset entire economy of the country.
A foreseeable set back looms out of likely move on
the part of China and our neighbour India who are major cotton
consuming countries to export cotton and cotton yarn from America and
other cotton exporting countries finding Pakistani market of these
products less competitive.
The obvious fact that Agreement on Cotton &
Trade will expire in 2005 and trading in textiles will not be under
constraint any longer, China now being in WTO would explore the market
for these products and Pakistan is likely to loose the market unless
concerted efforts are undertaken to have more cordial, political and
economic relations with China. In this regard apart from move to have
bilateral trade agreements with China, contracts at lower level or in
other words through private sector should be entered with India,
Russia and China (all despite being cotton producing countries have
vast consumption needs for cotton and cotton yarn for their indigenous
industry) to retain country's market share.
Apart from protecting existing volume of exports of
cotton & cotton yarn, Export Promotion Bureau must move to make
greater alliance with China for exporting fashion garments as China
has vast fashion garment industry mostly dominated by foreigners.
Accordingly Pakistan can have indirect access to worldwide export
market of fashion garments through China which has emerged as a strong
member of WTO.
It is the prediction of experts that China in order
to enhance its market share in export of cotton textile items is
likely to concentrate its textile industry in western provinces which
are nearer to Pakistan through Karakuram Highway. This necessitates
Pakistan's immediate move to have bilateral trade agreements with
China as apart from importing cotton, cotton yarn and gray cloth from
Pakistan involving minimum transport cost, China would like to have
access to Middle East and European markets through Karakuram highway.
Further Pakistan can have more collaborations with
China in the field of Information technology which apart from being
beneficial to Pakistan would help China for removing language barriers
which are needed for diversification of its software exports.
Due to cancellation of export orders after
September 11, 2001 country is faced with a gap of about US$ 2 billion
in incremental rate for reaching the target of US$ 10 billion for the
year ending 30th June 2002. In order to recoup the immediate loss thus
arising and also to accelerate the rate of growth of exports following
product and export destinations diversification is suggested.
-Sincere efforts should be made to recapture the
Russian and Central Asian markets which we had lost in the past and
presently they are importing those items from China, Europe and
Malaysia. African and OIC countries are also need to be tapped on
priority basis. In this regard all exportable items must be made cost
effective in relation to similar items in competing countries.
-Major reliance on export of cotton and cotton
textile items (being almost 60% of the total export volume) need to be
reviewed. A major chunk of textile exports comprise of gray cloth and
yarn. Efforts should be accelerated to produce value-added products.
Further focus should be shifted to other items like export of Fruits
and vegetables, plastic goods, electric items, sanitary goods, denim
fabric garment. The fresh flowers and dry flower arrangements have
vast potential export markets.
The engineering goods especially automobile spare
parts have ample export potentials. During the last three years export
of auto-parts have risen from US$ 10m to US$ 25m. The Export Promotion
Bureau have a very ambitious plan to raise the export volume of this
item equal to US$100 million at the earliest. Further market for
electrical goods especially for export of Electric fans can be
explored in UK, Canada, Australia and African countries. These facts
if taken care of would not only boost our exports but also would give
impetus to SMEs (Small and medium size industries) which in turn would
generate substantial employment opportunities in the country.
For promoting small & medium size industries
producing value added exportable items their problems regarding
non-availability of institutional credit without or with inadequate
collateral and indiscriminate imposition of taxes and other government
tariffs should be looked into on priority basis. It is hoped that SMEs
Bank starting operations from 1st January 2002 will have special focus
on those entrepreneurs who are not in a position to offer tangible
collateral for acquiring loan.
No doubt, right from seventies Government has been
providing cheaper credit to exporters both for their preshipment and
postshipment needs, but for small exporters non availability of
adequate collateral poses a problem both for financing Bank and
exporter himself. For that proposed Export Guarantee scheme should be
floated at the earliest.
The major problem being faced by small exporters of
Textile items is non-availability of quota. Since in order to
compensate the loss accruing to Pakistan after September 11 and
further sufferings for longtime to come for being a frontline state on
borders of Afghanistan European Union Countries have enhanced the
quota for Pakistan by 15% and have abolished tariffs. Similar
announcements have come from the side of USA and Canada also alongwith
promises for providing greater market access to Pakistan.
In this regard it is essential that for
distribution of additional quota thus made available preference should
be given to new and small exporters.
The problem of liquidity faced by textile goods
exporters also needs immediate attention. The cases of refund of sales
tax and rebate should be settled at the earliest. It would be in the
fitness of things that their demand of having a separate Ministry to
manage the affairs of textile sector is acceded to.
For helping exporters to explore markets for their
products, Export Promotion Bureau must set up product display centers
in Regional Capitals of central Asian States, and Middle Eastern
countries . In this regard EPB 's plan to set up Export Houses in USA,
Far East and European countries in near future will go a long way in
introducing nontraditional items to this part of the globe.