ACHIEVING THE EXPORTS TARGET
A review of trade performance of last six months
From Shamim Ahmed Rizvi, Islamabad
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 1999-2000.
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 well.
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.