$ 1.8 BILLION TRADE DEFICIT
Public and private sectors should look for the non-traditional items to boost exports
From SHAMIM AHMED RIZVI
Jun 19 - 25, 2000
The financial year 1999-2000 may end up with a trade deficit of US$ 1.8 billion against 800 million as estimated in the budget for the current financial year. The deficit for the 11 months of current fiscal year (July 99-May 2000) has already crossed $1.6 billion which is exactly 100 per cent more than the annual target for the current financial year.
According to the foreign trade data available for the period of July-May 1999-2000, the exports stood at $7.69 billion against the 6.97 billion in the corresponding period of last fiscal year showing growth of 10.3 per cent. The imports, however, gained much momentum during this period and recorded at $9.3 billion as compared to $8.34 billion in the corresponding period of last year showing an increase of 11.5 per cent. The government had set an export target of $9.2 billion for the current fiscal year and the performance of the export sector during the first eleven months suggests that it would miss the export target by $700 million.
However, the Commerce Ministry officials claimed that rise in the import bill of the country was due to the rise in the petrol prices in the international markets in the recent month. According to them the country has spent over 1 billion dollar more on the import of petrol and petroleum products because of the sudden increase in the prices in the international market. Had this prices of petrol remained within normal range, our trade deficit would have been even less than what was estimated in the budget. This may be correct but we should not be unmindful of the fact that there had been far less import of machinery and industrial raw material because of sluggishness in the industrial and manufacturing sector during the current year. Had those imports been in the normal range the import bill would have been risen considerably resulting in a much higher trade deficit.
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 increase of 11.60 per cent as compared to the corresponding period last year. The rise in the cotton production to 9.7 million bales and rise in textile exports encouraged the textile entrepreneurs and they decided to make fresh investment in the sector.
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, 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 Latin 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 microcredit 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 indicator 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 infrastructure.
It is matter of satisfaction that this chronic problem has received due attention of the present government. The task forces headed by Chairman Export Promotion Bureau has formulated a new strategy to boost export which has been approved by the Chief Executive General Pervez Musharraf. The six point strategy aims to boost export to the level of 14 billion US dollar within a period of 3 years. The six-point strategy sets targets for achieving export earnings at 10 billion for the year 2000-2001, $12 billion for 2001-2002 and further at $14 billion for 2002-2003. These targets by and large reflect an annual growth of 15 per cent in the country's exports in the next three years.
The EPB's vision and strategy to boost the nation's exports to 14 billion dollars in two years' time is certainly not a very ambitious target in normal circumstances in view of the country's potentials. There is need to look behind the traditional items of exports such as cotton, textiles, rice, leather and sports goods and surgical instruments, besides identification of new markets to operationalise external trade on scientific lines for achieving the desired results. It is strongly felt that the public and private sectors should look for the non-traditional items to boost exports. In this connection, it will be appropriate to draw the authorities' attention towards the computer software sector, which is being accorded very low priority, in spite of its tremendous potential to do miracles with our export capabilities. Similarly fisheries sector is also being ignored, although it can make reasonable contribution to the country's foreign exchange earnings. The fact of the matter is that a total mess prevails in this sector since the discovery of the Forbes' scandal. There is hardly anything being done to clear the mess. The importance of the man behind the gun is universally recognized and it is thus fundamental that the commercial attaches in our missions abroad should be geared up to play their due role in the expansion of the nation's exports. Their selection should, in the first place, merit the requirements of their duty, contrary to the previous practice of filling these posts through nepotism and favouritism.