TARGETS IN TRADE POLICY ARE ACHIEVABLE
Aug 10 - 16, 2009
Pakistan People's Party led government has announced a medium-term (2009-12) Strategic Trade Policy Framework, setting an export target of US $18.84 billion for 2009-10 ó a six per cent growth over last year's figures.
The policy has envisaged an export growth of 10 per cent ($20.724 billion) for 2010-11 and 13 per cent ($23.418 billion) for 2011-12. The government projected an export target of $22 billion for 2008-09, which fell short by over $4 billion because of local problems and the global financial crisis.
The three-year framework plan focuses on reviving and reforming domestic commerce, diversifying export markets with EU, US and countries which have signed free trade agreements and promoting trade in services sector.
In the wake of worst energy crises, business closures, declining long term foreign investment, high cost of doing business and critical phase of weak domestic macroeconomic situation, Pakistan's economy is now undergoing a recovery phase, experts believe. In the current situation of insecurity and energy crisis, the targets fixed by the government in the trade policy 2009-12 are unachievable, business leaders observe.
According to them, targets were assumed in the policy without any realistic approach, as those who drafted the policy have neglected the ground realities and taken a big jump. The policy seemed a 'medium term policy framework' for the next three years, which is a task to be performed by the Planning Commission and not by the Ministry of Commerce. Ministry of Commerce was responsible to promote Pakistan's external trade activities and remove the barriers in the trade including diplomatic and procedural impediments.
According to acting president of Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Hameed A Chadda, most important aspect in the policy is the ignorance of cost competitiveness. The problems of foreign exchange reserves, higher trade deficit, consequently low investment, unemployment, and low GDP growth would remain intact, as no measures have been announced to address these issues.
Other business leaders including Muhammad Pervaiz Malik, Mian Faraz Alam, Ishaq Abbasi told PAGE that load shedding has played havoc with export based industry due to which exports from the country remain $ 17.781 billion as against the target of $ 22.1 billion.
Muhammad Pervaiz Malik urged the government to chalk out result-oriented strategy to cope with persistent power shortages problem that is not only hitting hard to the trade and industry but also causing manifold problems for fellow citizens. 'If the rulers do not take control on the power crisis the country would plunge into darkness and suffer a great loss in socio-economic and industrial sectors,' he said. He said the federal government should make result-oriented strategy to cope with this problem.
He, who is senior political assistant to chief minister Punjab, said that the government should restore the closed power plant at Raiwind Road and Japan Power House to meet the requirements of electricity. He said that if Pakistan continued to face power shortage nobody from foreign countries would come to invest in Pakistan and it would not be able to face problems like provincialism and hatred among the people. He said that it was right of the people to protest against electricity load shedding but they should refrain from inflicting loss to public properties like setting ablaze of WAPDA offices, which was a heinous crime and could not be allowed. He asked for rationalizing energy crisis, interest rates, and loans to reduce production cost to improve exports.
Mian Faraz Alam, a textile industrialist, said that textile sector has the largest share in country's exports but due to unfavorable conditions, textile industry is in crisis as many textile units have shut down their operations. He asked the government to suspend all taxes and levies, give extension in payment of loans, and provide soft terms credit facility to give some relief to export-based industries, which would help them come out of the crisis.
He asked for separate power and gas tariffs for textile and export-oriented industries along with duty-free import of machinery & accessories for these industries. He said that in the new trade policy, priorities were not set to give boost to regional trade and penetrating new markets with new products for successful economic and trade cooperation.
Pakistan Industrial and Traders Associations Front (PIAF) has linked the success of the Trade Policy to the availability of cheaper electricity, uninterrupted supply of gas, withdrawal of raise in the prices of petroleum products and a cut in mark up rates.
Ishaq Abbasi said fundamentals are strong in Pak economy and with little efforts and positive news and initiatives, the country's economy can take a jump start.
According to PIAF Vice Chairman Khawaja Shahzeb Akram, the government would have to concentrate on hydropower generation as thermal electricity would not only be very costly but it would also increase import bill. Thermal power units could be a stopgap arrangement, but their use for a long term would hit the economy hard. He was of the view that the industrial production would remain sluggish and all the targets of trade policy would remain unfulfilled unless and until measures were taken to expedite industrial activities by reducing cost of doing business.
A leader of PIAF, Irfan Qaiser Sheikh said the trade policy would leave a positive impact, particularly the provision of subsidy on inland freight and insurance cover to the foreign buyers who are presently reluctant to visit Pakistan, would play a key role in giving boost to the country's exports. He was of the view that the trade policy would help reduce increasing trade deficit.
Lahore Chamber of Commerce and Industry (LCCI) appreciated the federal government for accepting a number of its demands in the new trade policy. It called for technological advancement to cope with multiple challenges being faced by the local industry.
The LCCI President Mian Muzaffar Ali said the establishment of Hedge Fund would play an important role to support the business community. The life insurance cover to the international buyers intending to visit Pakistan would help enhance the country's exports while the inland freight subsidy announced in the policy would give a boost to the export oriented industries, which in turn would help stabilize the country's economy, he said.
The government would have to take and implement a proper strategy to overcome supply side constraints, including the development of infrastructure, he added.
Senior Vice President Tahir Javed Malik said the hedge fund would help contain the cost of capital, cost of imports and inflation for export-oriented industries by bearing the additional cost from the fund.
Another LCCI member Shamim Akhter asked the government to ensure implementation on the steps announced in the policy for the economic revival of the country. "There is no doubt in it that the policy for a three-year term is bound to yield positive results as it would ensure continuity in trade-related policies that is a long standing demand of the LCCI," she added. The objectives set in the policy are achievable but the exporters need conducive business environment and steps to reduce the cost of doing business to compete in the international market, she added.
She further said the government decision to motivate commercial attaches posted abroad to attract foreign investors would go a long way in the revival of the economy. However, she said the government would have to focus on product diversification to increase to volume of exports to the desired levels.
The Pak-India Business Council has also welcomed the government's decision to grant subsidy and special concession for introduction of new textile engineering products, daily use items, and medicines in the new three-year trade policy (2009-12).
The Council thanked President Asif Ali Zardari, Prime Minister Yousuf Raza Gilani and Commerce Minister Amin Fahim for making the policy for three years, instead of one year. It praised government decision to allow import of used machinery for oil and gas exploration. It also welcomed the decision to allocate 25 percent share to regional trade and hoped that it would be a positive step towards the betterment of strong trade relations with the neighboring countries.