MARKET ACCESS WITHOUT EXPORT SURPLUS MEANINGLESS
SHABBIR H. KAZMI
Dec 7 - 13, 2009
Pakistan government has set an export target for the current financial year, which has attracted two opposite comments. One group termed it as below the benchmark set for the last financial year and the second termed it as a little ambitious. Both the groups have their own arguments but one point is very clear that achieving this target may not be easy.
The popular complaint about the present government is that it has all the time to indulge in prolonged debates on secondary issues but hardly any time to discuss and make a little difficult decision. The opposition also shares the missing willingness. Opposition leaders often complain that they are not consulted on key issues. But, they are also shy of bringing pressing issues on the floor for discussion.
At the time when the whole world including some of the strongest economies are falling victim of economic downturn, a developing country like Pakistan, which also suffers from an acute shortage of energy and food, needs to be more proactive than responding lethargically to the crises to curb high but cost pushed inflation.
The focus of the current economic managers is on securing more and more debts rather than soliciting greater market access. They are still trying to contain inflation by following strict monetary policy. They are willing to resort to load shedding of gas and electricity but not ready to take measures for containing electricity transmission and distribution (T&D) losses and unaccounted for gas (UFG). They are talking about boosting exports in the absence of exportable surplus and eroding competitiveness of the export-oriented industries, in the simplest words wishing to bring change without providing supportive policies.
Over the years, Pakistan has been emphasizing 'trade not the aid' but success has been very limited. However, the point to be kept in mind is that producing exportable surplus and restoring competitiveness is precursory to greater market access. The export performance during July-October 2009 certainly cannot be termed satisfactory. Total exports during this period declined to US$6 billion compared to US$6.690 billion during the corresponding period last year, a decline of 9 percent.
Earnings from food category plunged almost 25%, mainly due to more than 33% reduction in rice exports. Decline was evident in almost all the category. Though nearly 8% increase was registered in other exports, the total quantum under this head was US$307 million. Increase in jewellery export partly compensated decline in the exports of chemicals and cement.
The overall decline in exports can be attributed to global economic downturn but the fall could have been contained by recouping Pakistan's inherent comparative advantage. It may not be wrong to say that when the country expected the most from Trade Development Authority of Pakistan (TDAP) it disappointed the most. It may be true that foreign buyers are reluctant in coming to Pakistan but the Authority could have arranged visits of delegations and ensured participation of Pakistani exporters in international fairs. It has billions of rupees in Export Development Fund and Export Marketing Fund. The money belongs to the exporters and should only be spent in export promotion rather than on the salaries and perks of executives, who hardly make any contribution.
Ministry of Commerce headed by Makhdoom Amin Fahim must come out of its shell and lead the exporters. The common complaint is that neither the minister nor the secretary has time to meet the exporters and listen to their problems. Ministry did not work out any specific agenda for representing Pakistan at the 7th WTO Ministerial Meeting held in Geneva, Switzerland from November 30 to December 2, 2009.
Secretary Commerce, Suleman Ghani was removed at a time when the country was in dire need of serious representation at the world's most important trade forum that too with a clear-cut agenda. Cabinet Secretary, Zafar Mahmood replaced Suleman Ghani who took over as Secretary Commerce on Tuesday, exactly the day when Pakistani representatives should have reached Geneva for the WTO conference under the leadership of Makhdoom Amin Fahim. Pakistan's representation at the WTO was not impressive as the Commerce Ministry or the TDAP had no done proper homework. The negotiators did not make an impression even at Cairns Group meeting despite the fact that Pakistan is a prominent member of the Group.
WTO Director General Pascal Lamy, prior to the 7th WTO Moot said that WTO Ministerial Conference would not be a negotiating session, it would be "a platform for ministers to review the functioning of this house," including the Doha Round, and an occasion "to send a number of strong signals to the world with respect to the entire WTO waterfront of issues - from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance, and international governance".
Policy planners must formulate a comprehensive export strategy but boosting exports is not possible without achieving exportable surplus. The various include 1) adding new manufacturing capacities; 2) improving productivity and efficiency of existing units through balancing, modernization, and reconstruction (BMR); 3) regaining Pakistan's competitive advantage and 4) containing cost of doing business. However, the objective cannot be achieved by introducing policies in piecemeal. The strategy must encompass monetary and fiscal policies and industrial and trade policies.
'Pakistan enjoys enormous potential' is not a cliché but a fact. However, to make use of the potential all the stakeholders will have to play their due role more diligently. The economic managers have to play the leading role. They will have to stop criticizing the past governments but learn from their mistakes and make certain difficult decisions. The added advantage is that at present international donors are willing to support Pakistan's economic recovery plan. Do not indulge in excessive borrowing. Each dollar must be used prudently.
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