GOOD GOVERNANCE CALLS FOR IMPLEMENTATION & FOLLOW UP OF THE EXPORT POLICIES
TARIQ AHMED SAEEDI
Aug 2 - 8, 2010
Federal commerce minister Makhdoom Amin Fahim with much exuberance in a televised programme last month said that Pakistan had surpassed exports target for the last financial year by near one billion dollar mark.
Commerce ministry set the exports target for the financial year 2009/10 at 18.7 billion dollar whilst total export receipts for the year reached at 19.4 billion dollar.
While he called for credit to his ministry and government's policies for this achievement amid global recession, yet he appreciated the efforts of exporters in making this possible.
Exporters on the other hand were absence in their celebrating this the way the minister did. Some policies in a broader context soured the sentiments of not only exporters but also all traders in general. Their silence when the commerce ministry is expressing pleasure in public is alarming showing the brewing discontentment over some issues that need urgent attention of the government.
Non- or delayed-implementation has been major concern of business community in Pakistan. Traders have to control their patience while waiting statutory regulatory orders following announcement of trade policy.
Few trade associations gave a soft response to the ministry's ecstasy, but majority of them found it logical to be moderate. Analysts say common sense demands moderation. Firstly, because the target was not crossed with remarkable difference the celebration sounded over-exaggerated. Second, effect of depreciating Pak rupee value against dollar pulled exports really up beyond target, which is nothing less than a manipulative act. Otherwise, that the exports from the country would have been lower than last year and trade deficit larger in view of unrelenting energy shortages and government's apathy towards industrial developments, was a viewpoint appeared generally in media reports. Industrial base of the country should be strengthened and this alone could bring sustainability in volumes of foreign trade.
A familiar criticism on the governance system is that there is no consistency in the policies made by different governments. A political change in the government brushes the policies of pervious government in the casket of annals. For example, when present government took the reign of the governance system of the country it propelled an impulse shift from consumer led growth regime to stabilisation mode of economy, resultantly stoking fears among investors. Transformation in the political system of government brought with it reshuffling where even it was unnecessary. Foreign exchange crunch compelled the government to resort to threshold of international lenders. Conventional approach of finding temporary solution to the economic malaise is however, a legacy this government seemingly swears to hold.
Basket of exportable products is traditional and despite being at the helm of affairs since over two years, the government is unable to enlarge the size of the basket. For last two years, traditional products account for major foreign exchange spinners. Over reliance on textile industry that makes 60 percent of aggregate exports to earn foreign exchange has dangerously made export performance dependent on efficiency of the textile sector. Textile sector also has the highest share in valued added exports from the country.
State-run trade development authority of Pakistan was tasked to facilitate diversification of exportable products and mainly to search for destinations for Pakistani exports in the world. Neither exports were diversified to non-traditional products, nor were exports in last two fiscal years sent to any significant numbers of non-traditional markets.
Trade policy 2009-10 was the second trade policy of this government. The policy set in three-year strategic trade policy formwork (2009-12) for reference of trade measures. Amin Fahim while presenting the trade policy had stated strategic trade policy was a medium term road map to implant certainty in policies. This trade policy aimed to enhance export competitiveness of Pakistan by revival of domestic commerce, small and medium enterprises, diversification both geographical and products, tariff rationalisation etc. Enhancing exports of agro-processed food was also contemplated in the strategic trade policy. The noticeable concept in the trade policy was of modern logical framework to implement and evaluate interventions and initiatives since the government realised the effectiveness of the policy depending on its implementation. Overall, the trade policy was a comprehensive documentation of measures that could enhance the export competiveness.
Initiatives contemplated in the policy must have provided desirable results until now. But, the policy has not spurred a considerable change in the international or domestic trades. Economists suggest exclusivity of policy to disentangle multifarious interventions for major sectors. Industrial policy came in the spotlight of late. Government is giving final touches to the policy, according to news report.
For long-term growth, government needs to depend on real growth factors. Despite being rich in resources and having investment prone demography, Pakistan is yet to realise full potential of exports of various sectors. Trade deficit of the country hovers around 10 to 15 billion dollar that offsets the benefits of exports. It is worthwhile to mention that many developed countries have expressed their interest to make investment because of human capital they can cash in on in Pakistan; whilst skilled manpower is still rare commodity.
The policy also conceived Rs2.5 billion special funds for the engineering sector to augment its sophistication level, product development and marketing. This fund is well timed since engineering sector is witnessing growth and financial support can scale up its share in exports from scant 1.5 percent.
Implementation of interventions may guarantee government-targeted growth in exports of 10 percent in 2011 and 13 percent in 2012 as well as improve regional trade. Regional trade of Pakistan accounts for 17 percent of its total international trade.