Pakistan’s total export volume is estimated at around $25 billion per annum, which is mainly consists of cotton and textile products while the global economic slow down has also an impact on the exports which are being witnessed on a decline.
However, apart from external factors some of the major issues including energy shortages, such as gas and frequent loadshedding and of course the high tariff rates are some of the factors dragging down the export momentum of the country.
According to a leading textile exporter, we are not short of orders there is a constant flow of export orders from abroad yet we are not taking these orders due to our own short comings rendering us unable to honor our export commitments to the foreign buyers. He said that a large number of textile units either performing below capacity or have been closed down on various grounds. He said that most of the export-oriented industries are confronted with liquidity crunch as huge claims of refunds are pending since long. Besides financial constraints of course the energy shortages are the major cause for hampering export growth from Pakistan.
PM directives to add concrete measures in trade policy to increase exports
Taking a serious note of the situation, Prime Minister Nawaz Sharif has expressed reservations on the proposed Strategic Trade Policy Framework (STPF) 2015-18 and has directed the Ministry of Commerce to include a package of concrete measures and initiatives for increasing exports.
It may be noted that the summary about the STPF 2015-18 has been lying with the Prime Minister Secretariat for last six months and approval is awaited. These issues were discussed in the meeting of the Senate Standing Committee on Commerce, last week.
Secretary Ministry of Commerce Shehzad Arbab while briefing the committee on status of implementation of previous STPF 2012-15 said that major portion of the trade policy had been implemented.
However, in some areas the ratio of implementation was lesser than level of satisfaction, however, cumulative target of exports for last three years was fixed $95 billion and there was a shortfall of only $21 billion because total tune of exports remained $74 billion.
He further said that payment of outstanding dues is not implemented and the proposal will be carried over to STPF 2015-18. At this the committee asked for early adoption of Strategic Trade Policy Framework (STPF) 2012-15 and signing by the Prime Minister.
The committee noted that almost a month is past and if the matter is not expedited, one quarter of the year will be lost by the time the policy comes into force. The committee was informed that all regulatory amendments have been implemented and no hurdles were faced because these amendments were already negotiated with all the relevant stakeholders.
On the sections of strengthening governance and enhancing export policy, the committee was told that consultations for establishing leather export council are in place, domestic commerce setup has been created, establishing women chambers of commerce is in process, ad hoc relief @3% of FOB has not been yet implemented and strengthening of skill development institute and work on Pakistan Land Port Authority is in process among many other clauses of the policy.
The committee asked the Ministry of Commerce to work on declining exports and work on achieving our export targets with special focus on services and domestic industry. Progress on technological upgradation of Pakistan’s domestic industry to compete in the global market and enhance trade costs was also discussed in the meeting.
The committee also had a briefing about International Road Transport Convention.
Secretary Ministry of Commerce Shehzad Arbab told that this system is operational in 58 countries and the convention will enter into force in Pakistan on January 21 this year. It may be noted that entering this convention will reduce cost of business and will increase Pakistan’s revenue.
Chinese investment expected to resolve energy issue in Pakistan
It is important to note that Pakistan-China Business Opportunity Conference is scheduled next week to further invigorate trade and business relations between the two countries.
The Ministry of Commerce is hosting a day-long Pak-China Business Opportunity Conference to exploit business opportunities being offered for Chinese investors in Pakistan. The Chinese business delegation will also visit Lahore and then go to Karachi to meet the Chief Ministers of Punjab and Sindh and discuss business opportunities in their respective provinces.
Pakistan will share, five principal good news, with the visiting participants that Pakistan is now politically stabilized and is a peaceful country for all the investors including Chinese businessmen.
The country has achieved macroeconomic stability as it has sufficient foreign exchange reserves to meet its international obligations.
Pakistan has also grappled with the energy crisis of electricity and natural gas, under China-Pakistan Economic Corridor (CPEC), there will be an investment of US$35 billion in energy sector only.
The game changer project of CPEC would benefit all the provinces including Gilgit and Baltistan.
In order to meet energy shortages Pakistan is also focusing on Liquefied Natural Gas (LNG) and in this respective first LNG terminal has already been made operational while the second terminal will soon be set up to import large scale gas aimed at bringing growth to the industry and relief to the consumers.
About regional connectivity for shared prosperity, under the vision of the Prime Minister Nawaz Sharif to promote regional trade with neighboring countries including Afghanistan and this trade should be expanded to Central Asian Republics (CARs). Under this vision, the government has entered into an agreement to import 1000MW electricity from Tajikistan under CASA-1000 while Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is being constructed to meet the energy need of these regional countries.
The Ministry of Commerce also focusing on agriculture to enhance exports through value addition and by increasing competitiveness.
Pakistan, it may be noted, has exported record volume of potato and kinnow to Russia last season while efforts are being made to explore markets for Pakistani agriculture goods to further enhance exports to Central Asian countries, Malaysia and Indonesia.
Pakistan has a huge rich crop of quality rice which is also surplus in the country. It was the efforts of aggressive marketing campaign, the Philippine and Cuba have also imported 10,000 tons and 15,000 tons of rice respectively while Indonesia has imported rice worth US$40 million during last few months.
At the moment for enhancing under market access, Pakistan is also negotiating Free Trade Agreements (FTAs) with Turkey and Thailand besides focusing on exploring new markets in East Asia especially South Korea for the Free Trade Agreement.