KARACHI: Businesses community has demanded of the government to take all the stakeholders on board when it gets down to overhaul the strategic trade policy framework (STPF), aimed at energising country’s exports drive, an industry official said on Tuesday.
“If the Ministry of Commerce (MoC) wants to energise the STPF, it needs to get buy-in from the other stakeholders. At the moment they are working in a silo and assuming that the others will do what they are expected to do,” Ehsan A Malik, CEO Pakistan Business Council, said in an email response.
“The export incentive announced by the government late last year remains largely unimplemented. Tax refunds have not made in full. Value-added exports continue to suffer from input cost disparity with sourcing competitor countries. The exchange rate tool has not been fully deployed to create competitiveness.”
Malik added that the net result is a growing trade and current account deficit, the latter acerbated by flat remittances. “An Exim Bank is a pretty dead question....what of our exports will we extend finance for...we do not export machinery or equipment, and EXIM finance is usually not for quick selling consumer goods or commodities, but for purchases that will take time to generate cash-flow surplus...so the PBC doesn’t see what the government is trying to achieve here,” Malik said, commenting on the unviability of export-import bank. The PBC chief continued that had the country been a big exporter of plant and machinery, the concept of an EXIM bank would have made sense seeing its current export portfolio the justification was not there.
Pakistan's exports continue to fall despite a relief package announced by the government to encourage exporters boost exports. Exports declined 1.63 percent to $20.448 billion during the last fiscal year of 2016/17.
The PBC, in a study published last year, had said that the SPTF should not be viewed as a purely ministry of commerce initiative, but rather as part of a larger initiative, which aims to significantly increase Pakistan’s exports, while leading to an increased competitiveness of domestic manufacturing.
The PBC, in its study, said that it advocates a long-term national trade strategy to be developed jointly by all relevant ministries i.e. commerce, industry, textiles, agriculture, planning, labour, finance, etc. “We believe that all provinces buy into the policy; and last but not the least, the implementation of the strategy should be overseen by a high level body accountable to the Prime Minster,” the PBC said in the research paper.
Only then, it added, would trade (including exports) receive the priority and focus it deserved. The study pointed out the fundamental issues that need to be addressed to promote exports. “The PBC sees the STPF to address the weaknesses of previous STPFs. The current STPF fails to draw lessons from that period,” it mentioned. The paper also argued that aside from restricting security sensitive items, the STPF was silent on how imports would be managed. “The STPF thus fails to qualify as a “trade” strategy,” the report deduced.
The council’s analysts also stressed that a proper exercise to develop a long term trade strategy would perforce address the competitiveness of domestic industries. “In a country with a population of 200 million people, industries should enjoy an inherent advantage of size and scale that could be deployed to limit imports and boost exports,” the analysts said.