STPF 2015-18 is an economic milestone

The secret of success of most of the successful economies of the world is that they have been directed and regulated with strategic policies chalked out by men of vision and wisdom.

In fact, policy wherever it is in vogue, means drawing a roadmap into future besides working out practical plans to achieve the set goals in accordance with the basic, vital interest of a country (or an economy; economy and country are interlinked because sound economic vision and its implementation means salvation).

Pakistan is no exception in this series of policy-making especially in the area of commerce and trade but something has continued to lack throughout all the past years. And the thing lacking has been what is called strategic framework. It is perhaps in this backdrop that the government of Prime Minister Muhammad Nawaz Sharif has given its Strategic Trade Policy Framework (STPF) 2015-18 which, according to its firm belief, would bring about a major turnaround on the national economic front.

The Framework, according to the government officials, took a complete year in consultations and deliberations and it was after all these extensive discussions and exchanges that Prime Minister Nawaz Sharif approved the Strategic Trade Policy Framework (STPF) 2015-18.

And, as per the policy of Sharif government, the matter was not left to the government machinery alone. Rather, all stakeholders in the public and private sectors, including the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), district chambers, trade associations, private businesses, academia and think tanks remained actively engaged in the formulation of the framework that has also set high targets including, of course, the target of enhancement of annual exports to $35 billion mark.

In order to achieve these targets, all procedural and budgetary bottlenecks have also been removed in the STPF 2015-18. Side by side with the removal of these bottlenecks, budgetary allocation of Rs6 billion has been approved to implement the Trade Policy initiatives for 2015-16. In addition, a short-term export enhancement strategy has also been devised. The measures to be adopted under this strategy will bear some cost. The estimated cost of the short-term export enhancement measures is Rs450 million for 2015-16 and Rs1,450 million for three years, i.e. 2015-18.

According to government functionaries working on Trade Policy formulation and implementation, “the target of $35b exports is a realistic and achievable target. The government is eyeing enhancement of annual exports to $35b by 2018 with special focus to be placed on export competitiveness, facilitative policy environment and improved market access and announcement of loans and tax rebates for export-oriented ventures. The main focus of the new policy would be on competitiveness, efficiency-driven and innovation-driven economy and increase in regional trade, besides facilitation of the exporters.”

Defining the key pillars of STPF, the government people say that the trade policy framework has identified four key pillars: product sophistication and diversification, market access, institutional development and strengthening, and trade facilitation. Explaining the justification of calling such a high target as achievable, the officials have stated that the target is doable despite deep global recession as the government is rapidly building up its capacity to realise the four enablers of competitiveness, compliance to standards, policy environment, access to utilities and optimum level of technological development.

At this juncture, it was also pointed out that with the key objective of enhancing the trade potential and for better market access, the government has also entered into multilateral trade agreements such as Trade Facilitation Agreement (TFA), Information Technology Agreement (ITA) and Government Procurement Agreement (GPA). Additionally, access to regional markets such as GCC, Asean, Saarc, Afghanistan and CARs is also being improved. As for bilateral trade agreements, the government has already started negotiating bilateral preferential access with Thailand, South Korea, Turkey, Iran, China, Malaysia, Indonesia, Nigeria and Jordan.

As regards the export potential, there are some key areas that have already been identified for the purpose of export enhancement. Take, for example, the leather, pharmaceutical, fisheries and surgical instruments’ sectors. They possess higher export potential, which if fully exploited, could lead to a quantum leap in total exports.

For boosting export in these sectors, a matching grant of up to Rs5 million would be given for a specified plant and machinery (or specified items) to improve product design and encourage innovation in small and medium enterprises (SMEs) and export sectors of leather, pharmaceutical and fisheries. Moreover, a Common Facility Center for surgical goods’ sector would also be established.

However, in surgical instruments, sports and cutlery sectors, manufacturing was hitherto done in Pakistan largely under the brands of foreign companies that had been resulting in lower prices. This particular method has also come in review in the STPF and steps are being taken accordingly to fetch higher prices under the banner of national, local brands as well.

Moreover, the raw and semi-processed agricultural produce being currently exported could get higher values if exported as processed food. The lack of necessary processing facilities has most often resulted in the wastage of large quantities, thus restricting the income of the farmers. Steps are being taken to promote processing of such produce.

Certainly, all these measures lead to mark improvement in the national economy. Already, the overall profile of the economy stands improved to a great extent, three years down the line. The fact is that the budget deficit — mother of all economic woes — has been brought down from 8.2 percent of GDP in 2013 to 5.3 percent in 2014-15 and is likely to be further pulled down to 4.3 percent by June 2016. It speaks volumes of the efficacy of the macro-economic and structural reforms introduced by the government during the last three years.

Other credible indicators of the health of our economy are: Expansion in the tax-net, decline in inflation to a single digit, increase in credit to private and agriculture sector, gradual enhancement in development funding, increased foreign remittances and the foreign exchange reserves touching the phenomenal level of 20 billion dollars, etc.

These factors coupled with the fiscal discipline have not only helped in bringing down the budget deficit but have also contributed to reducing the debt to GDP ratio from 64 per cent of GDP in 2012-13 to 63 per cent at the end of 2014-15, besides managing the debt issue amicably.

Pakistan has now embarked on the path of high growth economy and is heading towards a bright future for its people. All key indicators of economy are pointing to the fact that the economy has begun to show signs of revival and is fast moving in the right direction.