Trade deficit to be down $6 bn by June 30: Razzak

ISLAMABAD: Contrary to earlier claims about jacking up exports to $26-27 billion in the ongoing fiscal, Adviser to the Prime Minister on Commerce, Textile, Industry & Production and Investment Razzak Dawood says Pakistan’s exports may not touch the figure of $25 billion by end of the ongoing fiscal in view of the current growth in exports which stands at 1.88 percent and most probably would stay at $24 billion.

However, he expressed the hope that if the exports growth trend changed positively, then exports could hover somewherebetween $24 billion and $25 billion. This he stated while giving an interview (part-II) to The News Tuesday evening. However, he said trade deficit would be reduced by $5-6 billion by June 30, 2019 to $31 billion from $37 billion as the government had successfully managed to trim the imports.

During July-March period, imports went down by $3.5 billion and in March alone imports decreased by 28 percent. Dawood said on account of global recession, exports were not picking up mainly because of the US-China trade war on tariff lines that had triggered uncertainty in the global market. The enhancement in duties on tariff lines from other major economies by the US, the EU and other economies has contracted owing to which the exports to the US and the EU have suffered.

In January 2019, the world trade decreased by 3 percent. China’s exports dwindled by 21 percent in February, 2019 and more importantly India’s exports have gone down from 18 percent to 2 percent and exports of Bangladesh have also declined to 7 percent from 40 percent.

He said export of garments had increased by $265 million and the cement export to Bangladesh increased by $63 million and Pakistan has so far exported rice of $88 million to China alone. Dawood said after the Free Trade Agreement-II to be signed with China on April 28, 2019 in the presence of Prime Minister Imran will help jack up exports to China by $3 billion on short-term basis again depending upon the surplus Pakistan entrepreneurs will have.

He said on longer term basis Pakistan’s export could increase by $6 billion if it captures 6 percent share. Pakistan and China have already initialed FTA-II this month which will now be accorded approval by the cabinet on April 23 which would be formally signed between the two countries in Beijing on April 28 during the visit of Pakistan’s Prime Minister Imran Khan.

Prime minister along with a high level delegation will also attend the second OBOR (One Belt One Road) Forum for International Corporations. The second FTA is to be effective from July 1, 2019. He said China had extended concessions on 313 tariff lines and brought the tariff concessions on at par with the ASEAN countries. Pakistan will have benefit of increase in exports by half a billion dollar to one billion dollar.

When asked as to why Pakistan had failed to get better concessions more compared with concession given by China to ASEAN countries, Dawood said his ministry tried from pillar to post on this account, but China refused. However, he said even then FTA-II was very good for Pakistan. On the said 313 tariff lines, China imports the said items of worth $64 billion and most of these items are imported from ASEAN countries and if Pakistan captures 5 percent shares, then its exports will surge by $ 3 billion and if it captures 10 percent, the export will go up by $ 6 billion. And if Pakistan captures one percent, then exports will increase by $600 million. ‘So the sky is the limit for Pakistan’s entrepreneurs.’

Apart from signing FTA-II, Pakistan has good plans for China and offer four sectors for cooperation and investment from Beijing. This time IT, textile, agriculture and tourism sectors will be figured out. And to this effect the meetings between Chinese and Pakistani businessmen have already been lined up and confirmed. Business to business meetings will be held on April 26-27, and Chinese business community is set to initiate business with Pakistanis counterparts once the FTA is officially signed.

To a question, the adviser estimated $7 billion investment in Pakistan in next 5 years. He said this time in agriculture sector, Pakistan will seek China’s assistance and investment in seed development and introduction of mechanized farms with a view to increasing productivity.

He said under the proposed National Tariff Policy, duties on raw material and intermediaries would further reduce that will help bring industrialization in the country after getting more market access in China.