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October 12, 2020

‘Exports to increase up to $28 bn by end of current fiscal’

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October 12, 2020

ISLAMABAD: Pakistan is now back on track because of hectic endeavours in two years from de-industrialisation to a level wherein business community dealing with large scale manufacturing has now started feeling on how to increase their capacity to meet the export orders they have in their hand.

This government came into power in 2018 and it was the policy of the previous government to forget the industry and keep focusing on imports. The previous regime badly believed in making money through imports. Now the incumbent regime has successfully wriggled the country out of the de-industrialisation phase and placed it at a level where the process of industrialisation is set to take off.

Adviser to PM on Commerce, Textile and Investment Abdul Razak Dawood stated this in a wide-ranging interview with The News starting from the incentives the government is working on how to put the country on path to industrialisation to trade ties with regional countries, Afghanistan and Central Asian Republics (CARs) and India and up to the latest outlook about trade with China. Abdul Razak Dawood also spoke his mind when asked as to whether Pakistan suffered or not after trade with many economies such as China, Malaysia, Indonesia and Sri Lank under free trade agreements (FTAs) and preferential trade agreement (PTA). He also highlighted Pakistan strategy on how to regain the share of export of $2.1 billion once Pakistan had in Afghanistan.

Abdul Razak Dawood said that the government is vigorously working on how to provide further incentives to industrialists enabling them to go for more investment in expanding their business houses not only to attain the capacity enough to meet export orders but also to generate more economic activities that will result in generation of more jobs in the country. This will also expedite the process to put the country on the way to industrialisation. Keeping in view the export orders in hand, Abdul Razak Dawood said that Pakistan’s export will increase to $28 billion by end of the current financial year ($25 billion exports in goods and $ 5 billion in goods).

He said that Prime Minister Imran Khan has approved in principle to provide the industrial consumers to provide the electricity at reasonably reduced tariff which currently stands at Rs24 per unit. The government is going for a paradigm shift in tariff regime for the country’s industrial consumers with an aim to reduce their input cost. The existing tariff was worked out when the country was running short of electricity, but now the situation is otherwise as the country is now massively in surplus of electricity. “So the government wants to provide electricity at a reduced rate as an incentive to industrial consumers,” he said.

The government through this initiative will kill two birds with one stone meaning that this initiative will not only help generate economic activities in the country but will also help tackle the biggest issue of payment of capacity charges. The country has now installed capacity of about 36,000MW, but its derated capacity stands at 29,000MW. The government wants to utilise maximum electricity by giving incentives to industrial consumers. The adviser disclosed that the Energy Ministry (Power Division) is working on a new tariff regime for industrial consumers at lower prices and the summary to this effect Energy Ministry will soon submit to the ECC for approval. Apart from it, the government will also give incentives in the export and textile policies and Commerce Ministry is working on for the country's industry to harness the main objective of turning the country to industrialisation from de-industrialisation.

Coming to Afghanistan that is the captive market of Pakistan, the adviser admitted the fact that the export to the said country has dwindled by $800 over the years and said in the same breath: “We are back on track and started recovering in terms of increasing exports to Afghanistan. He said Afghanistan-Pakistan Trade Agreement is going to expire in February 2021 and both countries will renegotiate. Apart from it, Islamabad and Kabul are very keen to sign bilateral trade agreement for which both sides are working on it. Pakistan authorities are also working on improving the logistic movement for trade at Torkhum and Chaman borders to clear the backlogs.

“We are in touch with authorities in Kabul and in the process to improve the trade facilities at borders with Afghanistan. Abdul Razak Dawood also said that Pakistan is also in touch with Afghanistan in paving way for smooth transit trade with Central Asian States through Afghanistan. We want to safeguard the smooth and speedy movement of Pakistan’s trucks carrying goods for Central Asian States. The way trucks from Spain carrying goods move through European countries in the EU bloc without any impediment, we want Pakistani trucks to move in Afghanistan and Central Asian States.”

When asked if Afghanistan wants the permission of Indian goods to Afghanistan for the Wagha border and Kabul has linked it with progress on the transit trade to Pakistani goods for Central Asian States, the adviser said: “Yes, this issue is also on the table with authorities in Afghanistan.”

Towards the impact on trade balance of FTAs and PTAs with many countries, the adviser said that the country's trade balance is positive with Sri Lanka, but it is not in favour of Pakistan when it comes to trade with China. First FTA with China exposed Pakistan to massively negative trade balance. However after FTA-II, Pakistan has been accommodated very well and it is hoped that the export of Pakistan will increase to a reasonable level to China but the trade balance will remain in favour of China as it is a highly efficient economy. When it comes to Malaysia, Pakistan is again at loss as it has to import palm oil at the maximum. With Indonesia, the trade balance is not in favour of Pakistan but exports to Indonesia are improving as authorities in Indonesia have unilaterally extended zero duty to 20 items of Pakistan.

About trade with India, the adviser said: “The current status quo is being maintained. The restoration of trade with India is linked with the Kashmir issue. For us it is a sensitive issue.”

Mentioning again trade with China, the adviser said that after COVID-19, the trade has started coming on the way to normalcy and it is hoped that trade between the two countries would pick momentum after FTA-II which is enforced from January 01, 2020.

About GSP Plus from EU countries, the adviser said that Pakistan has already submitted on September 14 one day before the deadline of September 15, its detailed report about progress on 27 conventions. Earlier, EU authorities used to visit Pakistan in September-October every year, but this time because of COVID19 situation they did not turn up here and Pakistan was asked to submit a detailed report which it deposited before time.

“Though we need to do a lot on various conventions, but the progress on many issues mentioned in the detailed report will help continue the GSP Plus facility for Pakistan,” he concluded.