Last update: Sun, 14 Feb 2016 02am

Reasons behind fall in exports; minister rejects Ministry's presentation

Commerce Minister Engineer Khurram Dastgir Khan has reportedly rejected a presentation of his own Ministry identifying reasons for 15.6 per cent decline in exports during the first eight months (July-February) 2014-15 as compared to corresponding period of 2013-14, well informed sources told Business Recorder.

Pakistan's exports of textile sector, rice, petroleum group, sports goods, footballs, gloves and leather tanned have shown substantial decline which jolted the Commerce Minister, who is to brief the Prime Minister on " real" reasons for the decline in exports.

According to the statistics, exports declined by 12.9 per cent in February 2015 as compared to same month last year whereas 8.7 per cent negative growth was witnessed in February 2015 against January 2015.

" I am not satisfied with the presentation. Don't present analysis of data collected by SBP and PBS. Contact exporters to ascertain the reasons for the decline and seek their opinion to regain the lost markets," the sources quoted the Minister as saying.

Commerce Ministry's bureaucrats in their presentation argued that over valuation of rupee, energy crisis, law and order in Karachi, port handling by ANF and slow down in the economies of China, European Union (EU) and United States are the principal reasons for the decline in the country's exports.

Pakistan is facing worst scenario in exports at a time when the Commerce Ministry is in process of formulating another three year Strategic Trade Policy Framework (STPF) 2015-18.

According to sources, China's economy slowed down by 20 per cent during first two months of current year due to which Pakistan's exports to China have declined by 33 per cent.

China's slow down effect on Singapore has been recorded at 33 per cent, Europe 9 per cent, India 30 per cent and USA 20 per cent. "Pakistan is not the only affected country but overall sluggish trend in trade is witnessed across the globe," said an official on condition of anonymity.

Commerce Ministry is divided with respect to decline of exports to EU. One group of officers is of the opinion that Pakistan's exports to EU increased by $1.2 billion but the other group argues that benefit of GSP (plus) granted by the European Union (EU) is offset due to weakening of Euro.

Private sector maintains that government did not formulate any market plan to harvest benefits of GSP plus due to which estimated growth in exports to EU has not been realised.

The sources further stated that export of cotton, yarn and cloth has declined massively which is 60 per cent of Pakistan's total exports, adding that re-export of jewellery has also drastically declined. Export of jewellery nose-dived to $4 million from $200 million. Decline is export of petroleum products has also been witnessed. Leather products, footwear are also the affected sectors.

Though exact statistics of trade are not available, Pakistan's exports to Afghanistan have declined substantially.

Analysts are of the view that to reverse this situation, Pakistan has to work hard to seek market access, reduce the cost of doing business, introduce standards for different products and stop misuse of facilities.

Commerce Ministry bureaucrats suggested in the meeting that the Intellectual Property Rights Organisation (IPO) should be given in the administrative control of Commerce Ministry because a lot of issues related to intellectual property are hindering investment.

Commerce Minister, however, did not agree with the suggestion arguing that the Prime Minister can say that exports are already not performing well and Commerce Ministry is seeking administrative control of another organisation.

He further stated that PML(N) government is portrayed as business friendly but in fact growth in export in our government is far less than during the previous government.

According to sources, Commerce Ministry has not given attention to non-traditional markets and Russia which can be very attractive destinations for Pakistani products.

Another reason, the sources said, is that most of the Trade Officers who were given best stations due to their political clout hailed from Pakistan Administrative Service (PAS) former DMG who are not focused on promoting exports.

Copyright Business Recorder, 2015