FD raises objections over 5Es Framework for enhancing exports

ISLAMABAD: The Finance Division has raised objections over the 5Es Framework for enhancing exports, while saying that the exercise focuses on exporting goods and ignoring the key potential area of information technology (IT) and financial sector.

The Division submitted its observations and recommendations in response to the 5Es Framework of the Planning Commission. Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal chairs the 5Es Framework meeting.

The Finance Division has asked that why the focus is only on the textile sector. The performance of this sector remains very stagnant over the years even after huge facilitation by the government. Other sectors should also be explored to reach the potential of Industrial sector, the Division recommended.

“We should consider other regional competitors and how they are getting benefits by exploring the IT sector in the global market. Another important is the consistency of the policies to ensure sustainability and growth potential,” it noted.

The first E addresses the issue of exports promotion with different initiatives in various sectors like; Manufacturing, Mineral, Investment, Commerce and SMEs. The Finance Division stated that there is also need to increase exports in agriculture and IT sector for which there is need to introduce effective measures. Further, first E should also address to increase the competitiveness of exports so that it can compete with the products of other countries in international market. Besides focus on services exports should also be the part of First E.

The Finance Division noted that export-led growth generally depends upon a number of assumptions like favourable geo-political, global economic situation, political stability, law and order situation, highly developed infrastructure, productive manpower, price competitiveness and high bargaining power in trade negotiations, low population growth rate and substantial research and development expenditure, etc. There is little likelihood of managing the above said factors effectively in case of Pakistan to enable the exports to increase to a level where they could contribute significantly to economic growth. Therefore, it is important to analyse whether export led growth is feasible in context of above-mentioned factors.

“Further, we are of the view that to increase exports, there is need to focus on addressing the structural issues. It is also vital to boost logistics in order to lower the cost of doing business and make goods and services more competitive in the global market”, it added.

The framework should have little discussion on how to increase the Total Factor Productivity TFP? We are of the view that to improve TFP there is need to increase the efficiency of resource use and technological breakthrough in the economy. This can be achieved by investment in agricultural development projects, macroeconomic stability, education and training, research and development, infrastructure development and institutional reforms, the Finance Division noted.

Besides product and market diversification to achieve sustainable and higher growth in exports, Pakistan needs to improve competitiveness. By adopting more skilled and technology-intensive activities, Pakistan can improve competitiveness, however, improvement in Logistics as a measure of trade facilitation is fundamental for the country’s export competitiveness and foreign market expansion for indigenous goods. In this regard, the transport cost can be reduced considerably by introducing effective policy reforms in customs, ports, road authorities and the traffic regulators. Further, there is the quality and efficiency of logistic services. In this regard, a significantly higher investment would be important.

Copyright Business Recorder, 2023