The grave export challenge

Everyone agrees export growth is vital for our precarious balance of payments (BoP). Loans (IMF, multilateral donors, bonds), 'one offs' (3G licence, gift from a friendly country, off-loading equity holdings), and lucky breaks (Coalition Support Fund, bonanza of weak oil and commodity prices) seem to have run their course. Further, no 'import management strategy', as employed of late, can compensate for anemic export growth, which appears to have become our new normal.
But does everyone agree whose remit export growth is, and if this apparition is both competent and sufficiently empowered? Does it have a clue, beyond tired alibis, why the exports are stubbornly refusing to budge? Will the six month overdue Strategic Trade Policy Framework 2015-18 (cleared by a committee headed by the ubiquitous Finance Minister, of course) make us any the wiser?
Ministry of Commerce (MoC), who we are told has the mandate, faces a shrinking policy space. Either it doesn't have what it takes or the encroachers are too powerful to contend with. It can't do much about the held up refunds that have seriously affected Exporter cash flows. It is a silent spectator when it comes to Tariff Policy. We doubt if it ever cautioned against the recently announced 'mini budget'. The dictum 'tax on imports is a tax on exports' may be arguable, but if your Exports have high import content, as should be the case with Pakistan if you wish to diversify away from Cotton Textiles, surely it will affect your competitiveness. It has no say in matters of exchange rate, the quintessential life boat its competitors use in times of stress. It can only give a bemused look when instead of looking at the Real Effective Exchange Rate (REER) to maintain export competitiveness the State Bank chooses to accuse the 'analysts' if the rupee weakens. It has little control over physical and social infrastructure (whatever happened to the National Trade Corridor, announced in 2005?), or even trade facilitation. It is unable to incentives exports: the lock is in A Block but the key in Q Block that can be relied upon to lose it just when it is needed, as the fate of the vaingloriously dubbed Strategic Trade Policy Frameworks amply demonstrates.
So what does the MoC do?Trade fairs, trade offices, export development fund; and, yes, free trade agreements. It also pretends to have something to do with domestic commerce, happily oblivious of the fact that it is now a provincial subject.
It refuses to accept trade fairs is the tool of the last century. May be it is not. The only way to find out is getting an independent evaluation done of the costs and benefits. Meanwhile, we, the fair participants, will happily keep reporting to the TDAP the millions of dollars of orders booked at each fair. Tote them all up and year after year we exceed the year's export target - from the TDAP-sponsored fairs alone. Have more aalishans, and that wonderful delusion of grandeur Expo Pakistan, and let the State Bank wonder what happened to all those orders.
Trade offices: let's take a huge leap of faith here and assume all our trade officers are chosen on merit and merit alone. But can one of them put his hand on his heart and say what his job is, and if he is trained for it. If his job is trade diplomacy, why can't it be done by the better trained ambassador with necessary backing from MoC? And why do we have trade officers in all those lovely European capitals when the EU Trade Policy matters are handled in Brussels? If his job is marketing, does he know his products? Can he really be expected to have sufficient knowledge of the hundreds of products that are exported to his jurisdiction, without which it will be delusional to think he can market them? Is his job facilitating B2B partnerships? For that he would need an intimate knowledge of Pakistani suppliers; supply and value chains; distribution channels; and the respective aspirations of the potential partners.
One commerce secretary cottoned on to this and wished to have a proper evaluation of trade offices done. A scheme to do so was approved by the EDF Board, but the secretary quit the government before it could be implemented. It now languishes 'waiting for godot'. Could it be that the mandarins who covet these foreign postings feel threatened - the evaluation could well come up with a recommendation to drastically reduce the number of trade offices, besides more robust selection criteria and training requirements.
Export Development Fund (EDF) is funded by the exporters for use by the exporters. However, the EDF collections flow through the Ministry of Finance who treat it as a kind of usufruct, if not droit du seigneur, and unabashedly siphon off a large chunk for budgetary support. Whatever is left is divvied up among the members of the EDF Board for their pet projects. In most cases, you have to be truly imaginative to see the linkage between these projects and export growth. It defies logic, for instance, how building Offices for Chambers of Commerce will help exports grow!
A classic illustration of disconnect between intent and outcome is the manner in which the proposal to establish overseas offices of trade associations was neutered by the MoC. We had submitted that the way forward was state of the art research, technological diffusion, innovation, and 'partnerships' - with buyers, suppliers of know-how and technology, and trade bodies. This required our presence abroad. EDF Board agreed to sanction funds for FPCCI and two associations to open their offices abroad. Excited, we proceeded, full throttle, to locate the office premises, select the team, meet the juridical and banking requirements of the host country. We knew all this would cost money and our time. We were prepared for it. What we were not prepared for was the bureaucratic ringer at home! We resisted the 'shake down' efforts of some, agreed to all the (legitimate) procedural requirements of the government, and ourselves proposed a proper disbursement and audit regime. But the MoC Maginot Line was too fortified for us to scale. After two years of arduous effort, we went back to the EDF Board to say we would rather withdraw than put up with MoC intransigence. It did not take the Chair of the Board more than a minute to allow our withdrawal! No sign of remorse, no inclination whatsoever to look at the causes of our abject surrender.
One test of the efficacy of an organisation is if it will be missed if it was not there. This is something the Engineer superintending MoC has to ponder over. We, on our part, like to think it is too early to read the last rites. It may be triumph of hope over experience but we feel MoC can make a difference. If only it could get its act together.
(The writer is Patron-in-Chief of Pakistan Bedwear Exporters Association)