Government seeks to achieve $35 billion export target: three-year trade policy framework unveiled

Commerce Minister Engineer Khurram Dastgir Khan unveiled a three-year Strategic Trade Policy Framework (STPF) 2015-18, aimed at achieving ambitious export target of $35 billion by 2018 with main focus on higher export potential sectors ie leather, pharmaceutical, fisheries and surgical. Addressing a press conference, along with newly-appointed Additional Secretary Incharge, Azmat ali Ranjha and Director General Trade Policy, Ms Raheela Tajwar, Commerce Minister shared the details of the much delayed three-year trade policy.
The government earmarked Rs 6 billion in federal budget 2015-16 to implement the initiatives announced in the policy but since only three months are left in the current fiscal year, it is unclear whether the Commerce Ministry will be able to utilise this amount during the remaining 90 days. However, an official told Business Recorder Commerce Ministry would request Finance Minister Ishaq Dar that the budgeted amount be transferred to next year's allocation.
The new trade policy is based on four pillars ie product diversification and sophistication, market access, institution developing and trade facilitation. The Commerce Minister said that the current level of exports of $24 billion would be taken to $35 billion by 2018, adding that the new target is achievable and realistic. Dastgir said leather, pharmaceutical, fisheries and surgical instruments are the sectors with higher potential. These sectors can lead to a quantum jump in total exports. In order to further boost export in these sectors, a matching grant will be provided up to maximum of Rs 5 million for specified plant and machinery or specified items to improve product design and encourage innovation in SMEs and export sector of leather, pharmaceutical and fisheries. Moreover, a common facility centre for surgical sector will be established.
To reduce the cost of doing business and increase the competitiveness of value added non-textiles, drawback for local taxes and levies will be given to exporters on Freight on Board (FoB) values of their enhanced exports if increased by 10 per cent and beyond (over the last year's exports) at the rate of 4 per cent of the increase.
Raw and semi-processed agricultural produce being currently exported can get higher values if exported as processed food. A lack of necessary processing facilities results in the wastage of produce. To increase income of farmers and foreign exchange earnings, a 50 per cent support on the cost of imported new plant and machinery for specified under-developed regions or a 100 per cent mark-up support on the cost of imported new plant and machinery on all Pakistan basis will be provided.
Regulatory measures pertaining to various sectors in the form of amendments after consultation with the stakeholders have been taken to facilitate existing import regime. The same will be notified in the Import Policy & Export Policy Order accordingly. Details are as follows : (i) condition of submission of annual environment report is not applicable in case of units importing plastic scrap for the first time; (ii) Pyrolysis plants which are duly registered with respective EPAs and FBR are also allowed to import shredded tyres scraps on same terms and conditions as are applicable to industrial consumers; (iii) import of aerial vehicles and night vision goggles will be subject to an NoC from Ministry of Defence; (iv) import of 3D printers will be subject to prior permission from Ministry of Interior; (v) import of mobile handsets and tablets will be subject to type approval certification from PTA; (vi) Pakistan Security Printing Corporation may import security papers without having an NOC from Security Paper Limited; (vii) exporters operating under various schemes like DTRE, temporary Importation etc will be allowed to import all items borne on restricted list subject to fulfillment of conditions laid down in Import Policy Order; (viii) construction companies will be allowed to import specialised vehicles mounted machinery not older than five years subject to certification from pre-shipment in the exporting country and submission of original equipment manufacturers confirmation that such vehicles are built as specialised mounted machinery; (ix) import of pesticides will be allowed subject to prior pre-shipment certification issued by recognised Pre-shipment and Inspection Agencies to be notified by the Department of Plant Protection; (x) digital enhanced cordless telecommunication 6.0 will not be allowed to ensure compliance with the provisions of the PTA Act, 1969; (xi) ban on import of poultry and poultry products from South Korea, Russia, Kazakhstan, Mongolian, Turkey, Greece, Croatia, Italy, Azerbaijan, Ukraine Iraq, Bulgaria, Slovenia, Slovakia, Austria and Bosnia and Herzegovina will be lifted subject to certification from respective veteran authority of the exporting country that birds are only from such flocks where no incidence of Bird Flu has been reported for the last seven years; (xii) import of plug wrap paper will also be allowed in favour of manufacturers of cigarette rods duly registered with the Federal Board of Revenue; (xiii) import of two or three wheeler auto vehicles will be subject to compliance with the condition of Euro-IT standard; (xiv) import of mercury and mercury compounds will be allowed to industrial consumers having valid environmental approval from the concerned Federal/Provincial Environmental Protection Agency/Department; (xv) fireworks will now be placed on the restricted list and its import allowed subject to the conditions of compulsory physical examination by explosives expert. Furthermore, the Department of Explosives of Ministry of Industries will allow import only to the applicants and companies having valid licenses under the Explosives Rules, 2010; (xvi) import of Air-pistol and slugs may also be allowed; and (xvii) an Inter-Ministerial Working Group comprising Ministries of Science and Technology, Commerce and National Food Security and Research will be set up to work on quality standard and harmonisation of Pakistan Standard besides working on updation on the list of pre-shipment inspection companies given in the Import Policy Order.
A short term export enhancement strategy has also been made part of STPF- 2015-18 wherein following four products will be focused in the three chosen markets ie Iran, China and Afghanistan with a focus on four products; (i) Bastmati rice; (ii) horticulture; (iii) meat and meat products; and (iv) jewellery. He said that the new trade policy has been framed in consultation with all the stakeholders including the public sector, private sector, academia and Pakistani missions abroad and is being announced in very difficult global circumstances. He said that China's slowdown is the main factor in declining prices in world commodity market and minerals and the impact of which is witnessed in export figures of Pakistan.
He said the main reason of Pakistan's bad performance in exports is competitiveness crisis. "Pakistan's export crisis is competitiveness crisis," he added. Dastigir maintained that Pakistan's competitiveness will remain under stress due to dependence only on two products. He said, last year cotton had a bumper crop but this year it is reduced and this up and down is part of crop production. He said the government ensured gas supply to the textile sector and now with the import of LNG there will be no gas shortage.
Dastgir said that another important point of trade policy is to promote regional connectivity by focusing on enhancing trade links with Afghanistan and Central Asian States. Answering a question, he said the incumbent government has rectified the mistakes of the past during preparation of trade policies. He said previous trade policies were not implemented due to procedural bottlenecks and budgetary bottlenecks.
He said, all the processes of new trade policy have been finalised which will be uploaded on the website of Commerce Ministry within the next few days and a notification will be issued. Dastgir stated that now the exporters will visit State Bank of Pakistan to get refunds instead of visiting Commerce Ministry. Replying to another question, he said the existing car assemblers are not focusing on exports because the standards of their variants are not in line with international standards. Only one assembler exported some vehicles to Sri Lanka and the company is increasing exports to Colombo. New manufacturers of 600 CC to 1000 CC are ready to enter Pakistani market and consumer welfare can only be achieved through competition as import of used cars can only meet a short-term demand but for economy's efficiency and creation of new jobs, new entrants should come and provide better quality cars at lower price.
Replying to another question, he said import policy of used cars will again be discussed in the ECC and Commerce Ministry will submit its formal paper in the meeting. Under the policy to diversify export markets, an outreach strategy for Africa, Commonwealth of Independent States and Latin America is being adopted. These markets will be penetrated through market research, opening of new trade missions, exhibitions and delegations and developing linkages through Export Import Bank (EXIM Bank).
Besides, a three-pronged strategy has been developed on the multilateral, regional and bilateral trade promotion. Focus will be given to the integration of regional markets of Central and South Asian markets through building infrastructure, signing new agreements for bilateral and transit trades.
He said, Commerce Ministry and Trade Development Authority (TDAP) are also being restructured and the incumbent Additional Secretary Commerce has already started work. He also appreciated former Secretary Commerce, Shahzad Arbad for his valuable work in starting the restructuring of the Ministry and TDAP. He said intense co-ordination is required for quality standardisation and harmonisation and a reduction in freight for Afghanistan.
Answering another question, Dastigir stated that Trade Policy cannot provide refunds to exporters despite the fact that the Commerce Ministry is advocating the case of exporters with FBR but Commerce Ministry is unable to give a commitment of multi -billion rupee refunds. He said, not a single pharmaceutical firm is registered with WTO and Commerce Ministry will focus on this as it will give a quantum jump to pharmaceutical exports.
"Whatever we can deliver, Commerce Ministry has made part of the policy and avoided touching those areas which do not fall in its domain," he said. In reply to another question, Commerce Minister stated that trade ties between Pakistan and India are at a standstill. In December 2015 Pakistan was expecting the start of composite dialogue with India which did not happen and until this does happen trade relations with India cannot improve. Presently, Pakistan's main focus is our western border ie Afghanistan, Iran and Central Asia.