Former Commerce Minister, Khurram Dastgir Khan on Wednesday queried the reasons behind the decline in exports. "I want to ask my successor (Abdul Razak Dawood) the reasons for just 0.2 per cent growth in exports despite 30 per cent rupee depreciation, as when I left the portfolio exports grew by 12 per cent," he said while addressing 2nd National Open Trade Conference organized by Policy Research Institute of Market Economy.
Prime Minister's Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood who was scheduled to address the conference as keynote speaker did not attend due to other urgent engagements. Dastgir said it appears that currency depreciation cannot raise exports on its own and other policy measures are also required to achieve this objective. Dastgir covered almost all aspects of Pakistani trade, issues of exporters, role of Federal Board of Revenue (FBR) in exports, quality and standards of Pakistani products and Free Trade Agreements (FTAs). He said Pakistan is not connected with the world with respect to conforming to international standards but Pakistani industry wants protection as it has failed to comply with such standards.
"There is resistance from the local industry with respect to compliance with international standards, saying they cannot compete with the world and ask for high tariff barriers," he added.
He maintained that FBR collects 30 to 40 percent of its revenue from trade related activities due to which Pakistani products cannot compete with neighbouring countries. He further stated that when PML (N) government gave a package of Rs 180 billion to exporters, exports posted a growth of 12 per cent. He said, exports should be exempted from local taxes.
Talking about Free Trade Agreements, he said, China through FTA with Pakistan raised its exports to Pakistan by 400 per cent but Pakistan's exports grew by far less than China so one can say it was a "disaster". China's subsequent FTA with ASEAN eroded what was Pakistan's expected benefits from FTA which is why Pakistan has asked for the same concessions from China as those extended to ASEAN countries.
He said, presently Pakistan is negotiating FTAs' with Turkey and Thailand. Turkey is the gateway to Europe whereas Thailand is gateway to ASEAN. Turkey is not ready to give concessions on textile whereas Thailand is a hub of export houses with an export volume of $ 250 billion.
Talking about trade talks with India, Dastgir shared the quote of David Lyon George, former British Prime Minister: "Don't be afraid to take a big step if one is indicated. You can't cross a chasm in two small jumps."
"Free trade is a chasm that cannot be crossed in two small jumps, it has to be a big jump across," he said. Dastgir further stated that Pakistan has a "bazaar economy not a market economy", adding that political stability is essential for economic growth.
Chairman Prime Institute, Dr. Manzoor Ahmad and Joint Executive Director Zia Banday also addressed the conference. Dr Manzoor Ahmad argued that political class and the military have to join forces to move the country forward. He said that his message to the bureaucracy, judiciary, military, and the politicians is, help the industry grow and the government will have all the revenue it wants.
Ghulam Samad, Director PIDE, did highlight the pitfalls and opportunities for economic players in CPEC. He supported the gradual Chinese approach in policy implementation. Chinese government did make mistakes, but it also improved governance by learning from them. It has a greater focus on regional development than sectoral target policies. Economic integration with Chinese economy is a better option.
Shaiyanne Malik, President, Women Chamber of Commerce & Industry, South emphasized that since mid-1980s, global trading patterns have been changing. Instead of trading in finished goods, 70% of international trade is through global value chains (GVCs).
Ali Salman, CEO, Institute for Democracy & Economic Affairs, Malaysia stated that Pakistan is in dire need to better assessment of openness of its economy. We need to distinguish between promotion and protection. Finally he said, no country in the world has ever ruined by opening its trade! We need to maintain an open trade regime for our own industrial development.
The concept note of conference states that unlike successful developing countries, Pakistan has been consistently losing its global trade share. Until the 1960s, volume of manufactured exports exceeded the combined total for the Philippines, Thailand, Malaysia and Indonesia. Today, however, Pakistan's total exports are only a fraction of the exports of any one of these countries.
This slide is continuing. Pakistan's exports as share of GDP have fallen from 16.48 per cent in 1997 to about half or 8.24 per cent in 2017. According to World Bank's data, Pakistan is losing its trade share by 1.5 percent per year since 2005.
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