As a first stage of micromanagement, Pakistan Institute of Trade and Development (PITAD) needs a complete revamp in its research orientation to act as a data back stop for real time data analysis to monitor competitiveness and export trends at the 4-8 digit level. It should be headed by a person (preferably not a bureaucrat from MoC. For this it may need a change in its resolution/charter) with considerable work and research experience in international trade institutions. PITAD needs to be staffed with a large number of researchers in the 25-40 range based roughly for example on international product classification or FBR customs chapters or markets.
These researchers would be constantly analyzing monthly/quarterly data on real time basis to monitor exports. This staff strength would justify the use of exclusive and purpose built 4-storey premises to house the PITAD staff. Similarly, existing FTA's, PTA's, GSP and Investment Treatises (if any) need to be monitored by MoC at 6 month intervals. In absence of in-house capacity of MoC for evaluation or being constantly busy with the preparation of potential FTAs/PTAs and fire-fighting trade and industry policy issues, the restructured PITAD may regularly be assigned these evaluations. Trade facilitation functions are managed by Trade Development Authority of Pakistan (TDAP), specifically domestic and international trade exhibitions. Their value for money evaluations in terms of monitoring temporary and sustained increase in 4-8 digit level exports that participate in the exhibitions, should be a regular input into lessons learnt for future exhibitions as well product and market diversification.
The second stage of micromanagement would be driven by the exchange of information at the 4-8 digit level by the stakeholders including the data analysis conducted in the first stage. A basic ingredient or requirement of this stage is complete trust between the government officials and private sector exporting firms. The firms have to trust that the government officials are sincere to understand the export dynamics and help them to increase exports and the government has to trust that information on input costs, labour productivity, organisational structure, marketing and techniques of production are accurate and not based on second set of books.
Let us examine how and where micromanagement steps in and it is not possible without a frank and open discussion among all stakeholders, without expecting that this forum is for handouts and subsidies for the private sector. Suppose the first stage hypothetically reveals that overall seasonally adjusted exports of bed linen (HS Code: 630232, 630229) in dollar terms have been falling since last two quarters in major markets. The analysis would reveal a) whether they have been falling in quantity and/or price per unit terms and in which major/traditional markets; b) which new competitors have entered into our traditional markets and their price per unit structure; and c) estimates of various trade indices in vogue.
To reintroduce a borrowed term used as a co-author in a research paper titled, "Post-ATC Threats to Textile and Clothing Exports, Research Report 01/2011, PITAD", bed linen assumes a "Threatened" category of exports. With the above data driven information, government will be in the driving seat as to the 60-70 percent reasons for falling exports in the last two quarters. After mapping these exports onto the firm level for the last two quarters, consultations with stakeholders, including identified firms, FBR (customs), ministry of industry, Port, TDAP officials and textile technologists need to zero-in on the remaining reasons for the export slippages. Quantity slippages emanate from competitors (trade diversion) who may have used for, eg, superior marketing tools, efficient trade facilitation and better quality at lower price. Lower dollar earnings from price per unit slippages call for in-depth exchange of information on domestic firm-wise cost structure, technology of production, labour productivity and exchange rate regime. Trade counsellors in Pakistan consulates abroad need to submit market research memos and collect and ship competitors' samples of bed linen from our traditional markets, in order to judge new competitor's quality and marketing strategy at these consultations. If the firms were previous exhibitors and received orders, TDAP needs to bring them into consultations.
Apart from the identification of 'threatened' products, the data analysis as part of the first stage can identify products that are 'Competitive' and 'Emerging'. In order to promote the diversification of products, the 'Emerging' products need nurturing and policy support to establish a sustainable footprint in the international markets. Again consultations among the identified firms and government functionaries are of essence in order to understand export dynamics, including a close study of various components of the entire export cycle of our competitors in order to upgrade these emerging products into competitive products on a permanent basis.
The above export diagnostics at the 4-8 digit level will enable the stakeholders to draw a blueprint of policy implementation matrix of the common challenges faced by majority of the exporting firms. In devising a real time policy intervention strategy, policies that are 'implementable' in the very short run would have to be filtered out to remove the product at the earliest from the 'threatened' category and restore its 'competitive' edge. In the above hypothetical example, it is bed linen. Similarly, for 'emerging' products, short to medium run 'implementable' policies have to be identified to order to alleviate them to 'competitive' category. To emphasize, the focus of micro management of exports would be the issues of productivity, cost and quality control and market facilitation, rather than expecting policy level changes at the macro level.
Thus the third stage consists of coordination, consensus, prioritization and implementation among the government institutions and private sector. Coordination in the usual bureaucratic sense of 'business as usual' will nip micromanagement in its bud. Ideally an "Export Coordination and Implementation Unit' be established in MoC whose staff is exclusively devoted to real time coordination and implementation issues emerging from export monitoring in the above two stages, rather than relying on the permanent younger staff who is partially busy in planning and pushing files for their next posting abroad. IT be used extensively to hold meetings in real time with all stakeholders for policy implementation and its monitoring rather than physical face-to-face once a month contact.
In the end, micro management is not a very popular term in organizational literature, but when a war footing is required for economic survival and preventing repeated visits to the IMF, this is the only experimental route available to the economic managers.
(Concluded)
(The writer is a former Acting Chief Statistician of Pakistan Bureau of Statistics)
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