Relevance of TDAP

It has been widely argued that Trade Development Authority of Pakistan (TDAP) has lost its relevance because of country's changing export base. Moreover, TDAP is accused of moving away from its objective of export promotion to an event management company and that the focus should be on the domestic market and supply chain instead of spending millions on foreign trips.
The issue is quite complex and therefore needs a fair analysis of the export-oriented supply chain, domestic and global business and political dynamics, cost and ease of doing business in Pakistan related to competitiveness of Pakistan's products, marketing strategies and the role of TDAP and that of hundreds of commercial counsellors placed by the government around the world to promote export and business. The role of these civil servants is also equally questionable as that of TDAP in these times of declining exports.
TDAP, which was known as Export Promotion Bureau (EPB) from 1963 to 2006, is the apex agency of the government of Pakistan engaged in the promotion, growth and development of the country's exports and export base. Since its establishment in 1963 as an attached department of the Ministry of Commerce, EPB continued to facilitate Pakistani exporters in overcoming the supply and demand difficulties. Its successor, TDAP, continues to function with the same and more objectives and responsibilities as an independent entity under the administration of the Ministry of Commerce.
TDAP has its headquarters in Karachi with 14 regional offices all over the country. The regional offices mostly perform facilitation and regulatory functions; they also provide supply-side and marketing assistance to exporters.
The economic managers of Pakistan are very concerned about the export slide and declining foreign direct investment (FDI) and so are our legislators. It is reported that the figures recently placed before the National Assembly revealed that the trade deficit has risen to $ 11.75 billion during the ongoing financial year and exports of value-added products have declined by 15.9 percent during the last three years. More worrying is a forecast that spells out a bleak future of exports. The State Bank of Pakistan analyses project a further decline in the trade deficit to $ 11.856 billion and that the declining trend is gathering momentum.
The federal government, as usual, has placed the responsibility for this decline on external factors, notably the ongoing recession in the West where most of Pakistani products are exported. There is some truth in it as the traditional export market for our major products such as carpet, textile goods, leather and similar products has dried out very much. The exporters, however, blame the government for declining exports due to the delay in refund payments. Refund delays continue to be a source of serious concern for Pakistani exporters.
Another factor reported to be of concern to the exporters is the government's heavy reliance on external borrowing, particularly from the commercial banking sector that charges a high rate of return with a very short amortization period which partly accounts for the widening of the gap between the real effective exchange rate and the prevalent rate. This widening gap is reported to be having serious repercussions on their exports as our products are rendered more expensive relative to competing sellers' on the international market.
GSP plus status extended by the European Union to Pakistan accounted for a substantial increase in Pakistani exports - to the tune of 37 percent or 1.7 billion euros per annum. In November 2015, the European Union opted to introduce stringent rules of compliance inclusive of those relating to human rights and similar and Pakistan too is well-regulated under it. The ambition of our exporters to make a killing at GSP has considerably mellowed down.
Successive governments supported an increase in value-added exports to the extent of achieving impressive foreign exchange reserves but never went for reforms to remove structural weaknesses. None of our governments announced and implemented target-oriented policies for growth in exports.
The present government is no different from its predecessors. It follows the similar trend of providing tax incentives, duty drawbacks; it is not interested in addressing the core issues threatening our exports. The incentives extended by the government failed to spur exports on a sustainable basis.
Touting incentives as a remedy, the government last month announced 'Export Incentive Package'. It has, however, invited some criticism as duty drawbacks have been allowed on garments, home textiles, processed fabric, grey fabric and yarn manufacturers-cum-exporters but not for surgical and sports goods, leather and carpets which may well account for the worsening trade deficit. The export package is not sufficient to reverse the trends of declining exports and rising trade deficit.
Pakistan in global ranking has slid down many notches in areas of 'ease of doing business' and 'cost of doing business'. Unfortunately, however, there are no serious efforts to arrest this slide. The business segments that have recognized the real impediment have been able to maintaining export growth in their respective areas.
Sialkot's sports goods manufacturing industry has managed to rise above the challenges to secure a strong foothold in a niche market, becoming a global exporter of sport-related products - estimated at US$ 2 billion. In an effort to continue that trend, as many as 120 Sialkot-based companies are participating in the ISPO Munich, the world's biggest trade show for sports business.
According to the Pakistan Sports Goods Manufacturers and Exporters Association (PSGMEA) and the Sialkot Chamber of Commerce and Industry (SCCI), the bodies who organised Pakistan's delegation in Germany, the response from international buyers was very encouraging and they expect an upsurge in orders ahead of the 2018 FIFA World Cup in Russia. After becoming famous for being the official producer of the "Brazuca" football for Adidas in the 2014 World Cup, the city of Sialkot is hoping for a similar success in upcoming sporting events.
For that to happen, the state has to support Sialkot's industries in an effective and meaningful manner. Sialkot's dry port is Pakistan's first privately-constructed port and its airport was also funded by the private sector. By further promoting the industry, as Germany has done for its industry, Pakistan can ensure that the sports goods industry can stay in the forefront of the global market and stave off the impending challenge of the China Pakistan Economic Corridor (CPEC).
SCCI is rightly rated as the most dynamic business chamber of Pakistan. Other chambers in Pakistan are therefore required to follow the proactive SCCI approach to business.
One of the other major deficiencies the exports of Pakistan are facing is the absence of deliverables from our Commercial Counsellors at our foreign missions abroad. They are positioned and manned by the Ministry of Commerce and are mostly career officers. Their role is to promote, facilitate and market Pakistan and its products and businesses. But they are reported to be much deficient in meeting the exporters' expectations. There is, therefore, a need for the audit of the whole export chain and process, identification of gaps and initiation of steps aimed at removing deficiencies to achieve sustainable growth in Pakistan's exports.
(The writer is former President Oversees Investors Chamber of Commerce and Industry)