Ministry of Commerce on Wednesday accepted the responsibility for poor performance with respect to implementing the Strategic Trade Policy Framework (STPF) 2015-18 tailored to achieve $ 35 billion export target by 2017-18. This acknowledgement came at an interactive session convened to seek proposals from different sectors for the STPF 2018-23, presided over by Secretary Commerce Younus Dagha.
The participants comprising private and government sectors also expressed their views on difficulties facing domestic industry and deficiencies in government policies. Commerce Ministry''s Director General in his presentation said that delay of 9 months in announcement of STPF, late publication of circulars/SROs, limited scope of EDIs and inherent flaws in business procedures were the main reasons for the poor implementation of STPF 2015-18.
Talking about trade facilitation, he acknowledged that there was little progress in Railways and Inland Navigation whereas progress on expediting exporters'' tax refunds was average. Restructuring of Ministry of Commerce, Trade Development Authority of Pakistan (TDAP), Pakistan Horticulture Development and Export Company (PHDEC) and creation of new Export Councils (Rice and Pharma) are under way. He said that regulatory measures are implemented but did not refer to the dysfunctional Exim Bank.
According to Commerce Ministry, STPF 2018-23 will be based on eight fundamentals ie investment linkages, service strategy, product development and compliance, trade promotion and branding, trade facilitation, market access and regional connectivity, institutional strengthening and gender mainstream. Secretary Commerce in his address said that the government has started consultative process for STPF 2018-23.
Talking about Pakistan''s export performance, he said that there was pressure on exports for the last three years. However, he took credit for the recent increase in exports saying "exports have shown growth for the last few months due to government''s measures." He also claimed that Pakistan was successful in getting trade concessions from Indonesia and China; but did not elaborate on the nature of the concessions he secured from China. Dagha further stated that incentives will be announced for small and medium industry and female entrepreneurs'' in the five-year trade policy which will be presented to the cabinet for approval in May 2018.
Vice President and Incharge FPCCI Capital office, Karim Aziz Malik, expressed no confidence in government policies and asked Secretary Commerce to give time to hear the viewpoint of the business community comprising office bearers of different chambers. He said the country''s exports have nose-dived to $ 20 billion from $ 25 billion mark.
Malik further stated that Free Trade Agreement (FTAs) with China has increased Chinese exports to Pakistan to reach $ 15 billion while Pakistan''s exports to China stood at $ 2 billion. The FTA with Malaysia increased Malaysia''s exports to Pakistan to $ 1.2 billion while Pakistan''s exports to Malaysia stood at $ 172 million. He said, FPCCI strongly recommends Pakistan re-negotiate these agreements and FPCCI, and all stakeholders, should be taken on board while finalizing FTAs and PTAs with various countries.
He further stated that Prime Minister announced a Rs 180 billion incentive package for exporters to boost the country''s exports by June 2018 but the package was not implemented despite the passage of nine months and "now the government has revised this package after consultation with textile exporters". Under the revised export package, 50 percent of the incentives will be offered to eligible textile and non-textile exporters on the same terms as given for the January to June 2017 period without the condition of 10 percent increase in shipments. The remaining 50 percent of the incentives will be provided if an exporter achieves an increase of 10 percent or more in shipments compared to the corresponding period of the previous year.
Commenting on incentives being given by regional countries, he said other countries have given huge incentives to their exporters and manufacturers in terms of subsidies and other incentives. At present, the gas tariff in India is US $ 4.5; Vietnam US $ 4.20; Bangladesh US $ 3.10 as against $ 7.65 in Pakistan. Our Industrial Electricity Tariff is also 22.2 percent higher than Bangladesh''s and India''s. Moreover, taxes on exports in Bangladesh are levied @ 0.25% whereas in Pakistan they are levied @ 1%. Moreover, after including indirect taxes and other levies total taxes come to 11% of the total cost of exports.
He said there is a dire need for simplification of tax and tariff regime for exporters. Exports should be made totally tax-exempt; else the Government should compensate these costs by way of compensatory export rebates. He said the China Pakistan Economic Corridor (CPEC) is a mega project that will connect Kashgar with Gwadar and will benefit the entire region in terms of bringing prosperity and development. Currently, there are some reservations of the business community with respect to CPEC.
FPCCI, Malik added, has requested clarification from Government on matters relating to the routing of CPEC, import of Chinese labour and material in the light of existing FTA and regional and global implications of this project. The special economic zones on the sidelines of CPEC would be one of the tools for its success. However, the management of such economic zones should be awarded to private sector of Pakistan for fruitful results.
The business community of Pakistan should also come forward and take benefit of the emerging opportunities, he added. Local products and producers should be protected against the inflow of raw material that would be allowed to Chinese investors at duty free rates otherwise promotion of new industries will flourish at the cost of established local goods and producers. Local entrepreneurs must be provided a level playing field by allowing them the same incentives and concessions as available to the Chinese investors and traders under CPEC.
Mian Shaukat Masood, an industrialist, suggested that Commerce Ministry should establish an Emergency Cell "to deal with troublesome situations that emerge from time to time at the international level". He said, loom industry of Faisalabad has been adversely affected with a crisis and hundreds of mills have sold their machinery as scrap and he is one of the industrialists who did this.
Mian Shaukat Masood said that the no bank is ready to extend long-term financing except a few groups while banks are even lending to invest in the stock markets. He requested Commerce Ministry to ask commercial banks to give loans to those businessmen who have equity and added "the government should take measures to revive domestic industry".
Masood said that a number of industrialists have opted to invest in real estate sector due to a massive return instead of investing in industry. He urged the government to reduce electricity prices to bring cost of doing business at par with regional competitors. He also suggested that Commerce Ministry should study trade policies of regional countries prior to formulation of five-year STPF. President Azad Jammu and Kashmir Chamber of Commerce and Industry suggested that the government should work for branding Pakistan''s products. Representatives of small chambers and women chambers also raised different issues and submitted their proposals.