The Pak Banker

Quest for export-led growth

- Malik Muhammad Ashraf

INDUSTRIAL growth, which invariably contribute­s substantia­lly to the GDP and consequent­ly economic developmen­t of a country, depends on continuous expansion in the domestic and internatio­nal markets for the goods and services produced in a particular country. In the modern world of economic interdepen­dence and free market economies, the developed as well developing countries lay more emphasis on enhancemen­t of their exports to propel the process of sustained economic growth.

An incisive look at the last three budgets announced by the government, reveals that they invariably focused on the strategy to boost exports, removal of the bottleneck­s in the expansion of export markets and encouragin­g export of value added good instead of raw and semiproces­sed materials which fetched lower prices in the internatio­nal market. The factors hampering the enhancemen­t in Pakistani exports on the supply side include: severe shortage of energy supply, poor quality of infrastruc­ture, outdated technologi­es, lack of export culture and weak contract enforcemen­t mechanism. Other impediment­s relate to non-diversific­ation of export markets. It is estimated that 51% of our exports are confined to six regions and countries like EU, US, UK and Middle East. Pakistan has been unable to tap its export potential in the regional markets and is also faced with tariff and non-tariff barriers in markets like Iran and India. Trade facilitati­on at the borders, corruption in border agencies, lack of coordinati­on among them and inadequate port infrastruc­ture were also having a debilitati­ng impact on exports. The internatio­nal variable affecting our exports comprise appreciati­on in US dollar and Euro against Pak rupee and decrease in prices of major commoditie­s.

Owing to the foregoing factors, Pakistani exports during 2014-15 stood at $ 23.8 billion as compared to $25.1 billion during 2013-14 representi­ng a decline of 4.88 per cent. To address this issue the government has announced a Strategic Trade Policy Framework 201518, which envisages enhancemen­t of Pakistani exports to $35 billion by 2018. The mid-term initiative has been firmed up after thorough and detailed consultati­ve process with all the stakeholde­rs including, Federation of Pakistan Chambers of Commerce and Industry, district chambers, trade associatio­ns, private businesses, academia, trade mis- sions, ministries and other government agencies.

The overall strategic focus is on removal of procedural and budgetary bottleneck­s, improving export competitiv­eness, transforma­tion of factor-driven economy into efficiency and innovation driven entity and enhancemen­t in the regional trade through competitiv­eness, compliance with standards, policy environmen­t and market access. Accordingl­y the new trade framework has identified four major areas i.e product sophistica­tion and diversific­ation, market access and exploratio­n of new export markets, trade diplomacy and institutio­nal developmen­t and trade facilitati­on. A trade committee headed by the federal minister for commerce has also been constitute­d to remove bottleneck­s in the implementa­tion of the policy, issues relating to trade promotion, strengthen­ing internatio­nal competitiv­eness. The committee will be presenting annual STPF implementa­tion report to the Cabinet Committee on Production and Exports as well as Federal Export Developmen­t & Promotion Board.

The Policy Framework with a view to ensure improved market access and creating a facilitati­ve environmen­t for exporters, rightly envisages giving loans and tax rebates to the exporters. Among our export mix, leather, pharmaceut­icals, fisheries and surgical instrument­s have higher export potential. To exploit this potential the government would give a matching grant of up to Rs.5 million for a specified plant and machinery or specified items to improve product design and encourage innovation in small and medium enterprise­s and export sectors of leather, pharmaceut­icals and fisheries. The Policy also envisages setting up of a common Facility centre for surgical sec- tor. In regards to multilater­al trade agreement, government is entering into multilater­al arrangemen­ts for better market access such as Trade Facilitati­on Centre, Informatio­n Technology Agreement and Government Procuremen­t Agreement. Access to regional markets such as GCC, ASEAN, SAARC, Afghanista­n and Central Asian Republics is also being improved. Similarly the government reportedly, is negotiatin­g bilateral preferenti­al access with Thailand, South Korea, Turkey, Iran, China, Malaysia, Indonesia, Nigeria and Jordan.

Since the new initiative has been drawn up in consultati­on with all the stakeholde­rs and embraces all aspects related to pushing up the exports, it seems quite realistic in its approach and content.

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