Pak Economy: New Trade Policy & challenges ahead

Munawar Iqbal

Though the country was in grip of serious political uncertainty and law and order situation and we are not having conducive business environment, achieving export target of $22 billion was difficult but not impossible provided government is facilitating the trade and industrial sector the way its needed. The official stance about the situation that the trade policy is appropriate keeping in view the overall situation of the socio-economic conditions is half true but the government can still patronize those sectors of economy which have potential to deliver with a more sympathizing approach.”
The trade policy for the year 2008-09 has been announced finally, which has triggered a ix reaction among stake-holders but the business community overall has termed the measure announced by the Federal Minister for Commerce inadequate and said that no miracle can be expected as a result of this policy pertaining to promotion of exports and to overcome growing trade deficit. The trade and business community is of view that the government should have announced more incentives for the industries keeping in view the dismal position of industries. It was necessary both for the revival of industry as well as to achieve the new export target of $22 billion. These circles are disappointed with rising tariff of gas and power and felt that the incentives should have also been announced in this regard. Moreover, no adequate measures were taken for the textile and other sectors, which should have been done keeping the importance of the sector in view.
The steps taken for the setting up industrial zones can be termed as welcomed and it could help in strengthening economy but again translating the vision into reality needs a comprehensive follow up plan. Some of the opinion makers are terming the policy as vague as Research and Development (R&D) support issue was not considered. These circles are of opinion that the new trade policy is mere jugglery of the words as if the government would have been serious about revamping trade and industry, the R & D would have been one the prime areas of the focus while announcing the policy.
Some trade and industry circles are rightly complaining about the energy related problems that have not been taken as serious as it was being expected. These circles say that they were expecting reduction in 31 percent of the gas price hike and other incentives for the revival of the industry but nothing has been done. The opening the Wagha border is a good step but its not going to increase our exports by itself.
Yes, when we talk about positive aspects of the new trade policy, the measures taken to allow certain Indian products, the decision to activate SAFTA once again and the TDAP export cluster plans all proved that the government was treading on the right path to enhance local industries. Moreover, the most notable thing in new policy had been attention given to the non-traditional industries which if enhanced would also help to edge up exports and level country’s balance of trade.
Likewise, many goods had been allowed into the country, especially machinery items to scale back the trade deficit in the long run and therefore the policy seems to be an appropriate one as it wouldn’t benefit immediately but in the years to come. But the real thing is that the country’s potential is not being utilized to the maximum and it’s evident by trade policy as well. It’s also being realized that the state called for economic targets without providing the facilities to achieve them. The target is of course not unrealistic and quite achievable but the required incentives such as R&D support, low petroleum prices and utility rates are missing here.
We are all aware that the textile is the major contributor in our exports, hence special focus should have been made on this sector but the government has made all the wrong decisions since textile industries are closing down which comprise 68 per cent of the total exports from the country and this is going to create a greater gap eventually leading to dire consequences for the economy. New and emerging markets like CIARs should also be focused to become regional trade hub by promoting regional trade as it would also be helping in reducing the cost of freights and other logistics.
The export target is pragmatic but government must understand that achieving it in real sense would not be an easier task. It would require the strong emphasis on three fronts entailing facilitation, promotion and motivation but ironically the successive governments have seldom adopted motivation of exporters as their mindset. Moreover Pakistan commercial Counselors abroad need to play a vital role to tap new markets and government should adopt a serious capacity building mechanism for them. The government should also refrain from the practice of appointing favorites on foreign jobs and encourage hardcore professionals for these slots.
—The writer is SVP, ICCI & President PCA.
Source: Pakistan Observer, 23/7/2008

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