New trade policy and challenges ahead

MUNAWAR IQBAL

The trade policy for the year 2008-09 has been announced finally, which has triggered a mixed reaction among stakeholders, but the business community overall has termed the measures announced by the Federal Minister for Commerce as “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 the 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 in view the importance of the sector.

Though, the country is in the grip of serious political uncertainty, 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 facilitates the trade and industrial sectors the way it is 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 patronise those sectors of economy which have the potential to deliver with a more sympathising approach.

The steps taken for the establishment of industrial zones can be termed as welcome and it could help in strengthening economy, but again translating the vision into reality needs a comprehensive follow up plans. 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 the opinion that the new trade policy is mere jugglery of words as if the government has 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 seriously 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 of the Wagha border is a good step, but it is not going to increase our exports.

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 the new policy had been the attention given to the non-traditional industries which if enhanced would also help to increase exports and 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 appropriate one as it will not bring immediate benefit, but in the years to come it will.

But the real thing is that the country’s potential is not being utilised to the maximum and it’s evident by the trade policy as well. It is also being realised that it envisages 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 textile is the major contributor in our exports, hence special focus should have been given to this sector, but the government has made all the wrong decisions since textile industries are closing down. They offer 68 percent 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 the 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 to exporters.

Moreover, Pakistan commercial counsellors 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 favourites on foreign jobs and encourage hardcore professionals for these slots.

(The writer is Senior Vice President of Islamabad Chamber of Commerce and Industry (ICCI) and the President of Pakistan Computer Association e-mail: info@pakcomputerassociation.com)

Source: Business Recorder, 27/7/2008

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