The Pakistan Commerce Minister Khurram Dastgir Khan on the back of worrisome performance of the export sector has formed a three-year plan called "Strategic Trade Policy Framework (STPF) - 2015-18 to make a big push in exports particularly to the booming regions like Middle East Africa, South East Asia and China which has been okayed by the Cabinet Committee on Production and Exports. Low-cost finance reduction in procedures cheaper cargo and freight services regular supply of electricity and gas and greater cooperation between the government and trade organisations are some of the incentives which are required to achieve the results.
The new target to boost exports to an all time high of 35 billion a year means that within three years the amount has to go up by nearly 10 billion which will require considerable effort by the industry businesses and services.
Exports during the June 30-ended fiscal year 2015 totalled 24.2 billion against the official target of 27 billion. Fiscal year 2015 was the third consecutive year of declining exports. Compared to fiscal year 2014 exports in fiscal year 2015 were down 3.5 per cent. The exports were 25.1 billion in fiscal year 2014. The actual exports in fiscal year 2015 were only 25.1 billion against the government's target of 29.9 billion.
Finance Minister Ishaq Dar who chaired the Cabinet Committee on Production and Exports said that all steps will be taken to enhance export to the 35 billion level by 2018 by expanding production of all currently exported items and those with a future potential in the changing global market.
While formulating the new strategy for higher exports they have taken into account the potential of the industry and the economy as well as the hurdles in growth which restrained the output. These hurdles include the continued shortage of electricity and gas rising cost of doing business appreciation of the rupee against the dollar and other currencies as well as the growing foreign competition particularly to their textiles.
The STFP has outlined the potential markets which will be targeted to enhance exports. The focus for export of high-quality "Basmati" rice will be the Middle East Saudi Arabia the UAE and Iran. Pakistan will make a push for export of its fruits including oranges mangoes vegetables potatoes onions and halal meat products to the Middle East the UAE and Iran.
South East Asia will be the target for export of horticulture products. India Sri Lanka Afghanistan and Africa are identified for export of cement. Pakistan will offer a freight subsidy for export of cement to Africa. Items marked for export to China are rice cotton yarn fabrics and ready-to-wear garments. Wheat rice meat and cement are identified for export to Afghanistan. In order to expand trade border marketing support development expansion of banking facilities improvement of the rail-link and infra-structure development will be undertaken. Products destined for the Iran market will include provision of warehousing support product branding "halal" certification.
The STFP provides Rs20 billion for research and development to expand and upgrade Pakistani exports and to achieve the targets set by this plan.
The government has also decided to undertake immediate steps for expanding farm products further improving the quality and range of products especially fruits and vegetables commodity pricing and to examine the input cost which will have to be restrained in order to ensure expansion of exports and enable the country to counter foreign competition. The government will have a deeper look at other hurdles being faced by exporters.
These issues relate to R&D technology problems moving out of the current concentration of traditional products improvement of resources and financing of the potentially exportable products upgradation of all products including those needed to match with the new and developing demands of the consumers in foreign markets where incomes living standards and lifestyles are changing and rising Commerce Minister Dasgir said.
The government's Committee on Ease of Doing Business the State Bank of Pakistan (SBP) the central bank Ministry of Commerce and Ministry of Textiles will work jointly to achieve these objectives. Pakistani fashion industry is constantly increasing its exports and arranging fashion show in the UAE Qatar and other foreign markets. One has to look at the latest foreign trade statistics in order to understand the importance of export volumes and values in the context of the entire external balances. Some improvement is visible in this sector according to the latest SBP statistics.
SBP said that the current account deficit has narrowed down by 80 per cent to 150 million in July - the first month of fiscal year 2016.Both exports and imports drop down in July. Exports were down to 1.76 billion from 1.91 billion in the same month last year. Imports declined to 3.5 billion from 4 billion in the two comparable months.
FDI inflows were 75 million compared to 18 million in the two comparable months. For the whole of fiscal year 2015 the overall current account deficit was 2.3 billion - 27 percent lower than the deficit in FY-14. Fiscal year 2015 saw the overall imports totalling 41.13 billion as compared to 41.66 billion in fiscal year 2014.
The foreign exchange reserves on September 3 were 18.497 billion of which SBP held 13.458 billion enough to cover imports for three months. The forex reserves held by commercial banks were 5.050 billion. Analysts and businesses are also questioning the current rupee-dollar parity. They claim that devaluing the rupee to a "realistic level" can reduce the current export slowdown.
The open market rate of dollar was Rs104.45/104.65 and Rs103.80/104 in the inter-bank market over the weekend. Institute for Policy Reforms a research group said: "The rupee remains significantly overvalued which has impaired the competitiveness of our exports." Several businessmen said the rupee is overvalued up to five percent against the dollar and lowering it will help exports to rise. But the government has taken no decision on such claims.
The STFP provides a road map to raise exports.
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