The government on Monday unveiled a medium-term (2009-12) Strategic Trade Policy Framework, setting an export target of $18.84 billion for 2009-10 — a six per cent growth over last year’s figures.
The policy has envisaged an export growth of 10 per cent ($20.724 billion) for 2010-11 and 13 per cent ($23.418 billion) for 2011-12. The government had projected an export target of $22 billion for 2008-09, which fell short by over $4 billion because of the global financial crisis.
The three-year framework plan focuses on reviving and reforming domestic commerce, diversifying export markets with EU, US and countries which have signed free trade agreements and promoting trade in services sector.
The trade policy, however, avoids projecting an import target and hopes Pakistani companies will be able to absorb shocks of the international economic crisis through integrated policy measures.
The trade policy, approved at a cabinet meeting held under Prime Minister Yousuf Raza Gilani before it was announced on national hook-up by Commerce Minister Makhdoom Amin Fahim, offers few incentives to non-textile sector (traditional products), which accounts for 40 per cent of trade revenue.
Interestingly, last year’s trade policy speech was 44-page-long while the policy framework for three years was spread over just 23 pages.
Mr Fahim said that a separate textile policy would be announced for the sector which would cover all issues, including exports.
Textile and garments sector’s share in export proceeds is 60 per cent.
The commerce ministry has traditionally been responsible for the promotion of exports while the ministry of textile industry was set up to improve competitiveness and production.
It is, however, for the first time that the government has allowed textile ministry to look after exports in the sectors, reducing the commerce ministry’s involvement in this sector without amending rules.
The federal government also ignored the provinces, major stakeholders for implementing trade measures for the first time in framing the trade policy framework.
In the past, the commerce ministry used to consult chief ministers or governors before finalising proposals for the trade policy. However, representatives of the chambers and associations were consulted.
The framework policy hopes to improve Pakistan’s ranking by 2012 from 101 to 75. It also envisages the share of engineering exports will increase from 1.5 per cent to 5 per cent, value-addition of cotton will increase from $1,000 to $1,500 per bale and regional trade to expand from 17 to 25 per cent.
A special fund of Rs2.5 billion will be created for product development and marketing to increase exports in the light engineering sector.
A medium-term strategy to boost exports of gems and jewellery will also be devised during the same period.
A scheme will be launched to offset inland freight cost to exporters of cement, light engineering, leather garments, furniture, soda ash, hydrogen peroxide, sanitary wares, including tiles, finished marble, granite and onyx products.
A fund of Rs3 billion is being established for product research and development for enhancing competitiveness either by technology upgradation, skill development or by improving system management.
A freight subsidy on export of live seafood was announced, besides setting up Services Export Development Fund, Enterprise and Entrepreneur Fund and an export investment support fund. Insurance cover for foreigners will also be given.
To reduce the cost of doing business, oil and gas and petroleum sector companies are allowed import of second-hand machinery not older than 10 years.
Since drilling rigs usually have a useful life of about 20 years, it has been decided that the age limit for them may be enhanced to 20 years subject to pre-shipment inspection certification.