By: Dr. Mirza Ikhtiar Baig (Medal of Imtiaz/Order of Merit):
The National Institute of Management (NIM) conducts important training courses every year for senior government officials promoted to the 20th grade. I am fortunate to have been giving presentations to these senior officers during their courses on key topics like Pakistan’s Large Industries (LSM), CPEC, Trade and Industrial Policies for the past 12 years.
In NIM, a speaker’s address to the course participants takes place when the speaker receives a high grade. Last few days I gave a keynote presentation on “Pakistan’s Trade Policy” to the top officers of the 34th Senior Management Course which was attended by 50 senior management and mid-career officers. Today I would like to share with my readers a 2 hour long presentation with these top national policy makers.
A review of Pakistan’s trade policy has revealed that our exports have stagnated between $27 billion and $31 billion for the past several years and our share in the global export market has reduced from 0.18 percent to 0.13 percent. Meanwhile, China has gained 27 percent and India 18 percent share, while Bangladesh has achieved an impressive growth of 95 percent.
In order to increase domestic exports, the caretaker government has announced an Export Advisory Council (EAC) for textile and other sectors comprising prominent exporters of the country under the leadership of Commerce Minister Gohar Ijaz, who will take the country’s exports to 100 billion dollars in 8 weeks. Suggestions are to be made.
The government had announced the last trade policy Strategic Trade Policy Framework (STPF) 2020-25 in 2021 but during this time instead of increasing exports, our imports have increased to record 80 billion dollars in 2021-22.
Imports of petroleum products were $18 billion and food items were $8 billion, while exports were barely $30 billion, causing the country an unsustainable trade deficit of $50 billion, which depleted our foreign exchange reserves. brought to the lowest level.
Challenges facing domestic exports include cost of production, rising electricity and gas prices, 24 percent high interest rates, inordinate delays in sales tax rebates and DLTL refunds, which have adversely affected the cash flow of companies. The supply chain has also been affected by the delay in the opening of LCs for export raw materials due to the shortage of dollars in the country, which has made the prices of our products uncompetitive compared to other countries in the region.
The decline in cotton production over the years, which fell from 11 million bales to barely 5 million bales last year, forced us to import $2.4 billion worth of cotton, increasing our production costs and reducing our competitiveness. . Increase in gas prices and load shedding also affected the productivity of industries.
In order to reduce our import bill, we have to reduce the import of furnace oil and LNG, generate electricity from alternative sources such as solar, wind, coal and nuclear, and restore the agriculture sector to make the country self-sufficient in agriculture instead of importing agricultural commodities. Must be made. We cannot afford an import bill of $4 billion for edible oil and $2 billion for tea.
Our imports currently comprise 29 percent of petroleum products, 20 percent of raw materials, 22 percent of capital goods, 16 percent of chemicals, 10 percent of food items and 3 percent of consumer goods. The record difference in import and export is proof of the failure of our 3-year trade policy, one of the reasons being that the Ministry of Commerce did not get funds on time to implement the policy.
Pakistan’s first textile policy 2009-14, which was presented during the tenure of Prime Minister Yousaf Raza Gilani, gave excellent results in the first 2 years, but later due to lack of funds, several schemes of the textile policy could not continue, so in the annual budget. Funds should be allocated to ministries so that the policies can be implemented.
According to the Strategic Trade Policy Framework (STPF), the Ministry of Commerce had projected exports in 3 different scenarios, in which the export projection in 2021-22 was 23 to 29 billion dollars while the target was set at 31.2 billion dollars.
In 2022-23, the export projection was 25 to 33 billion dollars while the target was set at 37.8 billion dollars. 2023-24 export projection was 26 to 36 billion dollars while the target was set at 45.81 billion dollars. In 2024-25, the export projection was 28 to 40 billion dollars while the target has been set at 57.03 billion dollars, but unfortunately these targets could not be achieved.
We have to improve value addition, branding, production cost reduction and competitiveness to increase exports. In this regard, the sectors of agriculture, IT, minerals and defense production should be our priorities under the Special Investment Council (SIFC).