ISLAMABAD: The government is set to announce the 2005-06 Trade Policy on July 21 with an export target between $16 billion to $17 billion and major changes in the ongoing freight subsidy policy, a senior government official told Daily Times on Saturday.
The official said the ministry of commerce was thinking about setting the 2005-06 export target at around $16 billion but officials expect that the president and prime minister will ask the ministry to set an export target at $17 billion.
While speaking about the 2005-06 import target, the official said the Finance Division had suggested an import target of $22 billion but he added that the ministry of commerce did not agree with the finance division? target as the ministry expected it to be higher.
The official added that the ministry of commerce was of the view that the government has liberalised its tariff regime to such an extent that almost everything was being imported on a low tariff. He added that the business community was importing machinery and spare parts to upgrade industrial machinery
He added that the government had no option but to import POL (Petroleum Oil Lubricants) as Pakistan was not an oil producing and exporting country. The official stated that the value of imports would easily cross the $22 billion garget suggested by the Finance Ministry because of the import of oil and industrial machinery.
While speaking about the $16 billion to $17 billion export target, the official said it was an optimistic target as according to him Pakistan had not succeeded in increasing its production capacity to the necessary level and the cost of doing business was also on the rise. He said the garment industry of Pakistan, which had export potential was under pressure. The EU? anti-dumping duty of 13.1 percent and Pakistan exclusion from the GSP Plus scheme and the graduation of some items to the EU would make it difficult for exporters to achieve the likely target of $16 billion to $17 billion.
The official said high-ranking officials in the ministry and officials in the Export Promotion Bureau and State Bank of Pakistan were in a fix as to whether to continue the 25 percent freight subsidy scheme. He added that the ministry of commence believed that the freight subsidy of Rs 2.5 billion per annum on an average was not yielding the required dividend and the official added that the ministry had asked for data from the EPB in this regard. The data has not been provided to the ministry as yet.
The ministry of commerce doesn? want the funds for the freight subsidy to be extended to exporters from the Export Development Fund (EDF) and hopes that the funds will be extended from the amount allocated in the Public Sector Development Programme, the official added. However, a final decision in this regard is yet to be made and exporter associations are in favour of the continuation of the freight subsidy.
The official said the one village one product proposal had been dropped from the Trade Policy as the ministry of industries had been asked to work on improving the policy and he added that the Asian Development Bank was extending loans for the important project.
The official said there would be no significant initiatives announced in the forthcoming Trade Policy as some of the officials of the ministry were in favour of a three-year Trade policy but the Minister for Commerce supported an annual Trade Policy which is why the ministry is making the policy for next year.
?t is difficult to come up with new initiatives every year. We should follow the example of other countries.?He said India had also made a three-year trade policy. ?any of the initiatives, announced in previous trade policies had not been fully implemented as the task of setting up garment cities, textile cities and effluent plants had been given to the ministry of textiles, the ministry of industries and the ministry of environment respectively. So there is nothing for the ministry of commerce to implement in the current Trade Policy.
?he prime minister will take a final decision about the restructuring of the Export Promotion Bureau (EPB) to make it into an autonomous body or corporation during the month.?The government has been thinking about restructuring the EPB for a long time and has been thinking about whether the EPB should be made into a corporation or not. Under the proposal, the salary packages of officials of the EPB will be improved and they will be given the task to market Pakistani products abroad. Some of the experts and consultants will be hired from the private sector to make the marketing wing of the EPB more aggressive and to enable it to explore markets around the world.
However, in the next trade policy, the government will focus on exploring markets which have been neglected such as Latin America, Africa, Australia, Japan, and New Zealand. The official said Pakistan? industry was facing the challenge of a shortage of skilled labour across the country and he added that the government was coming up with what he called innovative initiatives in the trade policy to increase the skill of labour and to meet the demand for export-oriented products.
In this regard, the government is going to announce on the job skill institutes in various categories of industries. Labour will be given the required training at the said institutes. However, there are some concerns on the part of entrepreneurs who demand that there be guarantees that skilled labour will not leave them to join other industries after receiving training. The government is considering a system to sort out this problem.
By Khalid Mustafa
