Exports strategy

The PML-N government woke up from deep slumber and spell of false economic gains when hardly five months of its tenure of government is left and has started a public relation exercise promising a comprehensive strategy for enhancing exports. The smoke screen of spectacular economic achievements created by the Planning Minister Ahsan Iqbal is clearing out after the Prime Minister Shahid Khaqan Abbasi admitted between the lines in his address at Pakistan Economic Forum that exports are still stagnant at $20 billion. He subtly vindicated the authenticity of World Bank Report titled “South Asia Focus Fall 2017″released in August last year. The report highlighted the macro economic imbalances of Pakistan’s economy which included alarming current account deficit and reckless borrowing pushing the county to debt trap. But the government rejected that report and the Planning Minister painted a rosy picture after attending the joint meeting of World Bank and International Monetary Fund last year.
Federal Minister for Commerce and Textiles Pevez Malik said in a press conference on Friday the government had evolved a comprehensive strategy for enhancing country’s exports with a view to come out of trade decline. He assured that Prime Minister’s Exports Enhancement Package to exporters in the form of duty drawback will continue till mid of 2018. The Minister said, “We are negotiating on Free Trade Agreements (FTA) with different countries in which most of negotiations are nearing completion. The final agreement on Pakistan-China FTA Phase II with China and FTA with Thailand are on the anvil. The Minister disclosed that Indonesia had unilaterally agreed on concessional rate of import duty for 20 top export items of Pakistan during bilateral negotiation under Preferential Trade Agreement (PTA).
Prime Minister’s Export Enhancing Package of Rs 180 billion announced in February 2017 did not boost exports because of unfavorable economic environment that pushed up the production cost enormously. The economic environment was vitiated by sky-high tariffs of energy inputs and a barrage of regressive indirect taxes on finshed goods and primary commodities. The per unit price of electricity in India is Rs. 5 and Rs.3 per unit in Bangladesh. India provides Liquefied Natural Gas (LNG) to domestic and commercial consumers at $ 7 per mbtu. It imports the LNG from Qatar under a transparent agreement. The government of Pakistan also imports the same LNG from Qatar which is sold at an unreasonably high tariff of $ 11per mbtu to consumers because of shady import deal with Qatar which has not been made public. It is because of the reasonably low tariff of energy inputs that Bangladesh is earning $ 27 billion from the exports of textiles alone despite the fact thata single cotton plant does not grow in Bangladesh. Pakistan is cotton exporting country but its 120 textile units have been closed for relocation to Bangladesh in the pursuit of very rational energy input tariff and progressive tax regime.
The high cost of production has wiped out the comparative advantage of our exports in the international market. That is why Pakistan could not get benefit from the European Union generalized System of Preference GSP) Plus 2013-17. Under the GSP Plus Pakistan’s exports were allowed entry on Zero tariff in the European market but our products could not compete with the identical items of exports from other countries to whom the facility of zero import tariff was not granted. The Finance Minister ,on long leave ,Ishaq Dar had claimed that GSP Plus concession will enable the country to fetch $ 2 billion from exports to the European Union but it did not materialize due his disastrous macro economic management of’Darnomics’The Exports Enhancing Package is selective and is confined to the exports of sugar and wheat. It does not cover large number of exportable items. The Rice Exporters Association demand for granting incentives of exporting rice worth $ 265 million was not conceded to capture European market because of likely ban on import of rice from India due to the presence of a harmful ingredient in the Indian variety of Basmati rice. Likewise, the SOS calls from the industries of sports and surgical goods were not responded favorably. The independent economist belie that FTA agreement with China is loaded against the economic interests of Pakistan which is reflected in $ 8 billion deficit of the country in bilateral trade. This issue must be addressed in FTA Phase II with China. The suggestion and proposals Lahore Chamber of Commerce and Industry about the reduction in the prices of energy inputs and rationalization of tax structure should be seriously considered to make the economic environment exports friendly.