The Trade Policy

The Trade Policy for 2004-05 the Commerce Minister, Humayun Akhtar Khan, unveiled on the national TV and radio network on Thursday, with export and import targets seemingly somewhat ambitious at $13.7 billion and $16.7 billion respectively, will certainly be found to be quite realistic on the whole. For one thing, despite a higher import target, due care appears to have taken to ensure that the resulting trade deficit will be lower at $3 billion, compared with $3.2 billion in 2003-04.
Linking imports to exports the policy has been re-designed to serve as an instrument of investment and export promotion. Needless, as such, to point out, a much heavier reliance has been placed on balancing trade with the thrust on making the best of the country's increasing export potential from a holistic approach. As the Commerce Minister said, a quantum leap is envisaged in exports between $25 billion and $30 billion in the next five years through enhancement of world market share of textile exports, besides diversification and improvement of quality of goods. However, although big incentives have been offered and more have been promised to traders, the attainment of the export target cannot be taken for granted, largely because of the fierce competition, as developing in the international market.
Evidently, taking due note of the enhanced export potential and objectively assessing the strength of the textile sector, the policy has focused greater mobilisation of the textile sector, while paying much-needed attention to non-traditional items as also diversification of outlets, along with increased emphasis on more enabling measures.
In this regard, notable is the elimination of sales tax on ginned cotton to reduce costs for the spinning sector, setting up of garment cities and removal of ban on the import of cotton waste, particularly with a view to helping boost towel exports.
Reference may also made to the plan to provide technical, commercial and marketing support to the garment sector, notably through the Export Promotion Bureau, to improve its productivity and product range. That almost all restrictions on relocation of used textile machinery and related equipment have been removed, should serve as a catalyst for setting up more textile units, thereby helping enhance the export potential. All this will certainly appeal to reason.
The same can be said about a number of measures already in force or in the pipeline. These, among others, include the supplier credit fund, which has been created to facilitate exports, the concessional credit scheme, the special package for garment sector, and the communication city to be set up in Islamabad.
Encouraging also it is to note also that special allocations have been made from the export development fund for selected areas and that all the schemes launched previously have been carried forward for 2004-05 to ensure continuity in economic reforms and policies. That the Commerce Minister's optimism about the export potential of textiles and garments is well-placed should be evident from their performance during the last financial year, when their export proceeds amounted to $8.302 billion, or 68 percent of the country's total exports.
This may be why he said that the eagerly awaited elimination of textile quotas would mean a happy augury for Pakistan. All in all, the new Trade Policy should prove instrumental in enhancing Pakistan's prospects of continued progress on the economic front, all the more from the government's determination to allow the lead role to the private enterprise, while confining itself to an enabling role as a catalyst. With Pakistan's economic indicators, including export figures, pointing to richer harvests, the Commerce Minister will be seen to have rightly observed that to achieve the desired rates of growth the government must continue to follow the consistent economic policies evolved during the last three years.