Export Promotion Bureau (EPB) Chairman Tariq Ikram has said that there is nothing 'negative' in the increase in trade deficit, as it is going up on account of 'productive activity' on the economic front.
Elaborating his point, he said that imports of machinery, raw material and the fast going up international oil prices were the biggest contributors in this regard.
In a meeting at Lahore Chamber of Commerce & Industry (LCCI) on Monday, he said: "Increase in trade deficit is actually a vote of confidence for the economy as, with the new industrial units in place in the coming years, exports of the country are bound to grow; and there is no reason that exports would be at $35 billion by 2010."
LCCI president Shafqat Ali, vice-president Aftab Ahmad Vohra and a former senior vice-president Sohail Lashari also spoke on the occasion.
Tariq said that the chambers' role now is more crucial, as they would have to evolve a solid strategy or new methodology to take the present export figures to new heights. He said: "We would have to be more competitive in the coming years if we want to compete at the global market."
Talking about Export Development Fund, he said that he was ready to allocate money from the Fund if the LCCI desires to spend it on research and development. As many as 26 institutions had been established for the betterment of businesses in the country with Export Development Fund, he added.
He said that EPB could only inform the exporters about global requirements and the concerned ministries for taking care of the standard of the goods. "If the goods being exported are not as per international standards, the concerned exporter would not be able to compete in the market."
About freight subsidy scheme, he said: "It is still on, and the subsidy is being extended to exporters."
He said that non-traditional items play a major role in increasing the volume of exports and there was need to pay more attention in this direction.
Earlier in his address, LCCI president Shafqat Ali said: "The Export Promotion Bureau was established with the mandate to facilitate the exporters in all respects, but it is not delivering, and there is need to restructure the Bureau."
He said that only last year the government had collected Rs 700 million under Export Development Fund. He suggested that a portion of these funds could be earmarked for the establishment and strengthening of research and development departments and conducting market research.
About overall economy, he said that the biggest challenge before the business managers was to keep this momentum of growth going for at least another decade in the wake of new challenges and opportunities.
He said that trade deficit had gone up from $3.3 billion in 2003-04 to a massive $6.2 billion in 2004-5. This increase was largely on account of growth in the import of machinery and inputs for the industry, which accounted for 31 percent and 59 percent of the total imports, respectively. Thus, the import of these two items alone accounted for 90 percent of imports.
He said that textile was the largest participant in the growth of large-scale manufacturing last year and posted a growth of 24.7 percent to achieve the overall growth of 15.6 percent. Textile sector alone earns over 61 percent of the export proceeds of the country. If the textile production slips, it would certainly hit the economic growth and the exports. "Our exports of bed linen to EU are still subjected to anti-dumping duty of 9.9 percent, while EU is also considering imposing Rules of Origin. Whereas after the end of textile quotas, prices in the international market have come down, the cost of production of our textile products has increased due to increase in export refinancing rates, rise in the prices of cotton and frequent increases in the prices of POL making our exports costlier than competing countries, like China and India. No doubt, our products are best of the best but we have to be comparable in terms of both price and quality," he said.
Aftab Vohra emphasised the need for increasing EPB performance, keeping in view the fast changing global scenario.
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