Strategic Trade Policy Framework

Last year it was the US-funded PREIA that took the initiative to engage Pakistan’s private and public stakeholders for revisions in the trade policy. This year it’s the World Bank that’s engaging stakeholders under an Australian-government funded project aimed at boosting Pakistan’s exports.

Last year’s efforts didn’t bear fruits; and it’s too soon to say whether this year’s efforts led by the World Bank will be any better than the World Bank funded famed FBR’s TARP saga. Held in collaboration with the Islamabad-based think tank SDPI, the stakeholder engagement in Karachi resulted in a host of proposals to help Pakistan achieve export competitiveness.

These proposals can broadly be classified into macro concerns, governance, productivity, institutional and organisational affairs. Specifically, they ranged from rupee depreciation, simpler taxes, cheap and continuous power/gas supply, reforms in TDAP, ending corruption, rolling out the famous one-window operation, skill development both at white and blue-collar level, improving banking lines, timely refunds, subsidies to exporters, SME facilitation, strengthening Pakistan’s commercial counselors world over and the whole nine yards.

Adding to that list, this column would like to stress the following. If Pakistan needs to find products to sell, then it is paramount for Islamabad to closely engage the provinces as well. Exports may be a federal subject, but the fate of some of the key untapped sectors now lies with the provinces. These include the likes of meat, milk and other areas of agriculture value added chain. Horticulture, which was once labelled as one of the potential sunrise sectors, is another area that demands a provincial focus. Tourism, mines & minerals are other key areas that lie in the provincial domain.

Then there some indirect prospects, for instance, the case of housing or even IT/software industry. If provinces can work on the development of housing sector – housing being a provincial subject – then a host of industries associated with construction could get the boost needed to achieve the economies of scale. Those economies of scale could later spill over into exports. Recall that the growth of cement exports followed a similar trajectory; it’s another thing that those exports have slowed of late.

While provincial coordination is critical to a successful trade policy framework, the policy wonks ought to be cognizant that delivery is always a complex process and requires coordination of multiple stakeholders. Pakistan’s consistent failures in delivery demand a rethinking of governance structure where specific delivery-units ought to be considered for each spotlight sector.

In addition to these, the framework should focus on some of the key overarching themes that seems to be missing from the discussion. First, is the need for major logistics industry reform that ranges from clearing/forwarding, warehousing, trucking and the necessary financial reforms associated with it? It should not take ten years to rollout TIR; nor should truck policy catch dust resulting in disease of doing business.

Second, it’s high time to build ‘Brand Pakistan’ as well as a mindset of brands among local exporters. Building a brand is key to getting more dollars for the same goods; but that reality is yet to dawn upon Pakistani exporters.

Lastly, redirect at least a part of the growing tech start-ups wave towards the nexus of tech and manufacturing. If Pakistan is to advance towards the future, automation will be critical to boost productivity. In that vein, now is the time to invest in robotics and automation. This country missed the third industry revolution; must it miss the fourth?