Ministry does brainstorming about STPF 2019-24

The Ministry of Commerce (MoC) has started brainstorming the structure of long-awaited Strategic Trade Policy Framework 2019-24 to be based on ground realities instead of hallucination. For this purpose, Prime Minister's Advisor on Commerce, Industries and Production and Investment, Abdul Razak Dawood has "hired" the services of some of those individuals who have direct links with trade matters.

The first serious meeting on STPF 2019-24 held on December 12, 2019 in the Commerce Division which was attended by Commerce Advisor, Commerce Secretary, Additional Secretary, former Secretary Commerce, Younus Dagha, former Chief Executive Officer, the erstwhile Export Promotion Bureau(EPB) now TDAP, and officials of Commerce Ministry and National Tariff Commission (NTC).

The Commerce Ministry has to decide if it wants to draft a policy meant to take exports $ 30 billion from $ 23 billion per annum or higher than this benchmark and what steps would be needed to achieve 12 per cent growth, 15 per cent growth or 20 per cent growth. The contours of the new policy will be based on the firm future actions to be based on ground realities. Presently, growth in exports is less than even 5 per cent and behind the target.

"Pakistan has to become a dynamic and efficient domestic market and a globally- competitive export-driven economy."

The vision, mission and goals of STPF 2019-24, will transform Pakistan from a factor driven to efficiency -driven economy integrated into the global and regional value in the medium term and an innovation-driven economy in the long-term. The STPF-2019-24 was delayed to delayed approval of National Tariff Policy (NTP) which was approved last month.

Commerce Division has envisaged the following goals for the STPF 2019-24;(i) increase exports at a minimum compound annual growth rate of 12 per cent annually till 2024;(ii) improve competitive and efficiency of the industry, especially export sector ;(iii) increasing the share of regional trade in the total trade by 20 per cent and ;(iv) promote sustainable, socially-compliant, inclusive and gender-sensitive export development.

Tariq Ikram, who was considered very close to then Chief Executive, General Pervez Musharraf (now retired) sources said, was of the view that he gave a very successful trade policy as CEO EPB and his contribution will be useful for the forthcoming policy.

The sources said, Commerce Ministry has identified five critical enablers of STPF 2019-24, ie, competitiveness, investment, Global Value Chains (GVCs) integration, structural reforms and export Eco system.

For competitiveness, Commerce Division has identified following five necessary measures ;(i) reduction in cost of doing business ;(ii) rationalization of tariffs structure;(iii) increase in labour and enterprise productivity;(iv) decrease in input costs and ;(v) enhanced market access.

The sources said, enhancing production efficiencies and product sophistication through efficiency seeking investment, leveraging location, upgrading value chain and attracting investment to integrate in the GVCs would also be required for successful policy.

For structural reforms, market diversification and product sophistication, value creation and entrepreneurship development are required. Trade facilitation will also be one of the areas where the Commerce Ministry will give focus.

According to the Commerce Ministry, Pakistan's export sector weaknesses are as follows ;(i) textile and clothing sector, that contributes of 58.06 per cent of total exports of the country in 2018-19( compared to 4 per cent of worlds' trade and ;(ii) more than 50 per cent of exports rely on only four markets, ie, USA, EU, China and Afghanistan.

Pakistan is also far away in competitiveness as global competitiveness index shows 110/140(WEF), doing business index 101/ 190(World Bank) and enabling trade index: 122/136 (WEF).

Pakistan's labour productivity growth since 2001 stood at 1.8 per cent as compared to Bangladesh's 3.5 percent, India, 5.4 per cent and China 8.6 per cent.

"It was brain storming session. Ways and means were discussed to align this with other relevant policies like NTP, Industrial Policy, SME Policy and E-Commerce policy," the sources said adding that it was decided to focus on both goods and services, as services sector has been ignored in the past. Different regional and sectoral priorities were also discussed.

One of the world's top economists, Atif Mian, in his recent article asserted that Pakistan's total volume of exports has not risen since 2005. it has become a nation of consumers with limited capacity to produce and innovate. Last year, the country imported more than two times as much as it exported.

According to him, the government also continues to dole out large export subsidies without an iota of proof that these subsidies have helped increase exports.