ISLAMABAD, 16 July — Pakistani exports have moved forward during the just-ended fiscal 2001. And now, the new Trade Policy-2002 has introduced more incentives to keep exports moving forward.
The exports in 2001 were up 6.71 percent to $9.143 billion, compared to $8.568 billion in 2000. The imports were up 3.44 percent to $10.604 billion, as against $10.309 billion in 2000. The trade deficit, at the same time, narrowed to $1.521 billion, from $1.741 billion in 2000. The export target for 2002 is $10.1 billion. The imports are projected at $11.0 billion.
Commerce Minister Abdul Razzak Dawood has offered some good proposals to boost exports during the new fiscal that started July 1. These include: The maximum tariff has been reduced to 25 percent from 30 percent in order to reduce anti-export bias, and follow a demand-led strategy to enter new markets in products like textiles, rice and leather.
Greater efforts to export engineering, chemicals and ceramics products, while fisheries, fruit and vegetables, and gems and jewelry will continue to be developed. Exporters with 10 percent growth over last year, will be allowed to retain 50 percent of their additional export earnings in their Pakistani forex accounts and use the money for import of machinery, raw materials, and payment of commission and promotional expenses.
The 2 percent export development surcharge will be waived on additional exports. Exporters with good performance will be given incentives and rewards for which Rs.2 billion have been earmarked. Unlimited export finance will be available from banks, although the present subsidy has been withdrawn.
A pre-shipment export finance guarantee schemes will facilitate small and medium enterprises (SMEs).
An Emerging Electronics Products Assembly Schemes (EEPAS) will enable assembling mobile phones, cassette players, electronic calculators and DVD players, and other electronics. Completely Knocked Down (CKD) kits will pay only 5 percent customs duty.
Exporters can meet their forex requirements for imports from a $150 million foreign currency export finance facility by borrowing at LIBOR-plus 2 percent to be repaid out of export earnings.
A political risk Guarantee will change Pakistan’s triple C country risk to triple A.
Dawood and exporters are celebrating the fact that exports in fiscal 2001 that ended June 30, for the first time crossed the $9 billion mark to net $9.14 billion. This is 6.7 percent more than the exports in 2000. But, still it is short of the original target of $10 billion the Ministry of Commerce (MoC) had set for the year.
Unfavorable terms of trade and the unit prices did not help exports. But, part of the reason is that the exporters are hedging themselves for future forex gains, by retaining a part of their earnings abroad, through under-invoicing. Some estimates put the amount at 15 percent of exports.
However, exports, quantitatively, did move forward quite significantly. It is indicated by a 28 percent increase in rice. Raw cotton increased 90 percent, leather 35 percent, towels 32 percent, readymade garments 17 percent, synthetic textiles 35 percent, petroleum products 87 percent and cutlery 22 percent.
The MoC has set the export target for 2002 at $10.1 billion, or just $100 million more than the unachieved 2001 target of $10 billion. The new target is merely $860 million more than the actual exports in the outgoing year, or 9.40 percent higher than 2000. But some exporters say the target may be difficult to achieve.
Anjum Saleem, acting Chairman of All Pakistan Textile Mills Association (APTMA) says, the new policy lacks “innovative and strategic thrust for bringing about radical changes in the dollar value of exports. Unless a non-traditional and innovative trade policy is effectively implemented, no significant improvement in dollar value of exports can be expected.”