Islamabad – Exporters belonging to four different provinces have proposed variety of recommendations for boosting trade shares of Pak made ups in international market as Sindh raised non-availability of land route as major stumbling block while Punjab’s exporters demanded increasing trade with China and India for increasing exports.
A policy think tank, Sustainable Development Policy Institute (SDPI) has conducted study on increasing export competitiveness after getting input from 254 exporters and businessmen belonging to all parts of the country.
The provinces specific priorities highlighted in the study reads out that there were variations across provinces in terms of key priority issues hindering competitiveness. In the case of Sindh, main challenges included: a) dealing with tax authorities, b) lack of required skills in the labour market, c) weak role of business associations in demanding reform; providing awareness regarding their dialogue with the government and demanding facilitation, d) high tariff rates on imported inputs, e) lack of support for research and development in current and potential exporting sectors, f) weak banking channels at potential export destinations.
A key concern during this meeting was that Sindh is the only province which is unable to trade with neighbouring country via land route. On the utilities and related inputs, the members of potential exporter group felt that the formal businesses are now receiving uninterrupted energy supply, however the cost of electricity and gas is high vis-à-vis competitor economies.
In the case of Punjab, main challenges were: a) an uncertain post-18th constitutional Amendment regulatory regime faced by businesses – including the municipal, environmental and labour permits requirements, b) shortage of labour with required skills, c) complex tax regime for small exporters, d) lack of government support towards: timely coordination (within government) of export promotion measures, technological advancement support, and expansion of marketing efforts in potential export destinations.
The business associations from Punjab wanted greater interaction with their counterparts in China and India to allow exchange of ideas regarding future trade and investment cooperation. They were particularly concerned over lack of consultation on the free trade agreement between China and Pakistan currently under revision. Current exporters felt that exports to India could be increased via land routes if government is willing to negotiate the NTBs (Non Tariff Barriers) faced by Pakistani exports in lieu of effectively addressing those NTBs faced by Indian merchandise in Pakistan.
The issue of lack of transparency in exchange rate management was also highlighted as a key concern – something which heightens expectations of a future free fall of the Pakistani rupee. There was also a desire that annual evaluation of trade missions based in Pakistani embassies abroad should be carried out against a baseline and published for the knowledge of the business community.
In the case of Khyber Pakhtunkhwa, while issues faced in compliance with taxes and refunds remained a key concern (which is also preventing formalisation of businesses), the production side barriers to adoption of new technologies was highlighted. This could be a limiting factor as regards participation of enterprises from Khyber Pakhtunkhwa in China-Pakistan Economic Corridor (CPEC) programmes. This was followed by several other challenges including: a) lack of labour as per demands of the changing production requirements, b) weak coordination of federal and provincial government to deliver export promotion packages for Khyber Pakhtunkhwa’s business community, c) weak awareness regarding government facilitation in marketing, testing services, and visa facilitation, d) overvalued exchange rate, and e) expensive and uncertain supply of energy.
Several sector-specific associations were concerned regarding the arbitrary imposition of regulatory duties. Some other challenges include: lack of effectively operational dry ports in Khyber Pakhtunkhwa, fast changing state policies towards transit trade with Afghanistan (a key concern of services sector exporters), damage occurring to merchandise being traded via Torkham border, and slow progress in the area of mineral development – a sector which the local business community feels can bring medium to long term dividends.
Before moving to provincial meetings the team had also conducted a round table consultation in Islamabad, where the business community from Balochistan province had also participated. Again, apart from the usual constraints related to taxation, energy and the exchange rate, a key concern was the manner in which Pakistan was trying to pursue FTAs with Brazil, South Korea, Turkey, Thailand and some other trade partners. The business associations were concerned that broad based consultations had not taken place before the framework meetings of these FTAs.
Similarly, the representatives of manufacturing associations showed their concern at the lack of information available to local businesses regarding opportunities in Gwadar and SEZs under CPEC. The business community in Balochistan also wants export promotion as a key target in the recently announced ‘Prime Minister’s 10-year Uplift Package’ for the province, the study report concluded.