Power shortages and weak demand hit sales of products abroad

Pakistan plans to spend Rs26 billion to boost its export competitiveness in the next three fiscals to stem the slide in its product sales abroad.



The government had decided to take up the matter as part of the Strategic Trade Policy Framework 2015-18, which was sponsored by the Ministry of Commerce and approved by the Cabinet headed by Prime Minister Nawaz Sharif three months ago. But instead of moving on a fast track basis, action to implement it has been tardy for no apparent reason.



The decision of the Pakistan government, though late, follows constant protests by the industry and exporters seeking help as business has been declining rapidly. Billions of dollars of potential earnings were lost.



"Exports were down from $25 billion in fy-13 to $19 billion in fy-16," said the State Bank of Pakistan (SBP), the central bank.



Commerce Minister Khurrum Dastgir said: "Exports were down because the output of various key items was hit due to power and natural gas shortages. But the major external cause was the international oil and commodity price crash which reduced foreign demand for Pakistani products. These include export of textiles."



The textile industry alone earns 60 per cent of forex for Pakistan.



Dastgir, who has faced the brunt of the industry and exporters, said: "In the wake of international changes, several other initiatives are also being implemented to enhance exports and Pakistan's share in the global market."



The sales tax paid by manufacturers on the purchase of inputs for their products will be refunded to industrialists in the case of five products. These products are: textiles, leather and leather products, carpets, surgical instruments and sports goods. These five are the main products in Pakistan's export list.



Four categories of export items - fine grade basmati fragrant rice, horticultural products, halal meat and meat products and jewellery - will be highlighted for exports, especially to Iran, Afghanistan, China and the European Union (EU).



The government will also spend an additional Rs6 billion to help exporters, as provided under the Textile Policy 2014.



The government said that in order to help increase the industrial output, especially textile output, uninterrupted power supply has been assured since October 2015. Uninterrupted natural gas supply has been assured to the industry since March 2016 this year.



As part of the plan to reduce the cost of doing business and bring down the cost of production, the electricity tariff has been slashed by Rs3 per unit for industries. Additional charges on fuel consumption have been shifted from the industries to consumers.



The National Tariff Commission Act has been revamped to stop smuggling in foreign textiles. Cheaper Indian and Chinese textiles as well as those from South Asian countries are the main source of this smuggling into Pakistan.



The Pakistan government has also upgraded its trade promotion organisations such as the Trade Development Authority of Pakistan. The Pakistan Horticulture Development and Export Company is also being revitalised.



The volume and cost of export finance, the key element in funding this business, has been improved to make Pakistani exports competitive in the global market. The State Bank of Pakistan has reduced the discount rate to 5.75 per cent - the lowest in 42 years. The bank has introduced a special low rate export finance facility of three per cent to lower the export price of Pakistani products.



These new concessions will help boost exports. The cheaper prices of all Pakistani products, ranging from fashion and textiles to fresh fruits and vegetables, will be welcomed by consumers, including those living in the UAE, Saudi Arabia, the Middle East and the EU.



The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.