November 13, 2002	Wednesday	Ramazan 7, 1423

LAHORE, Nov 12: Commerce and Industries Minister Abdul Razak Dawood on Tuesday hinted at possibility of “Pakistan entering into a free trade agreement (FTA) with India on a reciprocal basis.”

Addressing the businessmen at the Lahore Chamber of Commerce and Industry, he did not elaborate his statement but added the tariff rates of SAARC nations (for one another’s products) were going to come down by two percentage points as a consequence of recent trade talks among the South Asian states held in Nepal. “The rates would further be reduced following future rounds of trade talks among SAARC nations.”

The minister said “Pakistan was negotiating FTA with Sri Lanka and Bangladesh. Maybe the same thing (is possible) with India as well.” He also mentioned Kenya and Morocco as other nations with whom the government is trying to enter into free trade agreements outside South Asia. He said finalization of FTA with Sri Lanka and Bangladesh would make all imports and exports zero rated in five years.

He said the “signing of FTA with Sri Lanka was delayed because some sectors were resisting the duty free import of similar goods from that country”. He said “it was strange some businessmen want duty free access for their goods to other markets but were averse to the idea of allowing the same facility to them.”

Dawood warned that tariff protection would not be available to the local industry in five years or so, urging the businessmen to improve their efficiency and become competitive. He said domestic industry should be prepared to compete with foreign products with no or minimal tariffs. “I feel that there would be no environment of tariff protection in next five years,” he said.

He advised the future government to keep the maximum tariff at 25 per cent but drastically reduce duties on raw materials. “If I were in government at the time of formulation of the next budget, I’d have proposed the same.”

IMPORT OF RE-CONDITIONED CARS: Dawood ruled out the possibility of lifting ban on the import of re-conditioned cars. “Inflow of used vehicles into the country would retard growth of the domestic automobile industry which has just begun showing signs of improvement as a result of lease finance made available for the purchase of cars.”

The domestic production of cars is expected to reach 6,000- 8,000 units a month in the next 2-3 months, paving the way for in-time delivery to buyers, the minister claimed.

He said the industry would need no tariff protection if the monthly production rises to 15,000 units.

He also rejected the demand to remove ban on the import of used auto parts, saying Pakistan should not be allowed to become junkyard.

EXPORTS: The minister emphasised the urgent need to diversify exports, saying it was not advisable to depend on a few sectors for long. He identified engineering, IT and chemicals as new sectors that could be encouraged to improve the country’s exports.

He said the total volume of world textile trade was $300 billion a year. “If you succeed in securing even 10 per cent share in it, your exports would not grow beyond $30 billion,” he said. “This kind of (small) export volume is not enough for us to take Pakistan where we want to lead it to.”

On the other hand, he said, the volume of world trade in the engineering sector stood at $6 trillion.

“Our exports of engineering items stands at a mere $274 million. It means Pakistan has vast opportunities to explore the opportunities offered by the world trade of engineering goods and enhance its exports to the level where we will be able to achieve our goals and objectives.”

The minister, praising the textile sector, said it had become internationally competitive and was able to meet the challenges to be posed by the WTO era from January 1, 2005. He was hopeful that the country’s textile exports would rise to $10 billion from the existing $6 billion in the near future. He also mentioned that the industry had invested $1 billion in BMR.

MARKET ACCESS: Dawood, who stated that it was his last presentation as a minister to the businessmen in Lahore, pointed out that Pakistan had won market access in Europe. Besides, he said, some progress had also been made in the case of the US, Turkey and Morocco in this connection.

LABOUR LAWS: He said the government had removed irritants in the labour laws to facilitate compliance of social accountability standards by export-oriented industries.

He said there were 58 different ordinances on labour, many of them are absurd and stupid. He said it was not possible for exporting industry to comply with these laws. He

He said the regime during last three years had made every effort to make the local industries internationally competitive by providing level-playing field under an open market economy. He urged the businessmen to jealously guard the free market reforms of the present regime.

He said the demand for durable goods would increase as the consumer financing takes roots. He said TV production was likely to increase to 800,000 by end of the current fiscal year. He expected consumer financing to push the production to over a million units a year.

PLASTIC INDUSTRY: He said tariff rationalization on raw materials for the plastic industry was one area where he had failed to deliver. It, he added, was more because of fear of loss of Rs6 billion in revenue.

He also mentioned a number of achievements during the last three years, saying the public sector had been put on the road of progress. He said loss making units had either been closed down or turned around in the last three years.

APP ADDS: Dawood said that State Life Insurance Company (SLIC) has improved a lot due to on-going restructuring process. “The corporation got rid of all the bogus agents who formed 80 per cent of a total strength of 27,000,” he said.

He said that this step had helped the SLIC save an amount of Rs280 million.

“How to privatize SLIC with life fund worth Rs80 billion has become a problem as it is very difficult to entrust this amount with a few persons,” he said.

He said that three ordinances regarding WTO were being promulgated to provide protection to the local industry.

To a question on e-Pass Scheme, he said that it failed just due to the fact that CKD kits were provided incentives instead of SKD kits.

Earlier President LCCI, Yawar Irfan Khan presented address of welcome.