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Is TDAP losing its relevance?

Updated December 18, 2016

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ISLAMABAD: The Trade Development Authority of Pakistan (TDAP) has lost its relevance because of the country’s changing export base, officials and exporters told Dawn on Saturday.

The objective of the establishment of TDAP in 2006 was to facilitate exports. Over the years, the organisation has turned from being an export promotion department into an event management company.

Sources in TDAP told Dawn that the authority has failed to deliver on its mandate mainly because of alleged corruption, wrong priorities and changing export patterns over the years.

Official data shows the government allocated Rs1.1 billion for TDAP in 2015-16. About Rs750 million, or 68 per cent of the total budget, was spent on salaries and managing the offices of TDAP. The operational budget for the export promotion was just Rs350m, or 32pc of the total budget, in the last fiscal year.

The breakup of the development budget reveals that Rs315m, which is 90pc of the development expenditure, was spent on holding more than 115 exhibitions abroad in the last fiscal year. Only Rs35m, or 10pc of the total development budget, was spent on export promotion functions in the domestic market.

The uneven allocation of the development budget for external and internal markets has created a vested interest for employees, an official of TDAP said.

TDAP has more than 1,000 employees. Only 50 of them are directly involved in holding exhibitions abroad. This means 90pc of the development budget is spent through only 5pc of employees.

“This is why most employees in TDAP try to become part of the exhibition department,” a TDAP officer said.

Additionally, the authority spent Rs650m from the Export Development Fund (EDF) on three exhibitions – Aalishan Pakistan (Rs250m), visits of Caravans to Central Asian States (Rs150m) and Expo-Pakistan (Rs250m).

TDAP CEO S.M. Muneer told Dawn the body held 118 exhibitions in the last fiscal year. He said 146 exhibitions will be held in the current fiscal year.

Mr Muneer admitted that a big chunk of the budget is being spent on non-development activities, like salaries and medical allowances. As part of an austerity drive, the government has reduced the overall budget of TDAP, he added.

According to the TDAP executive, the ‘systemic corruption element’ is the reason for spending huge money on holding exhibitions. The incidence of corruption is at multiple stages – right from the selection of a fair to the construction of a pavilion. The extent of corruption varies. Local agents of international exhibitors in Pakistan offer shares from their commission to TDAP officials in order to influence the selection of fairs.

Commercial councillors are also known for trying to make money in the selection of three bidders for the pavilion construction.

Regarding corruption in TDAP, Mr Muneer claimed he has eliminated it from the organisation. “Before I assumed office, TDAP faced charges of Rs1.2bn corruption. I can assure you that there is no corruption in TDAP now,” he said.

Garments Exporters Association Chairman Jawed Bilwani said TDAP has lost its importance as exports have been falling for the last three years. He said the authority was established to promote exports — something it has failed to do.

“I think the government should reform TDAP,” he suggested, adding that spending millions of rupees on foreign visits will not promote exports. The focus should be on the domestic market and its supply chain, he stated.

TDAP did not pay attention to the supply side and domestic commerce, he said. Top officials of TDAP and the Ministry of Commerce are the major beneficiaries of TDAP’s foreign trips, Mr Bilwani said.

The authority is the implementing arm of the Ministry of Commerce for export-related initiatives. It is located in the south of the country, although most of its officers are from the north and do not want to be posted elsewhere. Meanwhile, the pattern of the country’s exports has also witnessed drastic changes over time.

Commercial exporters based in the port city have been replaced by manufacturers who now sell their products directly into foreign markets, thus minimising the role of the middleman. This transformation has drastically changed TDAP’s role in dealing with exporters who are now based in the upper parts of the country.

Textile and clothing have a 55pc share in total exports. Much of the cotton-based industries are located in Multan. Yarn and fabric companies are mostly in Faisalabad. The home textile industry, which produces bed sheets and quilts, is mostly located in cities like Karachi, Faisalabad and Multan. The towel industry is predominantly based in Lahore, Faisalabad and Karachi. Associations of towel and bed-sheet manufacturers are based in Multan, Karachi and Lahore.

Similarly, the garment industry is spread over Faisalabad, Lahore, Sialkot and Karachi. The three garment trade associations are headquartered in Lahore.

In the agriculture sector, the $2bn in rice exports originates from Punjab. Similarly, the production of Irri-6 is in Sindh and Punjab. The association of rice exporters is headquartered in Lahore. Most of the kinno, rice and other agriculture products are exported from Punjab.

Meanwhile, sports, surgical and glove industries are located in Sialkot while the marble industry is based in Khyber Pakhtunkhwa. Yet the agro-food division of TDAP is in Karachi.

Also, the presence of the Engineering Development Board in Islamabad and TDAP’s engineering division in Karachi makes their coordination difficult. Similarly, most minerals and metals are in KP, but the relevant TDAP division operates from Karachi.

Trade analysts say TDAP officers should be posted to different regions on the basis of the products that are manufactured there. For instance, officers posted in Sialkot should look after industries like sports goods and surgical goods. Some of the offices in Karachi need to be relocated to other provinces, especially Balochistan and KP.

But the TDAP CEO said there are 13 sub-offices of the authority across Pakistan. He did not agree with the proposal to re-locate the headquarters to Islamabad. TDAP officials will continue making foreign trips, he said, adding that it is necessary to send them to international exhibitions.

Published in Dawn December 18th, 2016