KARACHI, July 17: The business community on Monday offered a mixed reaction to the Trade Policy 2006-07. Some saw the export target of $18.6 billion positively within reach owing to the incentives announced for non-traditional sectors. Some others, however, were disappointed with rising cost of utilities (gas and power) and felt that the incentives announced were not attractive enough to neutralise the impact of the rising cost of doing business and, therefore, export target may prove to be too ambitious.

The new policy was considered to be carrying more incentives as compared to last year. The focus was also seemed to have changed from the textiles to agro-based non-traditional items.

President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Chaudhry Mohammad Saeed thought that the direction of the policy was towards export-led-growth.

“The 13 per cent increase in export target for 2006-07 is quite achievable as the policy is studded with new measures and incentives for a number of sectors,” he said.

This year, the trade policy is not sector-specific but it has covered a large number of areas that needed urgent attention as compared to the last year’s trade policy. “I do not see any negative aspect of the trade policy so far,” Chaudhry Saeed said.

On the import policy, the FPCCI president said that the trade deficit of over $11 billion in 2005-06 might not swell in the new fiscal as the vacuum of demand and supply in some essential commodities had been filled or will be filled in coming months.

However, rising oil prices in world markets will make an impact on the country’s import bill depending on the situation prevailing in the Middle East. In case political situation improves in the Middle East, which looks a temporary phase, then chances of increasing trade deficit owing to rising oil prices will remain slim in the current fiscal.

The government estimates that the import would be around $28 billion in 2006-07 as compared to $25.6 billion in July-May 2005-06 and $18.4 billion in 2004-05. The bulk of this increase was due to higher prices paid for oil imports and the higher demand for machinery and raw materials stemming from increased economic activity, he added.

Chaudhry Saeed welcomed the initiatives like skill development programme in textile sector, facilitation to SME exports, warehouse city, incentives for boosting fruits and vegetables exports, border infrastructure, national trade corridor improvement programme, incentives for freight forwarding sectors, setting up a Trade Development Authority, carpet cities, dazzle park, expo centres in Islamabad, Quetta and Peshawar, freight subsidy schemes and promotion of meat exports.

President Karachi Chamber of Commerce and Industry (KCCI) Haroon Farouki termed the trade policy as export-oriented in view of the incentives offered to various sectors, which fall in the category of non- traditional items. “It is not a sector-specific trade policy but it covers other sectors that have the potential but were neglected for the past some years,” he said.

Besides, it looks that the government has finally realised the importance of those sectors and export-oriented industries that can contribute a lot in boosting country’s export.

However, he said that the export target was quite achievable but much depends on the power and gas rates as any further increase will give a severe jerk to the already increased cost of production and ultimately create problems in achieving the desired export target.

Haroon said that all the policies took few years to show results. The government should have changed the system and announce the trade policy for at least three years so that it could produce fruitful results as implementation of the policy eats up at least first six months and the remaining six months are not enough to get optimum results.

Former chairman Site Association of Industry Majyd Aziz described the policy loaded with too many long-term measures instead of any short-term measures. Like last year, there is a good vision in the policy but again a lot depends on the implementation which takes too much time. By the time the policy starts giving results the next policy becomes due.

He said that the new policy is “a non-textile policy” as some package was announced for the textile sector two days back. However the new policy has addressed those non-conventional sectors, which can do wonders in creating new markets abroad and enhance foreign exchange earnings.

He was of the view that the export target would not be achieved as the textile related sector is likely to remain under pressure for one more year owing to domestic and global problems. He said that rising oil prices would hit the economy very badly as increase in domestic oil prices has become due in coming months.