Recently there has been much self-congratulatory advertisements by the Export Promotion Bureau celebrating the fact that Pakistan's export has crossed the $12 billion mark in the last fiscal year and the fact that this year the target is set for $13.7 billion. With all the hectic efforts of the top management of the Ministry of Commerce, there is all likelihood that Pakistan will achieve this export target.

While the government draws optimism from the recent export growth, there are conflicting goals within the government itself. The President of Pakistan addressing the leading industrialist in the first week of October impressed upon them to reach the $ 50 billion mark in the near future. The prime minister calls for quantum leap in exports.

The trade policy speech of the Commerce Minister calls for export increment through buyer driven FDI. And the chairman of the Export Promotion Bureau wants to replace the present EPB and wants an all powerful and fully independent body to achieve US$ 15 billion mark in the next five years even if the EPB is dismantled and nothing is created in it's place, Pakistan's export would cross the $15 billion mark anyway.

Let us look at the scenario asked for by the President. Is it possible for Pakistan to reach $ 50 billion mark in the foreseeable future? If so, what will it take? If it is not possible, what is a reasonable target to aim for? In the quota free period commencing next year the singular most important condition for export enhancement would be competitiveness of Pakistan's products particularly in the context of textiles. But what exactly is the meaning of the term competitiveness and was Pakistan's recent export increment related to increased competitiveness or other factors? It is crucial to answer these questions in order to assess future tends of Pakistan's export.

While the idea that export growth and competitiveness are closely related sounds common sense, there are empirical evidence to the contrary establishing that export increment was accompanied by higher prices for many success story countries. Studies by professionals suggest that export increment is due to increase in demand in buying countries after which competitiveness becomes a function of transportation costs (including speed and reliability of delivery), entrepreneurship, capital, land and labour costs, and product quality as well as the role played by the export promotion related organs of the country.

I will add another major requirement which has gained importance in recent years, viz, the reputation of the exporting country as a reliable, secure, stable and timely deliverer Thus competitiveness is a function of price as well as non price issue.

Moreover, competitiveness is in-separately linked to relative competitiveness ,ie, relative to another country's competitiveness. It is also linked to the export basket composition, sophistication level of the product, market share etc. The export growth has to be fundamentally analyzed whether it was due to the overall growth in global demand and the country just getting a piece of the proportionate increase or whether it could nudge some country out and establish a relatively higher market share for itself due to improvement in competitiveness, however that term is defined?

If the export promotion agency has thought over these issues, it is safe to assert that it has not shared its finding with the public. It is perhaps safer to assume that the Export Promotion Bureau never carried out these studies, Many models are available to answer the above questions but without going into the academic domain, we may at least accept as an hypothesis that Pakistan's export increment had nothing to do with enhancement of competitiveness, either in relative terms or price or qualitative aspect.

The major reasons for increment were due to higher global demand and curb on incremental potential of countries restrained by quota and recently due to tariff advantage in the EU. No wonder the Pakistani exporters are panicking at the prospect of removal of tariff advantage in the EU beginning 2005 and in case of some exporters there is equal if not more fear on account of removal of quota on textiles.

The EPB's own website reflects a very pessimistic analysis of constant market share analysis for Pakistan's export. The recent increment in exports are basically in raw material like yarn and fabrics and due to new demand in Afghanistan besides the above mentioned factors. An exception has been the dynamism shown by the bed linen industry . With the government commitment to end the sales tax and customs duty drawback mechanism and replace it with the DTRE , some of the dynamism is bound to fizzle out. Thus it is not a very smart thinking on the part of the CBR to end the present system at this crucial time as the issue of competitiveness has not yet been solved in Pakistan.

The much projected cotton country does not even have a 2 per cent market share in the global clothing sector despite textile and clothing accounting for 67 per cent of Pakistan's export. Where have we gone wrong and how are we to reach the target the President desires for us and what should be the road-map to reach there?

Finding faults is the easiest part, especially in the EPB. Ideas are thought by the EPB in isolation without consulting exporters. All leading exporters, particularly of the clothing sector complain that not once has the chairman EPB invited them to ask them what they want in the post quota period. The EPB has not activated the Export advisory committees and council that it used to have.

Activating these would prove more beneficial than giving it another name and structure. The exporters surprisingly generally praise the low and middle level management of the EPB officials who do satisfactory work . The problem according to the exporters is the lack of direction given to them by the top management.

The EPB has not conducted any market survey in the last five years for any product or any market. It has not undertaken ant product adaptation exercise. It has not helped any exporter in test marketing any new product. Despite it having a vast network of trade attaches spread over in all major markets of the world, it has not identified one new product for any exporter to produce and export. To be fair to EPB, it is acknowledged by exporters that the EPB helps them in their case against the CBR and other government bodies but the EPB lacks the authority to over-rule the CBR.

The government on the other hand do not work in tandem. The ministry of commerce equally have no influence over the CBR. Whatever good policies the ministry announces somehow do not get off the paper or if any of them it does the CBR issues rules and customs order which dilutes the benefit.

Let us now turn to the difficult part of what should be done. First and foremost is the government's conviction that exports is a top national priority. This means all other national policies and laws should be subservient to export requirement. With the prime minister-ship of Mr. Shaukat Aziz coupled with the President's desire to boost exports, this is now possible. A small but effective export council may be set up which should be fully empowered to frame laws and rules .

The council may be headed by the prime minister and comprise of The commerce minister, finance minister, textile industry minister , industry minister, labour minister, environment minister , governor Sof the SBP and the four chief ministers. Only those issues may be brought to this council where commerce minister's advise is not accepted by any one of these minister from the perspective of their priorities.

This is the only meaning of the term top national priority. A perfect example is of SRO 410 and DTRE. The ministry of Commerce wants SRO 410 and drawback to remain. Some unwitting bureaucrat in the CBR thinks he has found the solution of all evils by eliminating drawback and SRO 410 and replace it with DTRE. While this may be in CBR's interest, it may not be in the interest of exports. The commerce ministry and the CBR enters into a a duel of power struggle and SRO 410 keeps getting extended in piecemeal for 6 months but the exporters are always in a suspense and can not plan in advance.

The council can decide the issue once and for all. Similarly labour laws need amendment to meet buyers compliance and despite committees upon committees report framed in the Commerce and Labour ministry , the issue has not been solved in years. The council can decide this in one day!

Where can we find export surplus immediately? It is abundantly available in the seas and oceans and there are billions of dollar worth of demand for the same: seafood. Each year these resources are wasted. Properly handled, the seafood sector can reach $ 2 billion mark in 2 to 3 years time from the pathetic $ 150 million. Similarly, gem-stones can immediately be raised to $ 2 billion mark if the provincial government cooperate.

Let this sector be declared tax free and let the government pay a 10 per cent rebate on exports. These are products against which no major importing country will initiate countervailing duty as they have no industry which can claim injury, a pre-requisite as per WTO rules. Food processing and milk processing can yield at least $ 3 billion worth of exports in 2 to 3 years.

All incentives may be given for investment in this sector to both local and foreign sectors though in this sector one must be careful of not providing export subsidy as there is possibility of countervailing duties. But if these are directed to Middle East and Africa, again there will be no injury and thus no likelihood of countervailing.

The above are just some sectoral examples. Other persons can, I am sure give better suggestions to the government. The policy may be streamlined through the Council, markets identified and these should be declared focused strategy for the respective trade officers and their performance may be evaluated only on these products . The EPB may hire sectoral head for these products and pay them handsomely, whether hired from the private sector or from its own pool of talented officers who have vast experience in export marketing but no motivation.

They may be given 3 years to deliver. The chairman EPB may be either one of the senior 22 grade officer who are used to thinking in broad macro terms or a professional marketing man with high salary rather those working at no fees. They have no motivation to work if they earn no money, claim of doing it for free for national interest not-withstanding. Rules regarding their need to travel abroad for market survey may be relaxed.

The most important element of competitiveness is reliability of supply. Massive investment needs to be done to improve the supply chain, build roads, improve ports and most important create a special cadre at market-based salary to replace the customs from all aspects of exports and this cadre should work directly under the ministry of commerce. Customs should be restricted to pure imports only; pure imports defined as imports meant for domestic consumption and not for use for export.

All rules and regulations for exports including import for export purpose and determination of IOC ratio should not only be framed directly but also manned by the ministry of commerce. The Customs Act 1969 and Export and Import Control Act 1951 may be amended accordingly. This is the only way to bring export culture in Pakistan

The council must decide on five priority sectors for implementation in five year year period and fully focus all energies and money into these sectors. For the next five-years, new priority sectors may be identified. The multiplier effect of this strategy will be tremendous and has been successfully implemented by the Far-East Asian success stories.

Pakistan will need to spend Rs3 to Rs4 billion a year on these export drives but it will be worth the price as the return will be many fold in $ terms in 4 to 5 years time.

Not necessarily the above road-map but coupled with new ideas thrown in by others can easily enhance Pakistan's export by an additional $ 15 billion in next 10 years. If success is achieved various models using the multiplier effect shows additional $ 40 billion increment in the other 10 year period if in the first 10 years all necessary infrastructure are laid down. The President's vision of $ 50 billion is not a dream. It is a pragmatic goal which can be achieved in the next 15 years, if not earlier, if corrective steps are taken now.