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Unfulfilled policy commitments

July 30, 2012


MANY businessmen are careful about attaching high hopes with the second three-year Strategic Trade Policy Framework expected sometime next month.

“What’s the use of a policy or a strategic framework if it is never to be implemented?,” wonders Akber Sheikh, a Lahore-based businessman.

“It is a meaningless exercise. Everyone forgot about a similar policy framework announced three years ago. I bet no one (in commerce ministry) would have bothered to re-read it, let alone implement it, in the last three years” he says in an obvious reference to the Strategic Trade Policy Framework 2009/12.

Commerce secretary Munir Qureishi has recently said the government is working on the new strategic trade policy framework 2012/15, which will be announced next month with a string of “development initiatives” to boost exports to above $30 billion in three years.

The previous strategic framework promised to push the country’s exports to $25 billion. The country earned $23.6 billion in export revenues during last fiscal - the last year of the previous strategic framework, down from a record $24.8 billion achieved in 2010/11 and substantially below the target of $25 billion for the last year.

The projected export target of $25.8 billion for the current year.

“The strategic trade policy framework 2009/12 has nothing to do with the 25 per cent jump in the country’s export revenues from less than $20 billion in 2009/10 to nearly $25 billion in 2010/11. The miracle was performed by rising global commodity prices, especially cotton, which pushed our textile exports to $14 billion in 2010/11,” argues Ejaz Khokhar, former chairman and chief coordinator of the Pakistan Readymade Garments Manufacturers and Exporters Association.

To support his argument, he says, textile exports dropped by just below 10 per cent last year on the back of falling global prices and demand. “This also pulled down the country’s overall exports by around nine per cent,” he insists.

He believes that the country could already have increased its exports to $30 billion, the target being set for the next three years, if the government had implemented the strategic trade and five-year textile policies.

“We may have been talking about something bigger today had the government implemented the initiatives announced in the two policies,” he contends, lamenting that scores of small value-added textile manufacturers had closed down business because of non-implementation of cash incentives announced in the trade and textile policies and losses suffered on account of sudden jump in global cotton prices, energy shortages etc.

“The success of a policy is in its honest implementation. Successive governments have given new policies every year rather than on fulfilling their commitments,” he notes.

Trade officials blame shortage of funds due to the government’s financial problems for the gap in policy implementation. “The implementation of the initiatives announced in the two policy frameworks required Rs35-40 billion. But the ministry got just a few billion rupees. So the initiatives largely remained unimplemented,” a commerce ministry official says on condition of anonymity.

The policy frameworks promised establishment of funds to subsidise loans for fresh capital investments in manufacturing and removal of infrastructural bottlenecks, reduction in the price of export refinance and provision of cash rebates on value-added exports, payment of half the cost of relocation of the industry to Pakistan from other parts of the world, provision of financial assistance to exporters for opening their offices in the foreign markets and support for acquisition of brands and marketing of branded products.

The export-oriented textile units were also exempted from gas and electricity load-shedding, but the industry in Punjab remained without gas for up to six months and without power for over three months (based on an average six hour cuts a day) last year. Some initiatives were launched at the time of the announcement of the two policies, but were suspended later because of financial problems. “Only a few initiatives could be implemented partially,” says the official. All Pakistan Textile Mills Association chairman Mohsin Aziz doesn’t believe in looking back. “Instead of lamenting the non-implementation of the previous policies we should be looking forward to the new policy and strive for inclusion in it of initiatives such as formation of technology up-gradation fund for providing low-cost loans to the export industry for updating technology and ageing machines and expanding capacity as well as provision of uninterrupted supply of gas and electricity to the industry to create jobs and increase exports,” he says.

The ministry of commerce has done little to encourage fresh investment for enhancing existing production capacity, according to a leading auto vendor from Lahore.

“We are not even heard let alone made part of decision making process,” he says, adding the policy-making decision should give a greater role to the real stakeholders rather than bureaucrats.

Lahore Chamber of Commerce and Industry president Irfan Qaiser Sheikh too laments the government’s failure to implement the previous trade policy framework. But he says the new secretary is a positive person who has asked the business community to forward its suggestions to be incorporated in the new policy framework.

“We are formulating our proposals and will send them to the ministry next week. Let’s hope these are accommodated and implemented,” he notes.