New trade policy

THE new trade policy contains no surprises. Nor does it have any innovative measures to speak of. Even the incentives announced to boost export of non-traditional items and those that have been included ostensibly to encourage exporters to explore non-traditional markets seem too conventional to have any significant impact on the overall content and direction of Pakistan’s foreign trade in the immediate future. Most other incentives announced for boosting exports and rationalizing imports seem rather routine in nature. The government seems to have reached a dead-end in its ability to formulate policies that would enable exports to resume the growth rate of 14-15 per cent per annum which was the case during the decade of the 1980s and most of the 1990s. But in order to achieve this kind of growth rate, the country needs to produce exportable surpluses in significant quantities and at a reasonable cost.

Pakistan needs larger access to the US, European and Japanese markets. Unless this happens, exports would continue to stagnate no matter what level of freight subsidies are offered to boost export of new products and for accessing new markets. Of course, the previous year was a very difficult year during which the already deepening worldwide recession had taken a serious dip following the 9/11 incident. Overall, demand fell across the board, pushing prices of exports down as well. That perhaps is the main reason for the income from exports falling as much as by 100 million dollars compared to what was earned in 2000-2001. Last year’s export target was fixed at $10.1 billion but the actual performance was worth no more than $9.1 billion against $9.2 billion in the previous year. This year’s target has been fixed at 10.4 billion dollars, envisaging a 14 per cent increase. One only hopes that during the year the overall domestic economic activity attains a level that would generate enough exportable surpluses to make the target realizable. However, the high cost of utilities and banking resources plus the deteriorating state of the physical infrastructure make this year’s export target seem unrealistic. More so because the international recession continues to have a depressing effect on the worldwide demand for goods and services. When one adds to this the creeping appreciation of the rupee against the dollar blunting our price edge in the international markets, one does not find the prospect too bright for Pakistan’s exports at least during the next 12 months.

However, there is a bright side to the appreciating rupee. It is causing the import prices already on the slide in the international market to decline further when they reach Pakistan. In combination with the reduction in the tariff rate to less than 25 per cent, this development is likely to bring down the cost of imported raw material and intermediaries which go into export goods, thus offsetting to an extent the loss of price edge of our exports in the international market as a consequence of the appreciating rupee. This combination would render smuggling largely unprofitable as well. So, if the State Bank acts prudently to keep the value of the rupee at the right level, our exporters could utilize the opportunity to their advantage. Another precondition is to keep the tariffs of power and other utilities as well as the banking interest rates in check — at least in line with the regional averages, or else it would be illogical to expect the exporters to benefit from the appreciating value of the rupee.

CEC’s timely advice

THE Chief Election Commissioner has done well to express his dissatisfaction on a number of points on which the government has been coming under increasing criticism. First, Justice Irshad Hasan Khan asked the government to lift the ban on political activities “at the earliest,” because the general election was only weeks away. Second, he wondered why the government was taking so long to finalize the procedure for elections to the Senate and the special seats for women and technocrats. Most significantly, the CEC said he was in touch with the political parties and it was wrong to keep them “in the dark” when the election was so close. During his meetings with them, the politicians had drawn his attention to the use of the official machinery for campaigning by some government functionaries. They specifically referred to two governors who, they claimed, had already begun their election campaigns. They were organizing public meetings even at the district level, and were using the official transport and other paraphernalia for this purpose. The governor houses, they claimed, had become the “hub” of political activity, and certain political parties and individuals were being openly backed.

These are indeed serious lapses and the CEC seemed to agree with the critics that the government should not allow the use of official machinery for the governors’ election campaigns. He has written to President Musharraf, asking the government not to allow its impartiality vis-a-vis elections not to be compromised in any manner. He specially asked the president to ensure that incumbent ministers seeking to contest elections resign well before the campaign officially begins. All this is sane and sensible advice and must be scrupulously adhered to if the October election is to be seen and accepted as a fair and impartial process untainted by manipulation of any kind.

Encounters galore

REPORTS of police encounters are again coming in from different parts of Punjab. On Sunday, three alleged proclaimed offenders were murdered in a staged encounter near Lahore. The police claimed that they had set up a picket on Ganjey Sadwan Road. When they signalled three men on a motorcycle to stop, they did not. They were chased and rounded up, the police said, adding that they retaliated when the police opened fire. How could those who had already been rounded up open fire on the police? Interestingly, no policeman was hurt. What casts doubt on the police version is the report that the three men were arrested after they killed three youngsters at Rawalpindi Race Club some days ago. They had since been in police custody. There are other suspicious aspects of the incident which suggest that it may not have been as spontaneous as it is being made out to be. Earlier, the police in Multan said that four dacoits riding bicycles were gunned down in an ‘encounter’. It claimed that the men were signalled to stop but the cyclists opened fire. Surprisingly, none of the policemen was hurt.

Over the past few months, there have been reports of numerous shootouts between outlaws and police creating an impression of a fresh wave of encounter killings going on in Punjab. Coupled with recurrent reports of custodial deaths, illegal confinement and maltreatment and highhandedness, it suggests that the police are increasingly resorting to desperate methods in fighting crime. This is strongly reminiscent of the course adopted by the Nawaz Sharif regime at one stage to control law and order. There would therefore be questions whether the government has adopted the same policy. It also raises concern whether the increased powers earlier conferred on the force under the so-called police reforms have encouraged the latter to take to such measures.