Published Date: Nov 15, 2017
Public-private dialogue to be backbone of trade policy
The Ministry of Commerce’s forthcoming Strategic Trade Policy Framework (STPF) 2018-2023 must be based on constructive and broad-based engagement between the public and private sectors, with a view towards addressing Pakistan’s gradual decline in export competitiveness over the past 20 years.
This was stated by Noman Aslam, Director General of Trade Policy at the Ministry of Commerce, while addressing a roundtable meeting organized by the Sustainable Development Policy Institute (SDPI), titled ‘Achieving Export Competitiveness in Pakistan’.
Charting the development of Pakistan’s trade policy over the last decade, Mr. Aslam also highlighted Pakistan’s movement towards a more forward-looking and longer-term approach since 2009, when the MoC drafted its first 3-year STPF. In this regard, he also appreciated the Ministry’s forthcoming trade policy framework, which will be valid for 5 years, between 2018 and 2023.
Speaking on Pakistan’s decline in exports over the last 2 decades, Gonzalo J. Varela, Senior Economist at the World Bank Group (WBG), highlighted the country’s challenges in penetrating more diverse export markets and leveraging global value chains as a vehicle of sustained economic growth. He explained how Pakistan’s overall share of the global export market had declined in comparison to peer economies such as India and Bangladesh, even though the country’s exports had increased in absolute terms. To reverse this decline, he recommended more market and product diversification and measures to improve the quality and sophistication of Pakistan’s export basket.
Providing further insight on the decline of trade and investment in Pakistan, Nadia Rocha, Senior Economist at the WBG, recommended introducing modern trade facilitation measures and a flexible exchange rate mechanism in the country.
She recommended measures to reduce the cost-of-doing business, with a few towards creating a more favorable climate for foreign direct investment. In this regard, she also highlighted the need for greater trade liberalization efforts, which can boost productivity and export competitiveness in Pakistan.
Earlier, Dr. Vaqar Ahmed, Deputy Executive Director at SDPI, highlighted key issues identified by the business community in the context of nation-wide consultations held by the organization. He explained how, despite recent investments in the energy sector, the cost of energy was still higher than in regional economies, reducing the competitiveness of local industries. He highlighted how local business competitiveness was being eroded by the imposition of multiple taxes by numerous revenue authorities at the federal and provincial levels. He explained how these same businesses faced audits by multiple tax bodies, leading to double taxation and higher compliance costs.
To address the decline in Pakistan’s export competitiveness, he recommended reducing the overall regulatory burden on businesses, especially in terms of registration and compliance with tax, environment, labor and building regulations. In this regard, he also called for greater public-private cooperation to encourage the adoption of productivity-enhancing technologies and improve sophistication and quality of Pakistan’s export basket.