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Trade facilitation in Pandemics
By:

Exports is considered as one of the key and important indicators for economic growth in any economic system. More the exports more is the industry growing and economic system keeps its pace in the world. Over the period exports do play a significant role and bring in the revenue. In comparison to Pakistan’s export in comparison to 2018, exports grow negatively.

In 2018, when this government came into power it brought in the policies and tried to revise and revisit the overall framework. Within this framework there is also revisiting of the trade and its related policies. The key focus of the policy shifted towards reduction of the trade deficit through controlling imports. Further to revise and revisit the trade policies government went into the dialogue mode and shifted focus towards more inclusivity i.e. through involvement of the business community while drafting trade policy which is seeing delay of 2 years now.

For any trade document and policy related measure before going into the monetary benefits there is need to look into the facilitation through providing infrastructure helpful to do business. The key elements in this regard are provision of infrastructure to the industrial area along with proper connectivity; after this infrastructure there comes the transition and smoothening of policies which government usually takes into the account by involving all the stakeholders. Policies in this regard made are sometimes hit by the situations and events which are not in any human control. The key situation in this regard observed in the recent scenario is Covid-19.

Pakistan suffered trade loss during Covid-19 with YoY plunge in August reported at 19.5 percent as reported by different studies. This loss is found to be significant across industries because of lockdown particularly the SME sector was the worst hit in this regard. First and foremost, crisis which industry went through is the inventory loss which they had in their storage. Within this inventory loss particularly in textile sector majority loss occurred due to the chemicals in use and cloth in system as in different areas the sudden shut down resulted in unfinished business. Second, and the most important challenge which industry faced during the covid-19 scenario is the structure of industry including infrastructure present in the surrounding. With the existing structure industry relocation is the factual thing and it seems to be the challenging task.

Further challenges after infrastructure were linked to managing staff and finances for which government announced different policy measures and incentives which didn’t got translated to the SME sector effectively. Translation challenges were primarily linked to the closing and opening of industry and finances.

The poor infrastructure is having consequences such as delay in logistics, damage to products, transportation of poor quality, health and environment in the surroundings which has impact on productivity and output

As far as industry closing is concerned and shut down which occurred for a particular period, there were challenges faced by the industry. First and foremost, challenge was the regulatory pressure and penalties which it had to face from different agencies such as electricity distribution agencies and social security agencies. As far as electricity distribution agencies are concerned industry was penalized for underutilization of the electricity allotted. Secondly various social security agencies though their policies though have announced the support to industries but field staff created hurdles and industry was penalized for various reasons. This therefore discouraged the industry for effective working in the pandemic situation.

In comparison to closing of industry or lockdown, opening of industry was another challenge for which governmentintroduced some of the policy measures along with standard operating procedureswhich industry has to follow. For opening industry in various cases there were different organizations involved. First and foremost, organization involved in this whole procedure was found to be TDAP followed by Export Promotion Bureau to look into export details and documentation. After this another department involved was found to be labor department followed by interior ministry or home department. This whole process took at maximum 30 days for industry to open and function.

Next major challenge in the pandemic situation was loan facilitation by commercial banks as per the policy directives of State Bank of Pakistan (SBP). Industries have to provide documents to commercial banks while requesting for loan and against the loan securities and guarantees were asked by commercial banks this has further discouraged the exporter to go towards policies announced by government and facilitations offered. This therefore shows that banks were more engaged in compliance and related matters therefore time of getting the financial facilities became high.

Further digging into the problems infrastructure and structure of industries is another major challenge which has influenced trade at general and now particularly in this pandemic situation. This is significantly visible in the industrial parts of the big cities. The poor infrastructure is having consequences such as delay in logistics, damage to products, transportation of poor quality, health and environment in the surroundings which has impact on productivity and output.

Thus, looking at these challenges and the current pandemic situation, there has been lack of facilitation for trade and this has impact on the business which is operating under fear. So, to deal with these challenges first and foremost, thing for government to have on to do list is relaxing the procedures for industry opening and operating. For this purpose, industry needs restructuring and relocation both in terms of working and resource mobilization.

Second, government has to ease the bank procedure. This bank procedure needs to be in line with central bank’s policy and coordination framework in between the banks should be improved. Primary role in this regard is of State Bank of Pakistan who has to revisit its financial framework and make it synchronized with those of the commercial banks. Further there is need to look into the operating procedures of banks offering loans to industrial sector. There is need to smoothen the loan procedures and compliance related to banks. Within these procedures there is need to look into the matters where banks are asking for guarantees from the customers which has already been taken up by SBP.

Third, utility distribution system and its structure also need a revisit along with the institutions linked to social security. Within the quota system which has been allocated by utility agencies there is need to revisit the distribution system and for this purpose the need is to look for more alternate energy frameworks for which Alternate Energy Development Board (AEDB) has significant role to play along with industries playing innovative role and taking in the energy producing role as well and bear the initial cost following which business may have the positive trajectory and trade is said to have a positive development.

Government has to look into the matters and take into the account industry while coming up with the STPF in covid-19 situation as well as coming up with fiscal policies in the coming times. Industry needs innovative approach to change its working environment by engaging more and more in the policy dialogues for trade facilitation.

This article was originally published at: https://dailytimes.com.pk/674295/trade-facilitation-in-pandemics/

The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.