It is strange. Not a single exporter has availed itself of any of the five cash support schemes launched at the start of the current financial year. Perhaps, the tedious process of claiming the subsidy has made it unattractive.
In fact, much of the three-year strategic trade policy framework (STPF 2015-18) of the PML-N government has largely remained unimplemented and its export promotion efforts have yielded little.
Cash support schemes were announced under the STPF 2015-18 to improve product design and encourage innovation, facilitate branding and certification, up-grade technology for new machinery or plant import, provide cash support for plant and machinery for agro processing and give duty drawback on local taxes and levies for non-textile products.
To avoid fund misuse, the government decided to disburse the subsidy amount to exporters through the SBP instead of the TDAP. “The SBP has not received a single re-imbursement request from exporters against these schemes”, an officer of the commerce ministry confirmed.
The officer admitted faults in scheme design. No exporter could fulfil the conditions mentioned while stringent conditions had become imperative to avoid misuse of the facility. They said the ministry of commerce will soon start consultation with exporters in this regard.
Much of the three-year strategic trade policy framework has remained largely unimplemented while export promotion efforts have yielded little
Trade experts say exports can only be increased by well thought out state intervention at institutional, policy, and entrepreneurial levels. On all these three areas performance has been dismal.
The STPF 2015-18, envisaged three export promotion councils for pharmaceuticals, cosmetics and rice; but nothing has happened.
The export policy also proposed the establishment of a committee to restructure subordinate offices of the commerce ministry.
The departments identified for revamping/restructuring were: Trade Development Authority of Pakistan (TDAP), Pakistan Horticulture Development and Export Company, the Ministry Of Commerce secretariat, Trade Dispute Resolution Organisation (TDRO), Services Trade Development Council, Pakistan Institute of Trade and Development, National Tariff Commission (NTC) and the Domestic Commerce Wing.
An official of the commerce ministry said nothing tangible has been done at the institutional level except for cosmetic measures. Recently, the government appointed members of the NTC and did window dressing within the TDAP. The only area where interest was shown was the appointment of trade officers abroad.
Cash support schemes were announced under the STPF 2015-18 to improve product design and encourage innovation
Commerce Minister Khurram Dastgir Khan was approached through email to seek his views on the poor implementation of his first ever trade policy. However, he did not respond.
On the policy level, the ministry has yet to finalise the much-awaited law for protecting the ownership rights of goods and a law for TDRO for resolving trade disputes. Only NTC-related laws were finalised.
The most frequent government intervention is at the enterprise/industry level which has not yielded the required results to boost exports. The scope of the STPF 2015-18 was limited only to 40pc of exportable goods which fell under the category of non-textiles.
Textile and clothing exports, which constitute nearly 60pc of total exports, are covered by a separate policy. Around Rs2.5bn export subsidy was given to textile and clothing exports in 2015-16.
Trade experts say there are structural issues in the ‘ritualistic’ trade policy making. The ministry of commerce seeks proposals from trade bodies around two points: cash subsidy on exports, and ban on imports.
At the same time, commercial importers want to reduce tariff on products that are locally manufactured to increase profits. The policy also promotes interests of some groups at the cost of others.
The implementation of trade initiatives is a major issue. There is no effective forum to oversee and monitor implementation and 70-80pc of the initiatives are never implemented. There is a serious human resource problem in the ministry of commerce and its subordinate TDAP, which is the implementing arm for trade initiatives.
Different agencies/departments are involved in the implementation of the trade policy causing delays.
Much of the export subsidies go to some established sectors like textile, clothing, leather. For example, in the recently announced Rs180bn package, 87pc cash support will go to the textile and clothing sector and a mere 13pc to the other four sectors.
Faulty policies have resulted in exports falling from $24.5bn in 2012-13 to $20.9bn in 2015-16.
Published in Dawn, Business & Finance weekly, February 20th, 2017