Pro-India Trade Policy – II

| 11/08/2008 | Reply

Ismat Sabir

Food
group items exports accounted for $ 561 million, of this rice $ 480
million, sugar $ 72 million, fruits $ 32 million and fish products $ 15
million. Commerce Minister Ahmad Mukhtar said in his Trade Policy
speech that substantial halal food is imported in the Middle East.
Muslim consumers in other countries are also conscious about halal
method of slaughtering and halal ingredients in other processed food
products for which halal certification is essential.

Currently
exporters setting up slaughter houses are facilitated by the Export
Development Fund picking up the first six percent of the mark-up on
investment financing. It has now been decided to enhance this facility
and the EDF will, therefore, pick up the first eight percent or 50
percent of the mark-up which ever is lesser.

It has,
therefore, been decided to establish a halal certification board, under
the ministry of science and technology, to devise and enforce halal
standards and certification mechanism for export of halal food
products.

The first six percent mark-up rate on loans obtained
for cool chain and cold storages for horticulture will be revised to
eight percent or 50 percent of the prevailing mark-up rate which ever
is lower. The umbrella National Trade Corridor Programme is also making
provision for development of a cool chain infrastructure.

The
horticulture export would be declared as industry to qualify it for
industrial credit, relief in taxation, etc. thus facilitating much
needed modernisation and infrastructure development in this sector.

As
in the budget, the Trade Policy also put emphasis on agriculture
sector. In this regard, the policy said to promote floricultural
exports a flora common facility centre would be set up in collaboration
with the Punjab Government near Lahore; depending on its success the
project will be replicated in other provinces also.

An
irradiation facility based on the latest E-Beam technology would also
be set up in Karachi in collaboration with the Sindh Government to
facilitate export of horticultural products.

The area under rice
cultivation is under pressure from other crops and the yield is
decreasing as no high yielding basmati variety after “Super basmati”
has been introduced. The cumulative effect of these two factors could
erode the exportable surplus.

It was proposed in the policy
that the ministry of food and agriculture would focus on evolving new
varieties and increasing area under cultivation; paddy harvesters and
paddy dryers may be provided on matching grant basis in rice growing
areas; the Minfal will explore the possibility of using Agribusiness
Support Fund for this purpose.

Initially, for demonstration
purposes, four dryers and harvesters will be provided from the EDF to
the Minfal. Furthermore, rice farm machinery namely paddy harvesters
and dryers will be importable from India through Wagha by road.

Unhindered
import of rice seeds increases disease risks all such imports will
undergo strict quarantine measures. For this purpose the Seed Act and
other related laws will be amended accordingly.

To make sure
export of quality and standards a system of voluntary pre-shipment
inspection and sampling of agro-products for exports will be
introduced.

To support the setting up of new pharmaceutical
plants incentives will be provided that include accelerating
depreciation allowance facility to 90 percent in the first year on
investment.

Export of free samples up to five percent of
quantity was allowed against exports in the preceding year to
pharmaceutical exporters. In order to further facilitate exports it has
now been decided to allow exporting companies to send free samples to
the tune of 10 percent of the commercial quantity exported in the
preceding year. In addition this sector would also be allowed to retain
15 percent of their export proceeds.

Biotech drugs is a high
tech value added sub-sector of the pharmaceuticals sector which was
needed to be encouraged. It would be desirable to accord pioneer
industry status to this sub-sector and also allow it tax incentives. A
committee comprising ministries of commerce, health, finance and the
FBR will work out a detailed proposal for a decision in this regard by
the government.

To promote export of herbal medicine, 50
percent of the cost of registration of herbal medicinal products abroad
would be paid by the government as is done in the case of export of
pharmaceutical products. These measures would boost the pharmaceutical
industry as a whole and herbal industry particularly.

At present
municipal bodies/corporations/cantonment boards can import old/used
waste disposal trucks provided they are not more than 15 years old,
directly or through their nominated agents for their own use only. Now
the facility of import would also be extended to the “authorised
contractors” of municipal bodies, etc. However, in all cases the
imported trucks will not be older than 10 years, instead of 15 years.

If
Pakistani nationals importing a vehicle are unable to release their
vehicle due to high tariff or other reasons, re-export of such vehicle
would be allowed by the Federal Board of Revenue (FBR) if there was no
contravention of the Import Policy Order during import stage. It has
also been decided to do away with the requirement of a driving license
for the TR scheme.

Construction companies or oil and gas
companies are presently allowed to import mobile transit
mixtures/dumpers. In order to avoid misuse of this facility laws were
amended. The import of used dump trucks, it has been decided to remove
this anomaly by restricting both categories of importers to the above
conditions i.e. of not importing trucks more than 10 years old.

To
remove anomaly by restricting both categories of importers to the above
conditions i.e. these rollers should not be more than 10 years old and
the capacity should not exceed 12 tonnes.

Arrangements will be
made to expose master craftsmen to international designs and trends. In
this regard there will be a special focus on promotion of various
activities related to the Prime Minister’s Programme of ‘One
Village-One Product’. However, it is good to see that the present
government has not abandoned all the policies of previous government as
this is a programme that was the brainchild of former Prime Minister
Shaukat Aziz.

Furniture is also a non-traditional item and
export potential of furniture has constrained due to lack of wood
seasoning plant and skilled labour. Ministry of Industries would set up
a wood seasoning plant and the National Vocational and Technical
Education Commission (NAVTEC) will set up a couple of vocational
training centres on modern lines to meet these deficiencies.

It
has been decided that a trade dispute settlement organisation, under
the Ministry of Commerce, will be set up to deal with trade disputes
arising from exports.

China has undertaken to provide duty
free access of goods manufactured in specific zones or manufactured
anywhere in Pakistan when exported to China by enlarging the ambit of
existing coverage of goods in the bilateral FTA. The renegotiated
agreement will be enforced through a protocol which will be signed
during the Prime Minister’s visit to China this year. It would boost
trade between the two countries.

The Ministry of Food and
Agriculture will also arrange for SPS controls at Pak-China border for
certification of cherry and other fruit products exports since they are
in great demand in the Chinese market.

In order to realise the
full export potential of Northern Areas and to facilitate local
exporters, Trade Development Authority of Pakistan (TDAP) would open an
office in the Northern Areas.

The world over-development of
industrial clusters helps tremendously in boosting production and
exports. The TDAP will establish the following new clusters that
include surgical instruments, Sialkot, gloves and personal protective
equipment, Sialkot, sportswear, Sialkot, leather and leather products
Sialkot and Charsadda, sports goods, Sialkot, weaving and textile
processing, Faisalabad, light engineering, Gujranwala, auto parts,
Lahore, ceramics, Multan and Halla, ajrak and bangles in
Hyderabad/Halla and embroidery in Balochistan.

The TDAP would be
restructured and in the near future necessary changes, including
warranted amendments in the TDAP Act will be undertaken for this
purpose.

It has been decided that the Federal Export Promotion
Board chaired by the prime minister, will be activated and
reconstituted to provide the effective and high level coordination
required for increase in exports. It is clearly an overlapping and may
create hindrances that would hamper the exports due to rivalry between
them.

Not only the Trade Policy has not indicated import target
or measures curtailing imports but also said its strategy is to
facilitate imports that will serve to increase the competitiveness of
the exports and, therefore, increase their overall quantum and value,
which ensure sufficient supply of essential commodities such as
foodstuffs to the common man at affordable prices. However, it is not
known how costly imports of these items would be provided at affordable
prices. While instead of encouraging imports the domestic production of
essential food items should be facilitated that can make the country
self sufficient with in a few years.

The PML(Q) rejected the
Trade Policy and announced that the opposition would take the business
community into confidence to launch a countrywide strike. It claimed
that the government had already awarded the contract of Thar coal
project to India’s Reliance Group. The commerce minister claimed that
the government focused to take the benefits of development to the
common man. Its aim is to encourage the businessmen, entrepreneurs,
manufacturers and investors to continue striving to do more in their
respective fields.

Moreover, on the one hand, government is
striving to raise foreign exchange reserves, but on the other, its
elected representatives are wasting money. Prime Minister Gillani took
along with him over 36 members of the delegation from Kuala Lumpur, on
the conclusion of G-8 summit, to Dubai and instead of sending them back
to Islamabad, for a meeting with the PPP co-chairman, most expensive
hotel rooms were booked for them. Further, he also took a 40 member
delegation to the US this month. This shows that all the fruits are
going towards democratic representatives, i.e. not to poor.

This
year was different in the sense that the prime minister has decided to
address the nation on the same day, to defend the performance of his
government’s 100 days in office, when press conference of commerce
minister was to be held. This decision has made impossible to do press
conference on the next day, therefore, he hurriedly arranged it on the
same day the policy was announced. The time was not given to the
journalists to understand the details of the Trade Policy.

The
most critical part of the Trade Policy is the liberalisation of the
import of raw materials, chemicals, fertilisers, capital goods, CNG
buses, etc from India. He also invited Indian investors to invest in
Pakistan, initially in the manufacture of CNG buses.

In short,
certain incentives have been given to encourage the export of gems and
jewellery, pharmaceuticals, rice and horticultural products. That is
all. A little has been said about product diversification or exploring
new markets, neither touched the strategy for boosting exports to large
and growing regional markets like India and China. Neither textile
sector was touched in detail.

The Trade Policy lacking in the
long-term vision while it should have set clear measures to encourage
domestic and foreign investment in the manufacturing, farm, mining and
other sectors which can boost export.

Surprisingly, he declared we will continue with past Trade Policy measures that are proving valuable for increasing exports.

Category: Asia, Halal Integrity

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