Saturday, July 19, 2008
New trade policy sets $22.10bn exports target; imports to be restricted to $30bn; Mukhtar defends more trade with India

By Aftab Maken

ISLAMABAD: The PPP-led coalition government on Friday announced its first trade policy, envisaging growth in exports by 15pc, cut in imports and emphasis on more trade with India.

The new trade policy sets the export target at $22.10 billion and limits the country’s imports bill to $30 billion as compared with the last year’s $39.97 billion. At the same time, the policy eases restrictions on import of various items from India.

Federal Commerce Minister, Ch Ahmed Mukhtar announcing the trade policy on the state TV said, “Cheaper raw material from India will make Pakistan’s exports more competitive in the international market. The trade policy will allow the import of diesel and fuel oil from India to also help address the growing trade deficit.”

The government has decided to allow the import of machinery or equipment for mining, quarrying and grinding of minerals from India, he said. In the new trade policy, importable items like CNG buses, stainless steel, cotton yarn, academic, scientific and professional books, specialised printers, laminators and rollers would be allowed from India.

The import of these items from India would also help address the trade deficit, said the policy. In order to enhance exports of minerals and rice, the new trade policy will also allow imports of mining and paddy machinery from India.

The minister said if we look at the performance of various export sectors in comparison with the available detailed figures for 11 months from July 2007 to May 2008 during the same period of the previous year, there was an overall increase of $1.755 billion.

The minister had earlier postponed his press briefing scheduled for Saturday on the direction of the prime minister in view of the prime minister’s first TV address to the nation. However, he asked the media men to attend the briefing soon after the PM’s address. Later, briefing the journalists at the Prime Minister Secretariat, the minister emphasized the need for effective measures to arrest the growing gap in trade deficit affecting the economy. He attributed a number of unavoidable factors, which contributed to the deficit gap to rise to $20.7 billion.

“We inherited a very difficult economic situation where the public is facing more hardships than it has in the recent history,” he said. This was due to external and internal factors of the past year, he added. Moreover, the commerce minister said the doubling of international oil prices from around $68 per barrel to $145 per barrel during the year and increase in international prices of food items Pakistan needed to import during the year, especially wheat and edible oil, enhanced the import bill.

“The total imports during the year 2007-08 amounted to $39.97 billion, raising the trade deficit of $20.7 billion”, he added. He emphasised the need for promotion of regional trade, which according to him, was the only way to reduce freight and trade deficit.

The new trade policy for 2008-09 enlarges the list of importable items from India, which is based on the requests of stakeholders. The list will be issued separately later. About giving Most Favour Nation (MFN) status to India, he said it did not suit Pakistan as India had technical and other trade barriers whereas Pakistan did not have such restrictions.

When asked about R&D scheme for textile, the minister who also has additional charge of commerce & textile ministries said that he would hold a meeting with the prime minister today (Saturday) and hopefully, the issue would be settled.

Imports measures: To any Indian manufacturer of CNG buses who makes a firm commitment to establish manufacturing unit of such buses in Pakistan, the commerce ministry may provide special dispensation for import of 10 buses by road via Wagah from each possible investor as test consignment.

Under TR scheme, import of buses not more than 10 years old are allowed. This facility will help the returning overseas Pakistanis with limited means to create an economic opportunity for themselves as well as ease the shortage of such buses on inter-city routes.

Imports of used cryogenic containers/cylinders by industrial consumers, cement trailers, without prime movers in second-hand/used condition, prime movers with age limit of 5 yeas and minimum fleet requirement of 5 prime movers were also allowed.

In order to reduce the cost of raw material imports and thereby make the country’s indigenous export products more competitive, the import of job lots and stock lots of raw material, which attracts duty up to 5pc would now be allowed.

Similarly, imports of old/used waste disposal trucks of municipal bodies (the imported trucks shall not be older than 10 years) will also be allowed. Stainless steel and cotton yarn is importable from India by train. In order to further reduce the cost of doing business, it has been decided to allow their import by trucks through Wagah as well.

Import of academic, scientific and reference books, specialised printers, laminators and laminator rolls used for printing visa stickers and passports by Nadra would be allowed from India. Only recognised manufacturers would be allowed to import crude palm oil for further processing and refining. Furthermore, manufacturers who import palm oil in crude form will not be allowed to sell it to non-manufacturers. However, commercial importers who have invested in large bulk storages will be allowed to continue importing crude palm oil subject to a safeguard mechanism to be drawn up by FBR.

Import of CFC-based compressors remains banned. The imports of rollers would be allowed, but not more than 10 years old, and the capacity should not exceed 12 tons. Export measures: As export enhancing measures, the new trade policy suggests the intensification of market intelligence, trade promotion, enhancing competitiveness, coordination with other public departments, improving physical infrastructure, discouraging subsidies, diversification and encouraging quality.

Plant, machinery and equipment imported to set up a unit in DTRE scheme will be exempt from duty and taxes. Import of inputs for DTRE will also be allowed from India, even if these are not included in the importable items from India, or manufactured locally.

To increase the exports of gem and jewellery and to encourage investment and remove all anti-export biases, gold, silver, platinum, palladium, diamond and precious stones would be exempted from levy of customs duties and sales tax.

Exporters are allowed to send $25,000 worth of samples to foreign buyers. Since automobiles have higher unit value therefore it has now been decided to increase the limit to $50,000 in the case of automobiles.

The TDAP with its revamping would also establish new clusters of surgical instruments, gloves and personal protective equipment, sports wear, leather & leather products in Sialkot and Charsadda, weaving and textile processing sector in Faisalabad, light engineering sector in Gujranwala, auto parts in Lahore, ceramics in Multan and Halla, ajrak and bangles in Hyderabad/Halla and embroidery in Balochistan.

APP adds: Earlier, the federal cabinet in a special meeting with Prime Minister Syed Yousuf Raza Gilani in chair approved the Export Policy 2008-09 emphasising increase in country’s exports.

The cabinet also approved in principle the establishment of NFC University of Engineering and Technology in Multan to cater for ever-increasing demand for higher education of students of Southern Punjab.

The prime minister had announced the up-gradation of the Institute of Engineering and Technology Multan in May. Presently the Institute of Engineering and Technology Multan is affiliated with Bahauddin Zakriya University and is conducting B.Sc courses in the disciplines of Chemical Engineering and Computer Engineering. The Higher Education Commission recommended the up-gradation of the institute to the status of university level as a degree awarding institution.


http://thenews.jang.com.pk/top_story_detail.asp?Id=16070

Zinda hai Bibi zinda hai

Lol oh my god….

India, India, India...... WTF is wrong with these guys.

The UV rays from the long march have impaired their judgement.
Hence, now they are useless to be judges, so have decided to impart their opinion on other matters pertaining to national security.

They are actually about to import some bollywood type show in Lahore, that Ashwarya, Abishek and Shah Rukh/Salman types.

Holy crap is that true?????

I thght he mentioned they were only going to import raw materials to make pakistani exports more competitive. What is the problem with that?

Have a read of this;



Can we not get Diesel and Fuel from a non Indian source? Can we not setup a refinery to make it ourselves from crude oil? Why must we get this commodity from the enemy?

Why do we forget that India is the enemy?

The entire middle east is capable of providing us refined fuel products, we should import from there and make it immediate priority to setup refineries to do the refining ourselves.

Why is that important?

If we can refine it ourselves we can;

- Reduce fuel prices by buying cheap crude oil, rather than refined oil products.By refining it ourselves we cut arab labour costs and replace them with our own (lower) costs.
- Reduce the cost of getting the oil as refined products are more unstable and need to be carried in a safer manner than crude.
- Reduce our trade deficit by importing cheaper crude oil than expensive oil products.
- Potentially start an industry by selling refined product to Afghanistan and other Friendly states.

What we should never do, is work with the enemy.

platinum786,

I think with the opening up of trade people have realized that it is better to Import from the cheapest source.

A case in point is the Huge Trade Deficit that India suffers with China – I believe it is in Tens of Billions of US Dollars.

However, the Chinese are not only economic on price but also on performance. I believe they have built two “Huge” Ports with about 15 – 20 Metres Depth on the East Coast of India.

So even though India and China are Officially “Daggers Drawn” still there is a Huge amount of Trade between the two countries.

Another point is that with the “India-Pakistan Relationship" being what it is India still Imports Millions of Tonnes of Cement from Pakistan.

Pakistan is Exporting Cement at USD 60 per Ton (20 Bags per ton) which means each Bag costs USD 3 which at USD 1 = Pak. Rs. 65 (Average) equates to Pak. Rs. 185 per Bag.

You well know that Cement in Pakistan for Domestic Consumption is well over Pak. Rs. 300 per Bag.

Regarding Import of Petroleum Products : I think even the Persian Gulf Countries are importing Refined Petroleum Products especially Iran.

Pakistan is setting up two Refineries each of about 100,000 Barrels per day. These are old Refineries which are being dismantled and brought into Pakistan for setting up.

However with Reliance Refinery having a Capacity of 1.2 Million Barrels a day and the Essar Refinery having a Capacity of 250,000 Barrels a day being expanded to 700,000 Barrels a day Pakistan will also Import Petroleum Products from these two refineries as they are both in Jamnagar and the cost of Transportation is minimal.

Peace

While I can understand this line of thinking, it may not be the best way to proceed to allow Pakistan to develop economically. Take the example of China which has the US and Japan as it's biggest trading partners. These two countries also happen to be it's two greatest enemies.

PPP would sell their own mothers, and yet our people vote them in power.

Va keya baath hai.

Through the several refinery projects under construction in Pakistan our refinery capacity will be 869,000 barrels per day within a few years. Our current consumption is about 365,000 barrels per day, and within a few years (when those refineries are set up) our consumption will be somewhere between 450,000 to 500,000 barrels per day. That will give us the capability to supply our own needs and others. I don't see a reason to import petroleum based products from India when we can easily take care of it ourselves and more.

It doesn't work that way-

For instance if pakistan (or a private pakistani entity) is importing certain product or commodity it puts a tender in the world market. Depending on the competition it gets certain number of bids from several entities in several countries and awards the contract to L1 or the lowest cost bidder which meets the minimum standards. Indian or Indian entities are not allowed to bid for several of these Pakistani tenders on political grounds which restricts competition and increase cost to pakistani businesses and consumers. Even if Indians don't win the contract just their presence would increase the competition and force others to lower the prices.

If pakistan buys the commodity from some one else Indians will sell it to some one else. Everything these days is done in global commodity markets in London, Singapore, Chicago and local commodity exchanges, no one cares where it comes from. A trader in Dubai can win the tender and supply those drugs from its Indian subsidiary, joint-venture or out right purchases of components.

Presence of Chinese vendors have brought down costs of western machineries in India to ridiculously low levels. Western firms have started localizing by investing to narrow the cost difference while Indian businesses have reformed their business models and labor forces to survive. Lower costs have increased the size of projects creating economic scale which again brings down the cost –virtuous cycle of lower cost and ever increasing scale.

Although paksitan, or any other country, must protect its strategic sectors from nations with whom it has disputes. But those disputes should not come in the way of buying or selling every day commodities and machineries.

Also the new trade policy is fulfilling commitments made to the SARC and WTO by GoP.

Link


Islamabad shifts $4.1bn global trade to Delhi

By Mubarak Zeb Khan

ISLAMABAD, July 21: Pakistan has diverted its global trade worth $4.132 billion towards India following inclusion of 438 new importable items in the positive list during the past 10 months, officials told Dawn on Monday.

The expansion in the tradable list came in the backdrop of the composite dialogue launched in 2004, the forum which India successfully used for the benefits of their businessmen, while no progress has been made on the thorny issues including Kashmir, water barrages etc.

Commerce and Defence Minister Ahmad Mukhtar said Pakistan was in the process of “gradually liberalising” trade with India. “Composite dialogue process, especially on economic and commercial cooperation, has been instrumental in addressing the bilateral issues,” he added.

Official figures available with Dawn showed that Pakistan’s tradable list with India had 591 items in 1997, but it has been enhanced to 1,938 items in 2008. The government added 302 items to the list in October 2007 and 136 items in July 2008.

This expansion has widened Pakistan’s trade deficit with India to $893 million in 2006-07 from $73.736 million in 1999-2000. With the substantial expansion in the tradable list, the deficit is likely to reach $1.5 billion in 2007-08, when the final figures are finalised.

The figures for July-March 2007-08 showed Pakistan’s trade deficit with India stood at $1.095 billion.

Pakistan exported $200 million worth commodities to India in the July-March period of 2007-08, while the value of imported goods reached $1,295 million during the period under review.

Pakistan’s exports to India are stagnated between $200 million to $400 million despite the fact that New Delhi has granted MFN status to Islamabad.

A diplomatic source said, “India is satisfied with the constant expansion in the tradable items list. Whatever they want they get from Islamabad.”

Indian side never stressed for the MFN status as they were aware of the fact that the expansion in the positive list would serve their interest.

“MFN status has become just a political issue, which will lose its importance with the passage of time as Pakistan would keep on expanding the positive list to meet their demand,” he said.

Indians did not challenge the issue at WTO because they knew that they would lose the case.

Meanwhile, in a significant shift of policy, Pakistan also unilaterally announced measures in the trade policy to encourage Indian investment in manufacturing of CNG buses.

The government had already withdrawn the 15 per cent duty on the import of CNG buses in the budget 2008-09.

An official in the Board of Investment on condition of anonymity told Dawn that there was no law, which could bar Indian investment in Pakistan.

Pakistan has a liberal investment policy, but the official said generally both countries discouraged bilateral investments. It is not just for CNG buses the Pakistan government is also signalling its readiness to embrace Indian investment in other sectors.

The government has invited at least three Indian companies -- Tata, Reliance and Essar -- to a meeting of potential investors in the power sector to discuss the development of the Thar Coal Power Project. The meeting is due to be held in late July or early August.

Pakistan’s efforts at liberalisation of trade with India appear to be in line with the sentiments voiced by PPP co-chairman Asif Ali Zardari that the new government wanted to improve economic relations and would not allow the differences on K

China can afford to do that as it has the economic might to crush thier economies the same way they can crush the chinese economy.

We cannot do that, we cannot have a trade balance, and we are trading in something we rely on not just commodities.

I'm all for increased competion, but we cannot allow the Indians to gan a market hold in markets which are essential to us.

Semi humanoid in appearance, but primative and animalistic in nature, Indians are fast becoming the bane of humanity. Now all but classified as a completely seperate species, Indians took the left of the fork on the road of evolution when everybody else went right!

I think this is the best opportunity for the Indian companies to compete against the Chinese goods but the location( Pakistan) seem to favour the Chinese. But the companies are now economically stable to compete the Chinese competitor.CNG buses, stainless steel, cotton yarn, academic, scientific and professional books[ Chinese competition?] , specialised printers, laminators and rollers.

I doubt it. No other government other than the current one would be so open to trade with India. Zardari is probably being bribed to make this happen. Anyway, I doubt Indian companies would be able to compete with Chinese or Pakistani companies within Pakistan (seeing the biased nature of Pakistanis, which of course is justified).

Do you ever publish any books, academic, scientific, professional or otherwise, in your own language?

What is your own language anyway???

I don't see why Pakistan has to import academic books anyway, we have plenty of publishing companies within Pakistan just for that. My uncle even owns a fairly large publishing company based in Lahore, it mostly prints academic books.

This is a bitter pill to swallow, for hates sake I wouldn't spit my last breath at them, even if they were on fire.