Introduction

Presented to:• Prof. Khalil Ahmad Rao

Presented by:• Nouman Rafique• Muhammad Yousuf• Zubair Ali• Saqib Shahid• Moazzam Naveed

Impact of trade policy of Pakistan on imports and exports of our country

International trade and foreign exchange (ITFE)

What is trade policy

• Trade policy is a collection of rules and regulations which pertain to trade. Every nation has some form of trade policy in place, with public officials formulating the policy which they think would be most appropriate for their country.

• The purpose of trade policy is to help a nation's international trade run more smoothly, by setting clear standards and goals which can be understood by potential trading partners. Things like import and export, taxes, tariffs, inspection regulations, and quotas can all be part of a nation's trade policy.

Who make it

• The latest trade policy announced by the Government of Pakistan was the Strategic Trade Policy Framework for year 2009-12.

• Ministry of commerce make the trade policy of Pakistan.

• Trade policy presented by the Makhdoom Ameen Faheem.

Purpose of trade policy

• Set out the policy guidelines and identifying the principle action areas.

• Need for developing and effectively implementing a national export competitiveness program.

• To provide the reference to different trade measures by the Ministry of Commerce and other ministries from time to time.

• To achieve sustainable high economic growth through exports with the help of policy and support interventions by the government, industry, civil society and donors.

• Reducing the cost of business• Protection and promotion of SME sector

Purpose of trade policy

• Enabling Pakistani exporting countries overcome the negative effects of global demand contraction.

• Creating opportunities for employment• Environmental protection• Investing in human resources• Poverty alleviation • For promoting private sector as engine of growth• For focus on small scale sector particularly in

agriculture

Zubair Ali

Features of trade policy 2009-2010

• Full insurance cover for purchasers/importers coming to Pakistan.

• Cement, light engineering, leather garments, furniture, soda ash, hydrogen peroxide, sanitary wares including tiles, finished marble/granite/ onyx products exporters to be compensated for inland freight cost.

• 25% support to surgical instruments, sports goods and cutlery sectors for brand development.

• 25% of cost of labs in tanneries to be borne by government and 50% grants for purchase of flaying machines at slaughter houses.

Features of trade policy 2009-2010

• 25% freight subsidy for live seafood products exported by air.

• Processed food exports to receive 6pc of export cost as R&D.

• Government to bear 50pc cost of certification of halal products exports.

• 50% cost of quality certification for domestic appliances to be borne by government.

Features of trade policy 2009-2010

• Tents and canvas, sports goods, footwear, surgical / medical / veterinary / beauty care instruments, cutlery, onyx products, electric fans, furniture, auto parts, handicrafts, jewellery and pharmaceutical sector zero rated for GST.

• Machinery trade in old, obsolete machinery to obtain new, refurbished and upgraded machinery allowed.

• US$10,000 per invoice as advance payment for urgent imports allowed.

• Engineering units exporting 50pc production to enjoy status of export oriented units.

• Import of old and used computers to be allowed.• Import of used cathode ray tubes disallowed.• Vaccine imports restricted to import from WHO approved plants.

Features of trade policy 2010-2011

• Increasing a number of items mainly raw materials from India in consultation with stakeholders, improvement in Research and Development, improvement in transit trade and trade facilitation.

• To achieve the $23.5 billion export target by 2012.

• The total expenditures on three-year STPF are estimated at Rs 35.22 billion.

Features of trade policy 2010-2011

• The government shall ask United States and European Union to create a legal window for duty concession on Pakistani products because Pakistan has suffered a lot due to security situation owing to frontline state against terrorism.

• The Finance Division committed Rs 16 billion for funding of trade promotion activities for the current fiscal year 2010-11.

• The proposal to allow up to 5 years old and used cars imported in the country has been dropped.

Moazzam Naveed

Important imports of Pakistan• Machinery• Petroleum• Chemicals• Vehicles and spare parts• Edible Oil• Wheat• Tea• Fertilizers• Plastic material• Paper Board• Iron ore and steel• Pharmaceutical products

Important exports of Pakistan

• Raw cotton, Textile products and Cotton yarn• Rice• Leather and leather products• Carpets and rugs, Tents• Synthetic textiles• Surgical instruments• Sports goods• Readymade garments• Vegetable, fruit and fish• Engineering goods• Chemicals and Pharmaceutical products

Targets for 2009-2012

Targets set by the Government (Ministry of Commerce)

Indicator Target 2009-2012

• Exports Target $US Billion 17.8 - 23.5• Exports growth Projection 6% in 2009-10 $US Billion 18.8

10% in 2010-11 $US Billion 20.713% in 2011-12 $US Billion 23.5

• Competitiveness Ranking 101 < 75• Engineering Sector Export Share 1.5% - 5%• Expansion of Regional Trade 17% - 25%

Target and actual performance

Targets:• 2009-10: US$ Billion 18.8• 2010-11: US$ Billion 21.5• 2011-12: US$ Billion 23.5

Actual Exports:• 2009-10: US$ Billion 19.5 • 2010-11: US$ Billion 13.2

(Till February 2011). It is estimated that government is likely to achieve exports of $US Billion 22

Expenditures on strategic trade policy framework

Objectives:• Ministry of Commerce

planned to spend Rs. 35 billion (2009-2012) for implementation of STPF.

• The amount shall be spent on research and development.

Progress:• The current status of the

funding of STPF initiatives is not satisfactory, after completion of all formalities. Ministry of Finance has released only 1 billion and pended the release of Rs 2.5 billion due to financial constraints. This has put STPF implementation in jeopardy.

Saqib Shahid

Annual increase/decrease in imports

• During the first quarter of 2011, imports from the Asian continent, our major supplier, amounted to Rs 19,501 million with a share of 56.2% of total imports.

• Compared to the first quarter of 2010 changes noted in the import bill were: India (+50.2%), China (+19.5%) and France (+17.7%)

Annual increase/decrease in exports

• In a presentation made at the meeting it was informed that in the first 10 months of the ongoing fiscal year 2009-10, exports have seen a growth of 8.03%, which is above the target set at 6% for the first year of the science and technology promotion fund (STPF). If this trend continues and energy situation improves, overall STPF target of $23.5 billion can be achieved by June 30, 2012.

Total value of trade and trade balance

• Total international trade for the first quarter of 2011 was valued at Rs 52,503 million, i.e. 11.1% lower than the previous quarter but 22.2% higher than the corresponding quarter of 2010.

• During the first quarter of 2011, total exports stood at Rs 17,778 million against imports of Rs 34,725 million.

• This results in a trade deficit of Rs 16,947 million, compared to deficits of Rs 19,554 million (-13.3%) for the previous quarter and Rs 14,646 million (+15.7%) for the corresponding quarter of 2010.

Total value of trade and trade balance

Exports to main countries

Export of Fish and Sea Food

Actual exports:• 2009-10: US$ Million 289 • 2010-11: US$ Million 300 (Till February 2011)

Muhammad Yousuf

Total exports of main commodities by section, 2009- 2011

Particular 2009 20102010 2011

1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter

Food and live animals 18,593 20,856 3,604 5,028 5,724 6,500 4,973

Beverages and tobacco

474 496 76 182 101 137 171

Crude materials, inedible, except fuels

872 1077 232 297 280 268 296

Mineral fuels, lubricants and related materials

14 213 8 71 129 5 5

Animals and vegetable oils, fats & waxes

97 63 17 17 10 19 18

Chemicals & related products

1957 2204 429 507 565 703 458

Manufactured goods classified chiefly by material

5106 5834 1201 1584 1555 1494 1653

Machinery and transport equipment

1285 1678 433 376 357 512 475

Miscellaneous manufactured articles

27709 29474 6454 7560 7481 7979 7358

Commodities not elsewhere classified

56 102 12 23 29 38 46

Total 56162 61997 12466 15645 16231 17655 15454

Value in million Rupees

Imports from main countries

Imports by country of origin

• During the first quarter of 2011, imports from the Asian continent, our major supplier, amounted to Rs 19,501 million with a share of 56.2% of total imports.

• India (27.8%), China (11.6%), France (8.8%), South Africa (7.9%), Spain (3.2%) and Japan (2.8%). The high share of India in our import bill is explained by the fact that India is our main supplier of petroleum products since the last quarter of 2006.

• Compared to the first quarter of 2010 changes noted in the import bill were: India (+50.2%), China (+19.5%) and France (+17.7%)

Total imports of main commodities by section, 2009 - 2011

Commodities 2009 20102010 2011

1st quarter 2nd quarter 3rd quarter 4th quarter 1st quarter

Food and live animals 22051 24606 5803 5572 6424 6807 5923

Beverages and tobacco

2103 2482 568 599 553 762 575

Crude materials, inedible, except fuels

3174 3288 857 774 734 923 1177

Mineral fuels, lubricants and related materials

18557 25929 5738 6610 6015 7566 9386

Animals and vegetable oils, fats

1321 1176 298 271 262 345 534

Chemicals & related products

10711 12465 2310 2877 3174 4104 2714

Manufactured goods classified chiefly by material

21452 25091 4937 6519 6623 7012 6155

Machinery and transport equipment

27689 27451 5758 7556 6378 7759 5693

Miscellaneous manufactured articles

11028 12188 2308 3041 2951 3888 2435

Commodities and transactions

358 718 226 199 150 143 133

Value in million Rupees

Restriction on imports of Used Cars

• In trade policy 2010-2011, the proposal to allow up to 5 years old and used cars imported in the country was dropped.

• Now the policy has been reversed and the federal cabinet allowed the import of used cars whose age does not exceed five years in an attempt to check the rising prices of locally-manufactured vehicles.

Conclusion

• There was a mixed reaction by the business community on the trade policy 2009-12. Some rejected it out rightly because according to them continued severe energy shortage, high cost of production, high cost of doing business, weak infrastructure, inconsistent policies, lack of FDI, limited scope of joint venture, low chances of technology transfer deteriorating law and order situation, and above all denial of easy and smooth market access could play pivotal role to achieve the targeted export competitiveness till 2012.

Thank You