ISLAMABAD: The Ministry of Commerce (MoC) finally notified the 2020-2025 Strategic Trade Policy Framework (STPF) on Tuesday following the policy’s approval by the federal cabinet on November 9.
According to sources, the file had been pending at the Prime Minister’s secretariat for more than a month due to the need for the Prime Minister’s signature as responsible minister.
Under the five-year trade policy, approved by Cabinet after a delay of more than two years, the country aims to increase its exports to $ 57 billion by 2025.
According to the Ministry of Commerce, the policy aims to strengthen the capacity of Pakistani companies to produce, distribute and sell products and services more efficiently than their competitors.
The trade division had notified three policy frameworks for 2009-2012, 2012-2015 and 2015-2018, but none was able to meet its targets, especially export targets, for various reasons. The previous frameworks that expired in 2018 did not change the export paradigm either.
The documents available with this scribe show that priority sectors were identified under the STPF after studying international demand trends as well as capacities and capacities of various traditional export and development sectors of Pakistan.
The former includes textiles and clothing, leather, surgical instruments, sporting goods, rugs, rice and cutlery, while dDevelopmental export sectors include engineered products including auto parts, pharmaceuticals, marble and minerals, processed food and beverages, footwear, gems and jewelry, meat and poultry, and chemicals.
The latest STPF will focus primarily on geographic and product diversification, reducing manufacturing costs through tariff rationalization, pursuing regional connectivity, including Look Africa and Silk Route Reconnect policies, as well as improving market access through free trade agreements (FTAs) and preferential trade agreements (ACP).
Likewise, it will also focus on facilitating logistics and monitoring under the Convention on International Road Transport (TIR) and improving regional connectivity for access through the Asian Republics. Central (CAR), Turkey and Iran, to Europe and Russia.
In a statement, the Commerce Ministry said the new STPF is dynamic in nature and will be subject to course correction based on constant monitoring and evaluation.
There will be an institutionalized mechanism for strong monitoring and implementation of the STPF to minimize gaps in policy implementation, which have traditionally remained a weak link due to multi-organizational roles in the ecosystem of export, according to the press release.
The statement added that a cross-functional National Export Development Board (NEDB) has already been formed under the chairmanship of the Prime Minister and comprising senior public sector officials from relevant organizations and representatives of the private sector to oversee the implementation of the policy and have this board meet regularly to fulfill its purpose.
The approved 2020-2025 STPF, which is the fourth policy framework, predicts that the country’s exports will amount to $ 31.203 billion in the current fiscal year (FY22), $ 37.883 billion by AF23, 45.816 billion dollars by FY24 and 57.028 billion by FY25.
In addition, the export projections for STPF 2020-2025 are based on a solid econometric partial equilibrium model. The explanatory variables used in the model include world GDP, Pakistan’s GDP and the real effective exchange rate.
To project future exports, tThree scenarios have been constructed, the difference of which is Pakistan’s domestic prices which reflect the competitiveness and cost of doing business in the country. It is assumed that effective government interventions in terms of STPF, national tariff policy, trade facilitation, technology upgrading, easy finance and other ongoing initiatives to facilitate doing business (EODB) will have an impact. on competitiveness and thus improve exports.
The first scenario assumes that government interventions under the STPF and other initiatives would be minimal while the prices and cost of doing business would follow a status quo trend. Therefore, for FY 21, prices were assessed at a growth of 10.8% (actual value) followed by 8 pc in FY 22, after which it will follow a CAGR (6.5%) from year 23 to year 25.
The second scenario assumes that government interventions would reduce domestic price growth and therefore the price increase would be 8pc in FY21, 6.5pc in FY22, and followed by 6pc between FY23 and FY25.
The third, optimistic scenario assumes that domestic price growth would be 7.2% in FY21, then remain at 5.5% from FY22 to FY25.