A long awaited inter-ministerial meeting was held on September 27 in the committee room of the Commerce Ministry sans Finance Minister, Dr Abdul Hafeez Shaikh, who, according to sources, excused himself on the grounds of ill health. However, Commerce Ministry's top brass accused the Finance Minister of deliberately remaining away from the meeting for the second time to avoid a confrontation with senior Commerce Minister Makhdoom Amin Fahim.
Sources said the Finance Minister sent his close friend, Dr Nadeemul Haq, the Deputy Chairman of the Planning Commission, to attend the meeting who spoke against the schemes proposed in the STPF 2012-13 and objected to the amount of subsidy, arguing that the proposals would tantamount to waste of public money.
"Nadeemul Haq's arguments were based on the directions of the Finance Minister," said an official on condition of anonymity. Dr Nadeemul Haq questioned the logic of providing funds (subsidies) to sectors which had done nothing to become self-sufficient.
Secretary Finance Abdul Wajid Rana, who officially represented the Finance Ministry, did not argue against any of the proposals and remained silent, the sources added.
"Both the Deputy Chairman of the Planning Commission and the Secretary Finance did not waver from their earlier position, taken during a meeting presided over by Prime Minister Raja Pervez Ashraf, and refused to entertain the Commerce Ministry's proposals," sources said.
Business Recorder ran a story on September 8 this year that the Planning Commission and Finance Ministry had reportedly turned down Commerce Ministry's 'unconvincing' three-year STPF which angered the Commerce Ministry's top brass. The sources said that the Commerce Ministry had slashed the amount of subsidy from Rs60 billion to Rs30 billion, but the Finance Ministry and Planning Commission still believe that it would be a waste of national funds.
Commerce Ministry committed to achieve an export target of $95 billion in three years, but analysts argue that it is an unachievable target. Insiders believe that the Commerce Ministry lacked competent officials required to frame a realistic trade policy in accordance with the aspirations of the business community and industry and takes note of the resource constraints of the Finance Ministry.
"If the MoC had a strategy, they would have made Trade Policy long time ago," commented a businessman. The Commerce Ministry's conventional presentation says that increase in agro products shall raise income in the rural areas thus denting rural poverty and checking migration and load on urban centers. Pakistan has a comparative advantage in agriculture. To maximise this potential, the Ministry proposes the following: Export promotion campaigns for agro-processed products with the help of university graduates from Agricultural Universities of Faisalabad, Rawalpindi and Tando Jam.
The policy argues that certain under-developed regions in Pakistan have significant potential for exports, but are impeded due to infrastructure issues and argues that for the first time, these regions are being focused on to tap their potential through the following schemes: Support for setting up meat processing plants in bordering provinces, and tribal areas to promote its export to Iran, Afghanistan and Central Asian Republics (CARs); support for drying and processing plants for fruits and vegetables in Gilgit-Baltistan and Balochistan; promotion of services sector exports - sector which contributes 54 percent to the economy but export of services from Pakistan is very low, Pakistan's services exports stood at $5 billion in 2011-12 whereas the global trade in services is $18.2 trillion.
According to the Commerce Ministry, energy shortage has resulted in closures and under utilisation of capacity and has acted as a disincentive for new investment in export sector. In consultation and support with Ministry of Water and Power and Ministry of Petroleum, the policy proposes: to support the installation of Captive Power Plants running on coal, conversion of gas fired captive power plants to coal and installation of coal gasifiers for SMEs to be allowed in trade policy. Commerce Ministry also provided ad hoc relief to offset the impact of higher cost of utilities for Pakistani exporters.
The policy also proposed that units manufacturing items meant for 100 percent exports may be exempted from electricity and gas load shedding. Product development to meet the international demand remains a cornerstone of any country's export promotion strategy. The Commerce Ministry proposes to introduce the market development and diversification initiatives. To improve quality of leather garments, the Commerce Ministry has proposed to allow 2 per cent of the export proceeds to manufacture cum exporter for duty free import of accessories for value addition of leather garments and made ups by the same exporter.