Experts suggest improving exporters’ competitiveness

ISLAMABAD: The China-Pakistan Economic Corridor (CPEC) might become a threat if issues in competitiveness of exports are not addressed properly, experts and academics said at a seminar on Friday.

The experts urged the government to shift its policy to make local exporters competitive in the global market. The seminar was organised by the Centre for Policy Studies, COMSATS Institute of Information Technology (CIIT). 

Khalid Riaz, Dean of Faculty of Management Sciences CIIT said the country has been losing its share of textile exports relative to other countries mainly because of loss in competitiveness.

Speaking of cotton leaf curl virus, he said, “If had we addressed this issue, the total gain in exports would have been more than $50 billion which is much more than the CPEC related foreign inflows.”

He said that many international companies were providing cotton seeds to other countries that did not produce the virus.

“Unfortunately, we have not provided intellectual property rights to these companies and failed to benefit,” he said, and added that in Pakistan firms do not want to adopt the formal sector because of tax avoidance.

Dr Vaqar Ahmed of the Sustainable Development Policy Institute (SDPI), said in his presentation that government needed to examine the macro and micro level issues that affect competitiveness.

“These issues include high cost of doing business, including the high withholding and indirect taxes and a distorted import tariff structure; weak implementation of export promotion measures announced under trade policy; lack of coordinated support from formal institutions at federal and provincial level; relatively high cost of energy vis-a-vis regional economies; and an exchange rate regime that hurts exporters.”

It is also important to explore how Pakistan can elevate the current levels of export competitiveness by making use of its Generalised Scheme of Preferences (GSP) plus status and bilateral and regional trade agreements, for example with China, Malaysia, and Sri Lanka, he Dr Ahmed said.

Rehan Bharera, chairman, Faisalabad Garment City, said despite government’s assertion that the average tariff rates fell slightly from 14.4 percent in 2013 to 13.4 percent in 2016, our competitor countries provided more incentive to their exporters and hence Pakistani exporters were not competitive relative to other countries.

“We need to reform FBR (Federal Board of Revenue) since exporters face serious difficulties in getting their duty drawback that affects the performance of exports,” he said. He asked why Chinese investors would come to Pakistan when they were getting more incentives in Kashgar China.

Dr Talat Anwar, advisor CPS, CIIT, said in his presentation that despite government claims of good performance and certification by IFIs and international credit agencies, the country’s poor export performance has been a cause of concern.

Country’s falling competitiveness is driven by a number of factors, including poor trade facilitation, infrastructure gaps, inefficient logistics and poor investment climate.

Dr Anwar said export-oriented industrial policy was needed with a focus on broader institutional support to exporters along with a duty-free regime for inputs into exports and a strategic collaboration between public and private sectors.

“We need capacity building through education and trainings along with agreements to ensure transfer of foreign technology. We need to lend financial and technological help to SMEs with a focus on operational management skills, financial assistance, innovation, and technological up-gradation,” he added. In the end, Ambassador Fauzia Nasreen gave a vote of thanks and distributed the souvenirs to the speakers.