20000321

WB Group invites Pak

leaders to elicit curbs

facing exporters

RECORDER REPORT

KARACHI: The World Bank Group has invited business leaders to a meeting to elicit their views on issues and constraints that face Pakistani exporters and specific measures that would help improve country's export performance.

The meeting will be chaired by John Wall, Bank's Country Director for Pakistan and Afghanistan, in Islamabad on March 28, 2000.

A draft discussion note for the meeting has been circulated for the study of participants. The note is based on a survey of business leaders in Pakistan and experience of successful exporting countries.

The note highlights that Pakistan's export performance has been critically weak since beginning of the decade averaging only about 3 percent on an annual basis and has remained almost stagnant for the last several years. Exports have suffered due to its narrow base concentrated on cotton and cotton-based products, inward looking development policies and the deadweight costs of exporter related procedures. Pakistan needs a set of policy revisions for encouraging exports for at present there is an anti-export bias resulting in a higher rate of return available in the domestic market than for exports.

Specific recommended measures that need to be implemented for creating a favourable export environment and a level playing field are as follows :

Macro Policy : The exchange rate is the single most powerful tool to influence relative rates of return. Hence, a competitive exchange rate is essential for exports.

Tariff Structure : Tariffs encourage firms to produce for the domestic markets diverting resources away from exports. Further across the board tariff reductions and simplifications (removal of special exemptions and concessions) would help redress this imbalance and the simplifications may well yield some additional revenues.

Other measures include : Access to imported and domestic inputs at world prices, exporter finance, trade facilitation/logistics support, and support organizations and services.

The finance problems are principally related to pre-shipment finance for small, new, and emerging exporters. Addressing them requires (i) Export Finance Scheme, which presently benefits a sub-set of exporters and not exports as a whole, should be available only for pre-shipment financing, and (ii) Export Credit Guarantee Scheme needs to be revamped as public-private partnership, led by the private sector. Extending the schemes (finance and duty & tax free mechanisms) to indirect exporters should be initiated once it is working effectively for direct exporters.

Institutional developnment of agencies directly involved in export transactions is a key to success, without which measure will not reap the desired outcomes. It is imperative that these agencies are revitalised with staff that is both trained and responsive to the needs of exporters.