ISLAMABAD - The PTI-led coalition government is working on the Strategic Trade Policy Framework (STPF) 2018-23 with an aim to double the country’s exports to $46 billion in its five-year constitutional tenure.

“The government has finalized the draft of the Policy, which is now being shared with the stakeholders for their inputs,” said spokesperson of the ministry of commerce. He further said that consultation may take some time as government would incorporate the recommendations of the stakeholders in policy. The previous PML-N government had not announced the new five years trade policy and left the matter for the next government. The previous STPF 2016-18 expired on June 30 this year without achieving its targets.

The government is aiming to double the exports in next five years to control the widening current account deficit of the country. Secretary Commerce Younus Dagha recently informed a parliamentary committee that export target of $46 billion has been proposed in the STFP 2018-23. However, he said that imports target cannot be projected, but could go to around $80 billion if the current figure of $60 billion is kept in mind.

The government in the proposed STPF 2018-23 has recommended reducing the tariff on raw materials for export sector gradually. The government has also proposed competitive valuation of currency, electricity price at Rs 9 per unit and new electricity connections to industrial units within 30 days and provision of LNG to industrial sector in 30 days. It has also proposed clearance of duty drawbacks and sales tax refunds within 100 days that would generate $3 billion liquidity for export sector.

The previous STPF 2015-18 failed to achieve the results. Pakistan's exports were recorded at $23.2 billion during previous fiscal year. The government under STPF had set $35 billion exports target by June 30, 2018. The exports target announced in the trade policy could not materialize. The STPF had not helped to increase the exports during three years, rather exports continuously declined. The PML-N government had not addressed the concerns of the business community including currency devaluation, releasing tax refunds and reducing cost of production in last three to four years. However, the government had accepted one of the proposals to devalue the currency after four and half years, which recently helped in increasing the exports. Major causes of the policy failure are lack of diversification of exports, little innovation and value addition in export goods, insignificant research to know latest consumer needs and failure to find new markets.

The new PTI led government has decided to reduce the cost of doing business to enhance the overall exports of the country. The government had not increased the gas prices for exports oriented sectors as it did for all other sectors including domestic. The gas price would remain at 600 MMBTU for the exports oriented sectors. Similarly, the government would provide imported LNG to private sector at subsidized rates. The government would provide subsidy of Rs44 billion on not increasing gas prices and giving LNG at reduce rates to exports oriented sectors. Meanwhile, the PTI led coalition government is mulling to reduce the electricity tariff for the exports oriented sectors to reduce the cost of doing business in the country in order to enhance the exports.

The government had decided to enhance the exports of the country to $27 billion in ongoing fiscal year 2018-19 from existing $23.4 billion of the previous fiscal year. Finance Minister had estimated current account deficit in the range of $18 to $21 billion during current financial year from $18 billion of the previous year. The massive increase in current account deficit has eroded foreign exchange reserves of the country.  Pakistan’s exports have gone up by 5.05 percent to $3.66 billion during first couple of months (July and August) of the current fiscal year. On the other side, the country’s imports have grown by only one percent to $9.8 billion during July-August period of the year 2018-19. Therefore, the trade deficit was recorded at $6.17 billion in two months, according to the latest data of Pakistan Bureau of Statistics (PBS).