ISLAMABAD - The government on Tuesday announced the long-awaited Strategic Trade Policy Framework (STPF) having Rs6 billion incentives with the aim to enhance annual exports to $35 billion by 2018, improving export competitiveness and increasing share in regional trade.

The government has announced the trade policy (2015-18) after a delay of almost nine months, as the previous trade policy had expired on June 30, 2015. The government has announced the policy at a time when Pakistan’s exports are on the decline, falling by 13 percent to $ 13.9 billion during July-February period of the ongoing financial year.

While briefing the media on the new trade policy on Tuesday, Commerce Minister Khurram Dastgir Khan said government would enhance country’s exports to $35 billion by June 30, 2018 from existing $24 billion. “The target is quite realistic and achievable,” he said and added that exports of pharmaceutical sector would enhance, as government would obtain international certification for the sector having immense potential.

He informed that Prime Minister Nawaz Sharif had already announced reduction in power tariff and zero-rated facility for exports from next fiscal year to facilitate the exporters. The government had resolved the gas shortage issue by importing RLNG, he added. The minister said Rs6 billion have been allocated for the incentives to exporters for promotion of exports.

“The new policy is based on four pillars including product diversification and sophistication, increasing market access, institution developing and trade facilitation,” the minister remarked.

Under the STPF, the government would provide incentives to selected sectors including manufacturers of fans, home appliances, rice, and cutlery and sports goods. In order to increase the sophistication level, incentives for technology up-gradation will be provided in the shape of investment support of 20% or mark-up support of 50% up to a maximum of Rs1 million per annum per company for import of new plant and machinery.

The government would also provide up to Rs 5 million for specified plant and machinery to improve product design and encourage innovation in SMEs and export sectors of leather, pharmaceutical and fisheries. Moreover, a common facility center for surgical sector would be established.

“To reduce the cost of doing business and increase the competitiveness of the value added non-textile selected sectors, drawback for local taxes and levies will be given to exporters on free and board (FOB) values of their enhanced exports if increased by 10% and beyond (over last’s year exports) at the rate of 4% on the increase,” according to STPF.

Raw and semi-processed agricultural produce being currently exported can get higher values if exported as processed food. Lack of necessary processing facilities results in the wastage of large quantities, thus restricts the income of farmers. To reduce the wastage of produce, increase income of the farmers as well as foreign exchange earnings, 50% support on the cost of imported new plant and machinery for specified under-developed regions or 100% mark-up support on the cost of imported new plant and machinery on all Pakistan basis will be provided.

The government also decided to restructure ministry of Commerce as well as its attached departments including Pakistan Horticulture Development and Export Company and Trade Development Authority of Pakistan to improve their functioning. The STPF also proposed to place Intellectual Property Organization under Ministry of Commerce to build the required synergies between trade and the IPR policies.

The Ministry of Commerce, under new trade policy , would establish Export Promotion Council for pharmaceuticals, cosmetics and rice. The government has also chosen four markets of Iran, China, Afghanistan and European Union for trade of basmati rice, horticulture, meat products and jewelry.

In order to diversify export markets, an outreach strategy for Africa, Commonwealth of Independent States (CIS) and Latin America is being adopted. As part of the market penetration/outreach strategy, these new markets will be explored through market research, opening of new trade missions, exhibitions and delegations, linkages through Export Import Bank [EXIM Bank].

The STPF further stated that Ministry of Commerce would continue working on its three-pronged strategy of trade diplomacy in the multilateral, regional and bilateral arenas for increasing market access. The government is also negotiating bilateral preferential access with Thailand, South Korea, Turkey, Iran, China, Malaysia, Indonesia, Nigeria and Jordan.

Under the policy, construction companies will be allowed to import specialized vehicles mounted machinery not older than five years subject to certification from pre-shipment in the exporting country and submission of original equipment manufacturers confirmation that such vehicles are built as specialized mounted machinery.

Import of pesticides will be allowed subject to prior pre-shipment certification issued by recognized pre-shipment and inspection agencies to be notified by the Department of Plant Protection. Meanwhile, ban on import of poultry and poultry products from South Korea, Russia, Kazakhstan, Mongolian, Turkey, Greece, Croatia, Italy, Azerbaijan, Ukraine Iraq, Bulgaria, Slovenia, Slovakia, Austria, Bosnia and Herzegovina will be lifted subject to certification from respective veteran authority of the exporting country that birds are only from such flocks where no incidence of Bird Flu has been reported for the last seven years.

According to the STPF, import of plug wrap paper will also be allowed in favour of manufacturers of cigarettes rods duly registered with the Federal Board of Revenue. Import of two or three wheeler auto vehicles will be subject to compliance with the condition of Euro-II standard.

Under the policy, fireworks will now be placed on the restricted list and its import is allowed subject to the conditions of compulsory physical examination by explosives expert. Furthermore, the Department of Explosives of Ministry of Industries will allow import only to the applicants and companies having valid licenses under the Explosives Rules, 2010. Meanwhile, import of air-pistol and slugs may also be allowed.

An Inter-Ministerial Working Group comprising Ministries of Science and Technology, Commerce and National Food Security and Research will be set up to work on quality standard and harmonization of Pakistan Standard.