The plight of exporters in K-P

The last five years have been drastic in terms of trade activities within Pakistan and K-P

The last five years have been drastic in terms of trade activities within Pakistan and the situation in Khyber-Pakhtunkhwa (K-P) is no different. The exports have declined radically and the businesses are facing challenges from many fronts.

Exporters are unable to get rebate on time, though by law refund should be provided within 45 days. The Export Development Fund (EDF) is not being spent on facilitation of exporters. In the last few years, competition from China and India has increased significantly as the quality and rates of their products are better, and this has affected the local businesses in Pakistan. Buyers demand lower rates but because businesses are already running on a marginal level, it becomes difficult to do that. Indirect taxation is an additional burden on traders which has made the local products uncompetitive at the global level. High import duties on raw materials and machinery further act as a hurdle in flourishing the manufacturing sector.

Intermediate service providers like clearing agents aren’t transparent due to which traders have faced overcharging, which has led to an increased cost of production. Exporters also face transportation problems as bounded carrier rates are too high to transport the consignment from Peshawar to Karachi. On the other hand, not only are the government policies inefficient the government doesn’t even consult the business community when making them. The government departments fail to facilitate the businesses in resolving their issues or supporting them in trade promotion. The rupee losing its value in recent times has further increased the import prices of raw materials and machinery. Business community is also concerned about the energy crisis as the cost of available energy has increased significantly. Though the law and order situation has improved, a lot more needs to be done to boost investors’ confidence.

Moreover, the dry port in Peshawar has outdated facilities and no certificate is being provided to traders for inspection of their consignments. Hence, in case of damages traders have to bear the loss. The cargo has to undergo double inspection as well, one at the dry port and then at the Karachi port, which often affects the shipment packing. Owing to the unavailability of immediate flights from Peshawar, exporting perishable items becomes difficult.

In order to improve the situation, EDF should be available to exporters within the time period defined by law and the refund must be accessible directly to avoid any leakages. Research and development should be increased through EDF, which will enhance the quality of products. Industry can solve the unemployment crisis if they are provided the necessary facilities – the ones that are compatible with that of competitors, so that local products can compete globally.

Facilities at the dry port should be improved and the staff trained to handle the cargo with care to avoid any damages. Instead of a double inspection, a single examination should be enforced. Cold storage facility should be provided to promote the exports of perishable items from Peshawar. Dry ports in other major cities of K-P can be more beneficial to promote trade activities in the region. The cargo train should be resumed to reduce the transport cost, and it will also help in shipping the goods on time. The energy crisis should be dealt with on priority basis.

The government must consult the stakeholders in the process of making any relevant policy. The public-private consultation through establishing committees, which meet for resolving the matters, can be significant in this regard. The documentation process for the export should be simplified as well. The rates on import of raw materials and machinery should be lowered. The government must reduce the burden of indirect taxation. There is a severe lack of labour training, resulting in lower productivity levels in labour intensive industries. Hence, institutes like National Vocational & Technical Training Commission can be useful in developing the necessary basic skills. Major industries can be identified and then their workers can be trained accordingly.

Published in The Express Tribune, November 6^th, 2017.

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