STRATEGIC TRADE POLICY FRAMEWORK

2009 - 12
TRADE POLICY 2009

Ministry of Commerce July 27, 2009

Scheme of Presentation
2

Policy Statement
Trade Review
Challenges & Opportunities
Synopsis of Strategic Trade Policy Framework
P
Proposed
d Trade
T d PPolicy
li Initiatives
I ii i
Over

arching
Sector
S
SSpecific
ifi
Trade Diplomacy

In line with Manifesto of Pakistan Peoples Party, the

Trade Policy Aims at
3

Growth with Equity

Greater Opportunities for Gainful Employment
Sound Marco-economic Framework for Trade
Environment
Concern with Poverty Eradication and Environmental
Protection
Investing in Human Resource
Targeting Poverty Alleviation
Promoting Private Sector as Engine of Growth
Focus on Small Scale Sector Particularly Agriculture

Policy
y Statement
4

The
e Ministry
M s y of
o Commerces
Co e ce s eendeavor
deavo iss too provide
p ov de
medium term policy framework with focus on improving
supply side to achieve sustainable export growth.
The policy thrust would be to enhance quality, improve
business processes through structural transformation and
transferring resources to achieve production and export
of a more sophisticated and diversified range of products

T d Review
Trade
R i
I
Imports
and
d EExports 2008-09
2008 09

Exports
p
6

Exports 0707-08

US$ 19.1
19 1 Billion

Export Target 08
08--09

US$ 22.1 Billion

Actual Exports 0808-09 US$ 17.8 Billion*

WTO estimated a 9% shrinkage in

global trade
Pakistan is less hurt than competitorsExport growth in China declined by
24%, India by 31% and Bangladesh by
14%

Export
Growth

- 6.7%

* Provisional

Exports
p
Review
7

Exports
p
were 6.7% less than 2007-08 due to
Exogenous factors - demand shrinkage, financial crisis and
ensuing protectionist policies.
Domestic Factors - Power shortages/outages
shortages/outages, high financial
cost, bad law & order situation and competitiveness erosion

Traditional sectors like textile (- 9.5%), Leather (- 29%)

declined,, whereas Rice ((8%),
%), Engineering
g
gg
goods (26%),
( %),
Jewelry (35%) recorded growth in exports

Exports
p
Historical
8

Y
Year

Value
(FOB $ Billion)

Change
(%age)

2000-01

9.2

2001 02
2001-02

91
9.1

-0.7
07

2002-03

11.2

22.2

2003-04

12.3

10.3

2004-05

14.4

16.9

2005-06

16.5

14.3

2006 07
2006-07

17 0
17.0

32
3.2

2007-08

19.2

13.2

2008-09 ((P))

17.8

- 6.7

Export of Major Commodity Groups

(US$ Billion)

Product Group

2007-08 2008-09

Change
%

Food

2.83

3.02

6.7

Textile

10.57

9.56

- 9.5

Leather and Products

1.11

0.84

- 24.3

Chem. & Pharma.

0.62

0.61

- 2.1

Petroleum & Coal

1.26

0.81

- 35.5

Engineering

0 21
0.21

0 27
0.27

26 1
26.1

1.72

1.86

8.1

0.73

0.81

11.0

19.05

17.78

- 6.7

Other Manufactures *(Slide

Others
Total

96)

Export
p Profile 2008-09
10

Other Mfg.
G
Group
20%

Others
4%

Food
17%

Petroleum
5%
Textile
54%

Export
p Destinations
11

20
008-09

0 9%
0.9%
6.2%
22.3%
26 3%
26.3%
44.3%

2007-08

0 9%
0.9%
5.9%
23.1%
28 5%
28.5%
41.5%

Oceania

Africa

Americas

Europe

Asia

Import
p Review
12

Imports were US$ 34.8 billion in 2008

2008-09
09 as
compared to US$ 40 billion in 2007-08 , a
decrease of 13 %
Lower imports are attributed mainly to demand
shrinkage
g of items in Transport
p Group
p (-41%),
(
) and
Textile Group (-29%) whereas imports of Petroleum
decreased by 17% due to drop in international
prices of crude oil; imports of fertilizer were lower
both in terms of value (39%) and quantity (45%)

Imports
p
Historical
13

Year
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09(P)
( )

Value
(C&F US$ Billion)
10.7
10.3
12.2
15.6
20.6
28.6
30.5
40.0
34.8

Change (%age)

- 3.6
18.2
27.6
32.1
38.8
6.9
30.9
- 13.0

Import of Major Commodity Groups

(US$ Billion)
14

ITEM

2007-08

2008-09

%
Ch
Change

% Share

Food Group

4.21

4.14

-1.8

11.9

Machinery Group

7 37
7.37

6 59
6.59

-10 5
-10.5

18 9
18.9

Transport Group

2.27

1.34

-41.1

3.8

p
Petroleum Group

11.46

9.51

-17.0

27.3

Textiles Group

2.33

1.66

-29.0

4.8

Chemical Group

5.80

5.23

-9.8

15.0

Metal group

2.71

2.75

1.8

7.9

Miscellaneous Group.

0.74

0.67

-8.7

1.9

Other *

3.07

2.92

-4.6

8.4

39.97

34.82

-12.9

100

Total

Balance of Trade (US$

Billion))
(
15

Export

Import

Balance
40

28.6

30.5

16.5

17

2005-06

-12.1

2006-07

-13.5

19.1

2007-08

-20.9

34 8
34.8
17.8

2008-09

-17

Challenges
g

1/3
/

16

External Factors:
Economic downturn in our major markets:

Consumer confidence erosion in USA and its ripple effects in EU;

Economic slowdown

Buyers perception of Pakistan as a supplier of low

quality products and inability to deliver in bulk and in
time.
Negative travel advisories.

Challenges
g

2/3
/

17

Domestic Factors
High cost of finance
Energy Crisis (Electricity and Gas)
Law and Order
Lack of International Competitiveness
Investment declined to 19.7% of GDP as against
22.0%
% of last year
y
Large Scale Manufacturing growth declined by 7.7%
(Jul-Mar) as against increase of 4.8% in 2007-08

Challenges
g

3/3
/

18

Sliding Down the Competitiveness Index

(Ranking among 131 countries)
Indicator

Ranking
g 2007-08

Ranking
g 2008-09

Overall Competitiveness

92

101

Infrastructure

72

85

113

121

Financial Market Sophistication

65

71

Technological Readiness

89

100

Innovation & Sophistication

Factors

78

85

Labour Market Efficiency

S
Source:
Gl b l Competitiveness
Global
C
titi
Report
R
t 2008
2008-09,
09 World
W ld Economic
E
i Forum
F
18

Opportunities
pp
19

Favourable market access owing to bilateral

t d agreements
trade
t
Potential of doubling the value- addition of
cotton off which Pakistan is the 4th largest
producer
Strong resource base in many sectors (food,
building stones, gems & jewelry, leather, rice,
cement, light engineering)
Growing
g Services Sectors

Inference
20

Pakistan is fortunate to be less hurt by global

recession and this has placed Pakistan in a position
to take rebound opportunity
pp
y if : Supportive

& Targeted policies are adopted to help

export sector increase competitiveness & improve
product sophistication
Supply side constraints like power shortages and high
cost of finance are removed
Law & Order situation is improved

21

Strategic Trade Policy Framework

2009- 12

Main Features
22

Three years strategic framework

Review mechanism
Well defined business processes
Well-defined
Shift from Comparative Advantage to Competitive
Advantage

Trade Policy
y Objectives
j

1/2
/

23

People centric : Poverty alleviation and employment

generation through export led growth

Enhance the competitiveness of Pakistans

Pakistan s exports

1
1.

Increase the sophistication level of Pakistans exports by

increasing the technology component and value addition.
Trade Facilitation

a)
b)
i.
ii.

c)
d))

Process Improvement
Aligning Tax Reform with Trade Facilitation with the aim to reduce
g business
the cost of doing

Address supply side constraints power shortage & high

financial cost
Reduce anti-export
p bias

Trade Policy
y Objectives
j

2/2
/

24

2.
3
3.
4.
5
5.
6.

Reducing Cost of Doing Business

Protection and promotion of SMEs
Slide 94
Focus on products with higher sophistication potential
Promote agricultural development through exports
Enable Pakistani exporting companies overcome the
negative effects of global demand contraction

Textiles
Support
pp to initiatives
in Textile Policy

Services
Develop and implement a
comprehensive
h i exportt
plan

Focus Sectors of STPF 2009 - 12

25

Focus Sectors

Pharmaceuticals
Leather
Gems & Jewelry
Engineering Goods
Surgical. Medical,
Dental Beauty care
Dental,
instruments
Agriculture & food
Halal Products

Policy Thrusts

Increasing overall
competitiveness
titi
Moving up the
sophistication
p
ladder
SMEs Cluster development
Creating supply and
d
demand
d side
id linkages
li k
Improving Domestic
Commerce in these sectors

Strategic Trade Policy Framework 2009-12

26

Linking Trade Policy 2009-12 with other

development strategies by synergising the
Functional
Functional Linkages
Linkages between
trade

and industry;
trade and investment;
trade and education;
trade and science & technology;
technology
trade and social protection policy

Overarching Goals of Strategic Trade Policy

Framework 2009-12
27

Ensuring sustainable energy supply

Reducing cost of capital
Reforming domestic commerce
Promotion of Trade in Services
C
Consolidating
lid i gender
d sensitive
i i trade
d policies
li i
Greening of Exports
Connecting Supply and demand better

Trade Policy
y Formulation Process
28

Invitation of Proposals from all Chambers & Association

registered under TO Ordinance, Ministries, Provincial
Governments, Departments, Academia
Meeting
g of the Advisoryy Council
Short listing of Proposals received in response to invitation
or in the Council meeting
Firming up the proposals in consultations with major
Chambers/ Associations and relevant ministries
Drafting of the Policy
P
Presentation
i to the
h Prime
P i Minister
Mi i
Submission to the Cabinet
Issuance of SROs and notifications subject
j to approval
pp

Breakup
p of Proposals
p
Considered
29

O
Organization
i ti
Federation of Pakistan Chambers of Commerce
& Industry
I d
Chambers of Commerce & Industries
Trade Associations
Pakistans Missions Abroad
Provincial Governments
Ministries/ Federal Government Departments
Miscellaneous ((Industrial Units// Individuals))
TOTAL

No. of
Proposals
57
219
202
147
140
397
80
1242

Targets
Indicator

30

Merchandise Exports (US$ Billion)

Competitiveness Ranking
Engineering Sector Export-Share
Value addition of Cotton
Expansion of Regional Trade
FTAs
Operational ROZs

Target 2012
From 17.8
17 8 to 23.5
23 5
From 101 75
From 1.5% 5%
From US$ 1000/bale
to 1500/ bale
From 17% 25%
EU, USA
7

31

Strategic Trade Policy Framework

2009-12
P
Proposed
d Initiatives
I ii i

Proposed
oposed Trade
ade Policy
o cy
Initiatives
RRequired
i d to be
b Funded
F d d
Estimated Cost: Rs. 35.22 Billion
Period
: 2009-12

33

Addressing Supply
Supply-Side
Side
Constraints
N IInitiatives
New
ii i

Financing
g at Reasonable Markup
p
34

Businesses need short to medium term certainty in

the interest rate for investment. Currently, there is no
policyy instrument provided
p
p
byy the government
g
or
private sector for providing finance at fixed interest
rates for a short to medium term
It is proposed that a fund may be created to hedge
markup rate hikes. The fund shall be managed by
an organization (TDAP/ NIC) of the Ministry of
Commerce and shall be financed from EISF.

Reliabilityy of Electricity
y Supply
pp y
35

The electricity shortages is an irrefutable fact and is

adversely affecting industrial productivity. While little
can be done, in short term, to increase the quantum of
supply
pp y there is possibility
p
y for introducing
g an element of
predictability of power supply.
It is therefore proposed that Electricity Distribution
Companies (DISCOs) being bodies corporate should
enter into agreements with clusters of industries
whereby electricity is supplied at mutually agreed
times The agreements should have punitive and
times.
compensation legally enforceable clauses; the
compensation could be in the form of electricity charges
credit etc.
etc

Insurance Cover for Visiting

g Buyers
y
36

Purchasers,, inspectors
p
and sourcing
g agents
g
of overseas
buyers are reluctant to travel to Pakistan and the
exporters have to meet them in other countries. This
increases cost of doing business.
business It has been learnt that
apart from travel advisories that stop the
purchasers/importers from coming to Pakistan but also
the fact that the insurance companies refuse to cover
the period of stay in Pakistan on usual rate of premium.
A scheme may be launched for picking up the full cover
for stay in Pakistan for valid insurance policy of visiting
buyers/ buyers representatives.

T d Facilitation
Trade
F ili i
E i i Initiatives
Existing
I ii i
to be
b C
Continued
i d

38

Facilitating Presence in International

M k t
Markets

To encourage local firms to have international

presence and thereby increase the profitability
following
g initiatives were taken in previous
p
trade
policies:
Support

for Opening Exporters Offices Abroad

Support for Opening Retail Sales Outlets Abroad

It is proposed that the above initiatives may be

allowed to be continued throughout the period of
STPF 2009-12

Warehousing
g Facilityy
39

To make inroads into non-traditional markets and /

or to introduce non-traditional products in
traditional markets a warehouse scheme was
l
launched
h d and
d a warehouse
h
was established
bli h d in
i
Kenya. The changing patterns of trade require
direct to store deliveries and thereby need of
warehouse even in traditional markets.
It is proposed that the warehousing scheme may be
continued and its scope expanded to include
traditional markets and traditional products.

Support for Compliance Certification

40

In the previous three years government announced

50% subsidy for various quality, environmental and
sociall certifications.
f
To encourage ffurther,
h the
h
subsidy was progressively increased to 100% of the
cost of certification when a manufacturing units gets
four of the specified certifications*.
It is proposed that the initiatives may be continued
in the Trade Policy 2009 and list of certifications
may be expanded by TDAP in consultation with the
Industry.
* (i) ISO 9000, (ii) ISO 140001, (iii) OHSAS 18001, (iv) SA 8000, (v) WRAP, (vi)
EKOTEX, (vii) BSCI, (viii) BRC

S
Sector
SSpecific
ifi
N IInitiatives
New
ii i

Compensating
p
g Inland Freight
g Charges
g
42

Extra cost on inland transportation

p
erodes export
p
competitiveness of a range of developmental
products.
It is proposed that a scheme may be launched to
compensate inland freight cost to exporters of
cement light engineering
cement,
engineering, leather garments,
garments
furniture, soda ash, hydrogen peroxide, sanitary
wares including tiles, finished marble/
/ granite/
/
onyx products. The scheme may be funded from
Export Investment Support Fund

Technology, Skill and Management Upgradation Fund for Value Added Products
43

All final use products do require continuous research

and development for enhancing competitiveness
either by
y technology
gy up-gradation,
pg
, skill
development or by improved management systems.
A fund dedicated to support these activities is
required.
It is proposed that a Technology, Skill and
Management Up-gradation fund of Rs. 3 billion
may be established.

Brand Promotion Support for Surgical

I t
Instruments,
t Sports
S t goods
d & Cutlery
C tl
44

The manufacturing in these sectors is largely done under

the brands of foreign companies, and that result in
lower prices for manufacturers in these sectors.
It is proposed that surgical instruments*, sports goods &
cutlery sector may be granted 25% subsidy on brand
promotional
i l expenses lik
like advertisement
d
i
in
i recognized
i d
trade journals, certification cost.

* Term Surgical includes surgical

surgical, medical
medical, dental
dental, veterinary
veterinary,
beauty care (manicure/ pedicure etc.) and like instruments

Product Development and Marketing Fund

for Light Engineering
45

Engineering sector is dynamic and resilient but it is

fragmented. This sector has shown promising growth
during 2008-09 with an export growth of 32.1%.
In order to increase the sophistication level & realize
true potential of this sector, it is proposed that a special
fund of Rs 2.5 Billion may be created for product
development & marketing for light engineering sector.
sector

Enhancing Sophistication in Surgical

I t
Instruments
t Center
C t off Excellence
E ll
46

Shortage of well
well-trained
trained skilled manpower is
impeding growth of surgical instruments
manufacturing
g industry.
y
It is proposed that Ministry of Industries and
Production may
y establish a center of excellence for
catering to the training, designing, research &
development needs of surgical instrument*s sector
at Sialkot
* Term Surgical includes surgical, medical, dental, veterinary,
b t care ((manicure/
beauty
i
/ pedicure
di
etc.)
t ) and
d lik
like instruments
i t
t

Enhancing Sophistication in Leather

A
Apparel
l
47

Leather apparel
pp
industryy needs to adapt
p to changing
g g
trends for which they need expert input for improving
quality and efficiency.
ItI is
i proposed
d that
h use off EISF may b
be allowed
ll
d for:f
Providing on the floor expert advisory / consultancy
pp
manufacturers cum exporters.
p
services to leather apparel
Matching grant to establish design studios or design centers
in their factories.
Establishing R&D Centers in Karachi and Sialkot by PLGMEA
for providing Research & Development support to Leather
Garments & Leather Goods Exporters.

Freight Subsidy on Export of Live Sea

F d
Food
48

Live sea food fetch very high prices in international

markets as compared to frozen products, minimum
price ratio is 1.10. In fact,, maximum value addition
p
is through export of live sea food. This product
offers immense potential in export markets.
It is, therefore, proposed to grant 25% freight
subsidy if live seafood products are exported by
air. This will also compensate exporters to overcome
losses incurred due to mortality.

Support
pp on Export
p of Processed Food
49

Raw and semi

semi-processed
processed agricultural produced being
currently exported can get higher values if exported as
processed food. However, TBTs on processed food
require compliance to more sophisticated standards
and thereby higher cost of production
ItI is
i proposed
d that
h processed
d food
f d exports may be
b
supported initially by reimbursing R&D cost @ 6% of
the exports; the quantum & mode of support to be
adjusted after a detailed study but not later than May
2010.

Introduction of PAKGAP Standard

50

Good Agricultural
g
practices
p
are essential to ensure
food safety both locally and in export markets and
thereby a better acceptability; our agricultural
sector is
i llacking
ki recognized
i d agricultural
i l
l practices
i
standards.
It is proposed that PAKGAP (Pakistan Good
Agricultural Practices) standards initially for five
major horticultural exports (citrus, mango, date,
potato and onion) may be worked out by MoST and
implemented by MINFA in collaboration with PHDEB.

Conversion of PHDEB into a company

p y
51

Pakistan Horticulture Development & Export Board

is a EDF funded project of the Ministry of
Commerce. Due to its undefined status it can neither
seek international assistance which is otherwise
available nor contribute fully to the development of
the sector. It has therefore being changed into a
corporate body.
It is proposed that, on incorporation, O&M expenses
of PHDEB may be funded for a period of three
years.

Improving Supply Chain of Leather

S t Exports
Sector
E
t Flaying
Fl i M
Machines
hi
52

It is estimated that a minimum of 25% hides

and skins are rendered useless from butcher
cuts. There is an imminent need to introduce
flaying machines in abattoirs but local
governments have limited resources to install
and run flaying
f
machines.
It is therefore proposed that EISF may be used
f providing
for
d matching
h grants to district
d
governments for installing flaying machines.

Improving Supply Chain of Leather

S t Exports
Sector
E
t Finished
Fi i h d LLeather
th
53

Finished leather is one of the major export products &

an intermediate product in which substantial value
addition can be achieved by adopting modern
production processes
p
p
and creating
g trendyy finishes. There
is a need to encourage tanneries to upgrade production
and designing facilities and to facilitate them for
complying
p y g with international standards.
It is therefore proposed that EISF may be allowed to be
used for:Sharing 25% financial cost of setting up of design centers
and labs in the individual tanneries.
To provide matching grant for setting up of effluent
treatment plants in individual tanneries.
tanneries

Services Export
p Development
p
Fund
54

Services sector has immense potential for earning foreign

exchange
g however high
g pre-project
p p j costs are a deterrent to
its expansion. Support to Services Sector in tendering
process and preparing prefeasibility / feasibility studies
shall be instrumental in helping the sector to achieve its
potential.
It is proposed that a Services Export Development Fund may
b established
be
bli h d to provide
id assistance
i
in
i the
h form
f
off
reimbursable grants, to Pakistan service exporters for
Tendering or negotiating for international projects and for
conducting pre-feasibility or feasibility studies for
international projects.

Halal Products - Cost sharing of

C tifi ti
Certification
55

Halal Products (Food & non

non-food)
food) is an over trillion
dollar market. Pakistan despite being a Muslim
country
y is being
g left behind and one of the major
j
reason is lack of recognized halal standards. MoST
is charged with working out the standards and
setting up a Halal Certification Board.
It is proposed that till the time the Halal
Certification Board is setup, the government may
subsidize the cost of certification by internationally
recognized
i d bodies
b di by
b 50%.
50%

Compliance
p
with Safetyy Standards
56

Safety Standards Certification by Underwriters

Laboratories (UL) increases the level of
acceptability of manufactured products
particularly domestic electrical appliances in
international markets.
markets
It is proposed that 50% cost of UL certification
may be subsidized.
subsidized

57

S
Sector
SSpecific
ifi
C i i IInitiatives
Continuing
ii i

Cluster Development
p
58

It was decided in last y

years Trade Policy
y that Trade
Development Authority of Pakistan(TDAP) will
establish 11 new clusters such as surgical/sports
wear/gloves/leather
/ l
/l h etc to ffacilitate
ili
smallll units.
i
Since export clusters
Si
l
are essential
i l ffor d
development
l
promotion of non-traditional products, it is proposed
to continue with this initiative in current trade policy
to gain maximum benefit from the establishment of
these clusters.

Support
pp on Export
p of Motorcycles
y
59

Export of Motorcycles was facilitated through R&D

support of US$ 50 (Rupee Equivalent)/ Unit.
However the disbursement was started in end of FY
2008-09.
It is p
proposed
p
that the support
pp mayy be continued till
June 2010.

Pharmaceutical
60

Pharmaceutical sector was g

given following
g incentives
in previous years:
Support

for hiring medical representatives abroad

Support for registration of pharmaceutical products
abroad
Support for bioequivalence certification

The sector has responded well

It is proposed that the above initiatives may be
allowed to be continued throughout the period of
STPF 2009-12

Matching Grant for Paddy Harvesters

and
d Paddy
P dd Dryers
D
61

A large number of export consignments of rice are

being rejected due to aflatoxin infestation; a condition
attributed to high moisture contents of paddy.
The possibilities of aflatoxin infestation can be
minimized by introducing paddy harvesters and paddy
d
dryers
which
hi h the
h farmers
f
are reluctant
l
to procure due
d
to high cost.
It is proposed that matching grants may be given to
farmers / rice millers for purchase of paddy harvesters
paddyy dryers.
y
and p

Zero Rating of Exports and Adhoc

R li f @1%
Relief
62

Exporters are forced to export indirect taxes, estimated to be around 9%

of the cost of production. Trade Policy 2008 proposed a study to calculate
the burden of these taxes and pending that to give interim relief to
fourteen sectors in shape of additional duty drawback @1% of export
value. Though the proposal was approved by the Cabinet, FBR did not
allow additional duty drawback.
It is proposed that the exports may be completely zero rated and till such
time the decision to give additional duty drawback to specified sectors may
be implemented as an interim relief measure in Trade Policy 2009; the
sectors are tents & canvas, electric machinery, carpets, rugs and mats, sports
goods,
d footwear,
f t
surgical/
i l/ medical/
di l/ veterinary/
t i
/ beauty
b t care instruments,
i t
t
cutlery, onyx products, electric fans, furniture, autoparts, handicrafts, jewelry
and pharmaceuticals

Assistance to Horticulture Sector

63

It was decided in trade policy 2008

2008-09
09 that a farm
to port cool chain will be established, till completion
of cool chain,, support
pp for cool chain and cold
storages for horticulture will be given at 8% or
50% of the markup, which ever is lower.
It is proposed that this facility for horticulture may
be continued.

64

Mi ll
Miscellaneous
N IInitiatives
New
ii i

Greening
g of Industryy
65

Energy efficiency of the boilers being used by our

industries can be enhanced by 30% thereby reduce
the cost of p
production. Service providers
p
for
conversion of boilers are available but are reluctant
to come to Pakistan.
To encourage conversion of boilers for increasing
efficiency the government should underwrite the
agreement between service providers and the
industry.

66

T d PPolicy
Trade
li IInitiatives
ii i
P
Process
RRe-engineering
i
i

R d
Reducing
Cost
C off Doing
D
Business
B

Import
p of Used Drilling
g Rigs
g
68

Oil and gas and petroleum sector companies are

allowed import of second hand plant and machinery
equipment required for their project in Pakistan subject
to pre-shipment certification to the effect that such
plant, machinery and equipment are in good working
condition and are not older than 10 years.
years
Since drilling rigs usually have a useful life of around
20 years it is proposed that the age limit for them may
be enhanced to 20 years subject to PSI certification.

Import
p of Specialized
p
Machineryy
69

There are various restrictions on import

p of specialized
p
machinery and transport equipment e.g. Concrete
Transit Lorries, Concrete Pumps, Crain Lorries, Concrete
PlacingTrucks Dump Trucks,
PlacingTrucks,
Trucks Waste Disposal Trucks,
Trucks
cement bulkers and Prime Movers. These conditions
include age restrictions, actual use etc.
It is therefore proposed that Import of specialized
machinery/ transport equipment by actual users
(construction companies etc
etc.)) in used condition provided
they fulfill emission standards and have sufficient
productive life irrespective of the age.

Trade-in of Machinery
y
70

There is a possibility for Industrial Users to trade-in new,

refurbished or up-graded machinery with their obsolete
machinery. Current import and export regimes do not
provide for trade-ins whereas if allowed it could
p
reduce the expenditure on BMR.
It is therefore proposed that Industrial importers be
allowed to import new, refurbished and upgraded
machinery on the basis of trade-in with their old,
obsolete machinery. Likewise export of their
old/obsolete machinery for trade in with new,
new
refurbished or upgraded machinery may also be
allowed.

Advance Remittance for Expeditious

I
Imports
t
71

State Bank of Pakistan has discontinued the facility

y
to remit US$ 10,000 per invoice, as advance
payment, for import of spare parts, consumables/
raw materials
i l etc. The
Th di
discontinuation
i
i off the
h facility
f ili
has increased the cost and time to effect urgent
imports.
It is proposed that facility to remit US$ 10,000 per
invoice, as advance payment, for import of spare
parts, consumables/ raw materials etc may be
restored by State Bank of Pakistan.

Waiver of Size Restrictions on Import of Secondary

Quality Iron & Steel Plates/ Sheets/ Coils
72

Import
p of secondaryy quality
q
y iron and steel
sheets/plates / coils is allowed provided the sizes
are over 48" (length) x 20 (width). The size
restriction
i i is
i irrational
i i l and
d diffi
difficultl to iimplement.
l
The industrial users face difficulties in getting
clearance of unsorted scrap which adds to cost of
doing business.
It is proposed that minimum size restrictions on
import of secondary quality iron and steel
sheets/plates / coils may be waived off.

R d
Reducing
Cost
C off Doing
D
Business
B
S
Sector
SSpecific
ifi

Reducing Cost of Doing Business Gems

& JJewelry
l Sector
S t
74

To promote Gems and Jewelry sector, the Cabinet in

Trade Policy 2008, approved waiver of customs duties
and sales tax on import of Gold, Diamonds, Silver,
Platinum ,,Palladium and p
precious stones. The waiver was
not extended to pearls and other synthetic or
reconstructed precious or semi precious stones though
these are increasingly
g y being
g used in jewelry
j
y production.
p
Further FBR didnt comprehensively implement the
decision.
It is proposed to exempt natural pearls and other
synthetic or reconstructed precious or semi precious
stones from customs duty and sales tax. Implementation
of Cabinet decision may be expedited.
expedited

Pharmaceuticals Exports
p
- Facilitation
75

Marketing of pharmaceutical products involve

number of complexities in the international
territory including need for extensive sampling
at product launching stage.
It is therefore proposed that limit for
physicians' samples may be enhanced to 20%
(current limit 10%) at the time of launch with
first shipment

Special EOU Status to Engineering

U it
Units
76

Currently,
y, units that export
p 100% of their production
p
enjoy the status of Export Oriented Units and the
benefits thereof. Since, engineering industry,
particularly auto motive parts manufacturing industry
has vast export potential but cannot export all of its
production in initial stages it needs special treatment.
It is proposed that engineering units may be allowed
EOU facility on export of 50% of their production for
the first three years.
years After that engineering units should
be allowed this facility on export of 80% of their
production.

E
Export
Related
R l d

Export
p of Edible Oil in Bulk
78

At present export of edible oil from Pakistan is

allowed in retail packs. The permission for export in
Bulk should be allowed. There have been export
p
demands for domestic edible oils like sun flower,
canola and cotton seed.
It is therefore proposed that export in bulk of these
oils (sun flower, canola and cotton seed) may be
allowed.

Export
p of Pulses
79

Currently exports of all types of pulses is banned

due to domestic supply reasons. There is a growing
international demand for this item. Opportunities
pp
exist for exporting pulses obtained on processing of
imported inputs.
It is proposed that exports of pulses obtained on
processing of imported inputs may be allowed
subject to necessary safeguards against export of
indigenous pulses. Regulatory duty on such exports
may be
b waived
i d off.
ff

Enactment of G.I Law

80

Absence of sui generis law on Geographical

Indication (G.I) has exposed Pakistani G.I products
particularlyy Basmati rice to infringements.
p
g
The draft
G.I law is under preparation.
It is p
proposed
p
that G.I law mayy be enacted on fast
track basis and Trade Development Authority of
Pakistan (TDAP) may be given the mandate to
apply for and to hold G.I registration of Pakistani
products.

I
Import
RRelated
l d
R l
Regulatory

Controlling
g Import
p of Poppy
ppy Seeds
82

Presently there is no restriction on import of Poppy

seeds as far as the origin is concerned. Single
convention binds the signatories
g
to import
p poppy
p ppy
seeds only from the countries where it is legally
produced.
In view of the international commitments it is
proposed that source of import of opium poppy
seeds may be restricted to the countries where it is
legally produced.

Controlling Import of Scrap/Waste

Pl ti
Plastics
83

Presently import of waste, parings and scrap of

polyethylene and polypropylene is restricted to
industrial consumers while import
p of other plastics
p
is
allowed on commercial basis.
To regulate
g
import
p of such scrap,
p it is proposed
p p
to
restrict import of all types of plastic scrap to
industrial consumers only and strictly in accordance
with the Provisions of the Basel Convention.

Import
p of Used Computer
p
Components
p
84

At present old and used computers and peripherals

thereof are freely importable but the import of
used components
p
(RAM,
(
, Casing,
g, Motherboard,,
Processors etc) is banned. Thereby depriving the low
income strata of computer use.
In order to encourage use of computers by low
income segment of population, it is proposed that
import of old & used computer components may be
allowed.

Restricting Import of Used CRT

M it
Monitors
85

Second hand Cathode Ray Tubes (CRT) monitors are

being imported and used as televisions thereby
posing
p
g a threat to local television industry;
y; excessive
import of first worlds e-waste is also a threat to the
environment.
It is therefore proposed that import of CRT monitors
may be disallowed unless imported alongwith used
computers.

Protecting
g Local Vaccine Producers
86

Local manufacturing of vaccines is of strategic

importance and now local companies have
started venturing into this high tech segment.
segment
Unhindered import of vaccines is a
discouraging factor.
factor
It is proposed that to encourage local
manufacturing import of vaccines may be
manufacturing,
allowed only from World Health Organization
(WHO) approved plants.
plants

87

T d PPolicy
Trade
li IInitiatives
ii i
I
Import
FFacilitation
ili i

Import
p of Donated Ambulances
88

Only such used ambulances (not more than 15 years

old) that are donated by "reputable organizations"
are allowed for imports
p
byy charitable
organizations/ trusts/ hospitals.
It is p
proposed
p
that import
p of used ambulances that
fulfill certifiable standards and have minimum 10
years of useful life may be allowed when donated
by any organization / individual to charitable or
non-profit organizations, trusts or hospitals.

Disabled Persons Import of

M t i d Wh
Motorized
Wheell Ch
Chairs
i
89

Secondhand / used motorized wheel chairs are

presently importable only by charitable
institutions and hospitals whereas actual users
cannot do so.
To facilitate disabled persons it is proposed
that import of one Secondhand / used duty
free motorized wheel chair may be allowed to
actual user.

Disabled Persons - Import of Duty Free

Cars
90

Disabled persons are allowed waiver of import duty

which is in excess of 10% on CKD kits that are imported
for assembling of car for them. Restricting disabled
persons to use locallyy assembled cars limits the choice to
p
few makes; there have been persistent complaints of
non-availability of customized vehicles among the local
makes. Previouslyy dutyy free import
p of customized cars
by disabled persons was allowed.
To facilitate disabled persons to actively participate in
economic activity,
activity the facility to import duty free
customized cars, not above 1350cc of engine capacity,
may be allowed.

91

I
Import
RRelated
l d
Lib li i
Liberalization

Transfer of Residence (TR) Rules A

Amendment
d
t
92

In case a passenger who brings/imports vehicle

under TR scheme dies before the issuance of TR,
there is no p
provision in Import
p Policyy Order for
release of such vehicle.
It is p
proposed
p
that vehicle imported
p
byy a overseas
Pakistani, under TR rules, may be released to legal
heir(s) in case of his / her death.

Pakistan's low degree of Structural

T
Transformation
f
ti and
d Di
Diversification
ifi ti
94

95

Pakistan's exports ranked by sophistication

and share in total exports. All of them RCA>1
Commdity

Sophistication

1985

1990

1995

2000

2005

2006

pp
, nes
Medical Instruments and appliances,
other sporting goods and fairground amusements, etc

20814.00
15712.00

1.23
1.22

0.95
1.87

0.89
2.00

0.88
1.85

0.97
1.76

1.00
1.94

Cotton fabrics, woven, bleached, dyed, etc, or otherwise finished

Leather of other bovine cattle and equine leather
Clothing accessories, knitted or crocheted, nes
Fabrics, woven, less 85% of discontinuous synthetic fibres

11214.00
10168.00
9429.00
8683.00

3.46
2.21
0.23
0.10

4.11
2.04
0.36
2.49

6.02
1.31
0.73
3.09

3.61
0.92
0.90
4.00

4.78
1.17
1.65
3.48

4.48
1.14
1.95
3.17

Womens, girls, infants outerwear, textile, not knitted or crocheted;

other outer garments of textile fabrics, not knitted, crocheted
Other made-up articles of textile materials, nes

8585.00

1.24

2.59

1.90

2.44

2.59

2.77

8359.00

0.89

0.93

1.60

2.86

2.79

2.72

Outerwear knitted or crocheted, not elastic nor rubberized; jerseys,

pullovers, slip-overs, cardigans, etc
Articles of apparel, clothing accessories of leather

8199.00

0.16

1.16

1.65

3.79

3.23

3.05

8176.00

2.11

4.49

4.80

4.61

2.96

2.73

8119.00

0.28

0.96

1.63

1.70

2.18

2.17

Linens and furnishing articles of textile, not knitted or crocheted

Under-garments knitted or crocheted; of cotton,
Under-garments,
cotton not elastic nor
rubberized

7,345
7,122
7
122

3.66
1 00
1.00

5.45
2 27
2.27

5.94
4 27
4.27

9.30
3 62
3.62

12.63
3 55
3.55

13.38
3 87
3.87

Men's and boys' outerwear, textile fabrics not knitted or crocheted;

trousers, breeches and the like
Cotton yarn
Carpets, carpeting and rugs, knotted
Rice, semi-milled or wholly milled
Cotton fabrics, woven, unbleached, not mercerized
Sub-total (%)
Sophistication at the country level

6,798

0.28

0.64

1.25

2.75

2.96

3.15

5,728
5,309
5,060
4,578

10.32
4.57
8.63
5.07
46.70
7231.00

16.91
3.86
4.64
5.15
60.90
7693.00

18.91
1.82
5.55
6.88
70.20
8268.00

13.21
2.33
5.71
6.16
70.60
8362.00

10.14
1.93
5.82
5.15
69.70
8833.00

10.53
1.74
6.46
5.20
71.50
8,72a

Outerwear knitted or crocheted, not elastic nor rubberized; other,

clothin accessories non-elastic knitted or crocheted

SITC R2, Aggregate 4

Slide 24

* Other Manufactures

US$ Million

96

2007-08

2008-09

Change %

220.9

291.8

32.1%

Gloves (Sports)

76.3

88.5

16.0%

Cement

417

576.6

38.3%

Cutlery

54.9

47.2

-14.0%

Auto Parts

21.0

12.5

-40.5%

Fans

27.0

29.0

7.4%

Pharma Prods.

110.5

111.0

0.5%

Guar & Guar Prods.

Prods

36 7
36.7

28 1
28.1

-23
23.4%
4%

Electrical Machinery

38.2

45.9

20.2%

Surgical Instruments

261.1

250.4

-4.1%

Item
Gems & Jewelry

Slide 09