The Five Year Strategic Trade Policy Framework

The Department of Commerce delayed the completion of the five-year Strategic Trade Policy Framework (STPF) document proposed to improve the export competitiveness and productivity of the domestic industry, despite clear instructions from the Prime Minister. Prime Minister Lim Lan Khan has instructed the Commerce Department to draw up a five-year plan, which is the deadline of December 31, 2018, to facilitate exports. But not only did the department miss the deadline in nine months, but also put the entire process into the cold burner.

The range of $ 200 to $ 25 billion

This policy is expected to help the country's exports, which have remained in the range of $ 200 to $ 25 billion over the last decade and have declined over the past few years. According to the official documentation provided with us, the department has almost completed the preliminary work on the draft and found feedback from all stakeholders. Despite several attempts to contact the director to find the official stance on STPF's delay reasons through his cell phone, he did not receive any answers until the story was finished.

Similarly, an official spokesman for the ministry, Muhammad Ashraf, did not respond to written questions. Over the past decade, the Department has notified three STPFs each in 2009-12, 2012-15 and 2015-18, but none of these have been successfully implemented to achieve the desired goals for various reasons. In addition, policy has not changed the export paradigm over the past decade. The 2009-10 STPF failed mainly due to mismanagement.

But the 2012-15 framework struggled because the government failed to free up its allocated funds. In addition, in 2015-18, the STPF was announced after a delay of more than nine months, and the government suffered a fiscal crisis because it did not release its total budget of 200 billion rupees (Rss) of 500 billion rupees (Rss). The final goal of the last STPF was to increase the country's annual export to $ 35 billion by 2017-18.

Competitiveness trade-related investment

The new framework is expected to be centered around four pillars: competitiveness, trade-related investment, production refinement and diversification and trade promotion. The ultimate goal of this policy is to increase exports to a minimum compound annual growth rate of 12pc per year until FY23. Official documents, meanwhile, assume that if the government does not take timely corrective action, it will pose a serious threat to the country's export sector.

One of the major threats faced by exports has been the absence of active industrial policies since the 1990s, which has led to deindustrialization, with tax burdens of more than 58pc on the manufacturing sector, high energy costs, and high tariffs on industrial inputs. In addition, the export sector faces sectoral distortions over the years, with exports concentrated on three major commodities: cotton, rice and leather. Other distortions include carnivorous cotton and cotton water resources by sugarcane crops.

As a result, annual cotton production has been reduced by four to five meters below the target, and Pakistan continues to produce surplus sugar, which is not competitive in the international market due to the procurement price mechanism. Review studies of the past three STPFs have identified various shortcomings in the implementation of the proposed framework. One of the main interventions in the policy was to expand to export companies without connecting cash aid to increase competitiveness.  This increased the number of decaying vases.

Introduced reforms to existing trade aid agencies and attempted new reforms where institutional gaps exist. But the results were mixed and not greatly inspired. In addition, the restructuring movements of existing institutions, such as Pakistan's Trade and Development Bureau, have faced strong resistance to the change and establishment of new institutions due to internal bureaucratic obstacles of new institutions, the Exim Bank and Land Port Authority.

After a sharp deal

Stocks closed the week with positive notes by encouraging news flows to convince investors to varying levels. The KSE-100 index rose 795 points (2.68%) per week and was settled at 30,467 points. The rally was built to rejuvenate the capital market and promote the ease of doing business, based on SECP's major reforms announced last weekend. In addition, due to changes in the CPI methodology, the market was lower than expected at 10.49pc in August to increase the likelihood of policy rate cuts.

There were not many improvements that could absorb liquidity in the market in rupee dollar parity, gold prices and bank's fixed income revenue and national savings schemes. The third trading session also witnessed the withdrawal of the signed Presidential Decree to give up 50pc of outstanding GIDC overdue from CNG, power, fertilizer and industrial gas consumers. In addition, meetings with the prime minister and entrepreneurs bolded investors to stimulate economic activity.

At the end of the deal on the last day, there were reports that the IMF's mission was to go to Pakistan and hold financial indicators, but the government explained that there was no reason to be alerted by routine visits. Finally, SBP's foreign exchange reserves increased for three consecutive weeks (even in small amounts), which was a great help considering the downward movement for several weeks.

Foreign investors abandoned $ 5.32m of shares in the outgoing week (4 days), compared to net purchases of the previous week (0.97m). Major foreign sales were witnessed at commercial banks, which cost $ 3.05m, $ 2.44m for cement and $ 2.4m for oil and gas. Locally, other individuals with purchases of $ 6.15m have reported $ 4.10m.

The daily average turnover rate

The daily average turnover rate for outgoing states fell 24.9pc per week to 93m, while the average trading value was 23pc, down 23.3m. Volume-driven screening included MLCF (7.17m stock), WTL (4.58m stock), OGDC (4.22m stock), DGKC (2.66m stock) and PAEL (2.64m stock). The main issue that can determine the direction of the market is to discuss Pakistan's terrorist financing control process in accordance with FATF's decision at a meeting held in Bangkok from September 9 to 10.

Determines whether a country remains on the gray list or black list. IMF staff will visit Pakistan on September 17. Optimists expect the Bank of Pakistan to cut interest rates based on August inflation. The monetary policy statement closes on the last week of this month.

The main indicator used by state banks

The CPI, the main indicator used by state banks in determining interest rates, came in at 10.5% during the month of August after the Pakistan Bureau of Statistics (PBS) revised its method. Important indicators are calculated. The CPI inflation rate increased 10.5pc year-over-year in August 2019, compared with 8.4pc last month and 6.2pc August," PBS said. In the new base year. PBS has changed the base year for price statistics from 2007-08 to 2015-16.

The change in the base year means that the price level obtained in the FY16 economy will now be the basis on which all existing prices are calculated for the CPI calculation. Following FY08's previous year, which has been used to determine CPI so far, the major inflation index increased 11.64pc during the month of August to 1.64pc during the month of July. But according to the new base year, the July CPI will be 8.4pc.

In addition to reversing

PBS has changed the weight assigned to various consumer items in CPI baskets and introduced new price panels that can be obtained in urban and rural areas. “The Urban CPI includes 35 cities and 356 consumer goods. Rural CPI covers 27 rural centers and 244 consumer goods. From now on, the CPI is calculated as the weighted average of urban and rural prices. The weight assigned to houses, water, electricity, gas and other fuels has been significantly reduced, as well as transport.

Meanwhile, the weight assigned to restaurants and hotels increased significantly, as well as the category classified as "other goods and services". Weighting is assigned based on data from the household consumption survey. The data showed that the price increase between July and August was dominated by chicken, onions, tomatoes, and vegetables, and in urban and rural areas, the rate of double-digit price increases both rose to two orders of magnitude.

The only item that showed a two-digit percent decrease during this period was fresh fruit. But compared to last August, the price increase is much clearer. Gas prices were found to increase 114pc this time in urban areas, 75pc for chicken and 61pc for onions. Rural areas have seen the greatest price increases in foods like onions, chicken and pulses during this period.
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