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Commerce minister asks businessmen to get ready for post-WTO regime

LAHORE (November 13 2002) : Federal Commerce Minister Abdul Razak Dawood has asked the businessmen to prepare themselves to face the challenges of the post-WTO regime.

He stated this while addressing the members of the Lahore Chamber of Commerce and Industry (LCCI) here on Tuesday. Dawood termed this visit to the chamber, as his last one, before the new government takes charge.

He was of the view that future government should go for diversification of Pakistani exports so as to strengthen the country's economy.

Giving three years performance of present regime, he said, certain institutions were 'unbearable burden' on the country three years ago. Citing example of Steel Mills, he said, its accumulative loss was of Rs 19 billion and now this institution was earning profit, despite the fact that its production has decreased.

The goal was achieved through downsizing in the mills as well as reduction in non-core business activities, he added. Similarly, government closed down various entities including State Cement Corporation, Ghee Corporation and many others, swallowing huge amounts of revenue, he pointed out. Even the size of the Ministry of Industries (MoI) was reduced by 52 percent. As many as 250 employees of Iran-Pak Textile Mills, which was closed down 15 years ago, were still drawing their salary, and the issue was resolved by the present government, he said.

Coming to the point of diversification, he said that Engineering, Chemicals and Information Technology are the fields, which can be exploited further for boosting Pak exports in addition to textiles. He added that total volume of world textile business was around US 300 billion dollars. Even if we manage to get 10 percent share from it, our share would not be more than US 30 billion dollars.

Whereas the business of engineering sector stood at US 6 trillion dollars, providing an opportunity to the Pakistani entrepreneurs. At present our total export of engineering goods is around US 274 million dollars, he added.

Praising the textile sector's performance, he said that textile exports had been around US 6 billion dollars during the year 2001-02 and hopefully these would touch the mark of US 10 billion dollars in coming years. He added that three years back, there were certain textile items, which were banned for import.

The present government has lifted the ban from these items with confidence in the business community that it would face the challenge. He said, the performance could be gauged from the fact that exports in textile sector had increased, which had seen one billion dollars investment and is competitive in the international market. It shows that our businessmen could face the challenges of the new era, he added.

Now our cotton policy is based on fixing prices of cotton on international parity basis. We are doing very good business in textile, as 57 percent of total textile export is now value added, while by June 30, 2003 it would reach 60 percent.

Nevertheless, this was a very good start. Although international situation was not good but we have increased textile exports in volume by 20 percent. The price increase was only 5 percent. In some sectors, our businessmen have reduced the prices of their products to keep themselves alive in the international market, he added. However, he said, we wanted further growth of our textile industry.

We should pay attention towards other sectors including engineering, chemical and IT, he said. We had got market access in European Union and got some success in the US, Kenya, Morocco and Turkey too, he added.

He said that Free Trade Agreements had been signed with Bangladesh and Sri Lanka but the way we wanted to have access to their markets, they also wanted similar access to our markets. He advised the businessmen to be ready for future, which would be of low tariff and more competition. He added that the SAARC countries had also a round of talks on lowering duty two weeks ago in Katmandu. He added that decision taken at this forum would also be applicable for India too.

Coming towards the ginning sector, he said, it was the weakest link in our textile products. He said that there were 1200 ginning factories in Pakistan for 11 million bales cotton per year whereas in Australia, which produces 3 million bales per year there are only 25 ginning factories. He said that now we wanted new breed of ginners, which could produce finest thread. However, he said that the campaign launched by the government for producing clean cotton is going well.

He said that the National College of Textile Engineering Faisalabad, which was taken over by Bhutto government, had been upgraded to University and given to the private sector. He also praised the rice sector and said that the government had adopted the policy of non-interference in agriculture sector. He said that when he went abroad to get orders for agriculture commodities the first question they asked was whether Pakistan could be a reliable supplier. He said that we had to shun the practice of imposing ban on export when we have shortage of any commodity, we should honour export orders and meet the shortage by import as was done by other countries, he suggested.

Razak Dawood stated that Pakistan started exporting wheat at 92 dollars per ton but the excellent quality had made it successful to get a price of 124 dollars per ton now.

Talking about his failures, he said that the WTO wing was still weak and he could not give it much time, likewise less work was done on Intellectual Property Rights (IPR) field and improvement of 29 training institutes being run by the Ministry of Commerce and Industry.

He said that the State Life Insurance Company has been restructured for getting rid of 80 percent bogus agents out of total strength of 27,000 insurance agents. He said that now government wanted to privatise it, but at the same time it did not want to give Rs 80 billion fund of the Corporation in few hands and is looking for ways and means for its privatisation.

Replying to various questions raised by the LCCI President, M. Yawar Irfan Khan, he said that the menace of smuggling could be tackled through rationalisation of tariff only. He regretted that plastic industry could not get due incentives especially in terms of tariff rationalisation. He said that the government had set up Pakistan Compliance Board to help our industrialists to meet the requirements of compliance of ILO conventions, labour laws etc for reaching international markets.

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